What Employers Can Learn from Study Showing Discrimination in Hiring Processes

By Maggie Roddy posted 06-14-2024 09:34 AM


A group of economists recently released the results from a study in which they sent fake resumes to nearly 100 of the United States’s largest companies, revealing discrimination within hiring processes and HR best practices to help avoid bias. 

Race-Based Hiring Discrimination  

The study involved submitting 80,000 resumes for 10,000 jobs between 2019 and 2021. Economists created resumes with equivalent qualifications but different personal characteristics and applied for entry-level positions that did not require a college degree or any related work experience. The only difference in the resumes was the applicant’s name, designed to indicate the race and gender of the applicant. For example, Meredith or Lakisha, Joshua or Lamar. The study applied for up to 125 jobs per company at various locations nationally and then tracked whether the applicant was contacted within 30 days. On average, results showed white applicants received callbacks almost 10% more often than their black counterparts. 

Interestingly, results varied significantly by industry. Many retailers or car dealers favored white applicants over black applicants, even for positions that did not require customer interaction, indicating the company’s policies and practices were discriminatory rather than individual hiring managers. Likewise, companies with more bias tended to be less organized, calling applicants to see if they could start the following day.

Profitable companies were less biased, though the reason is unclear. Organizations with more regulatory oversight, like laws targeted at reducing discrimination for federal contractors or companies with prior citations from the Department of Labor, also resulted in a reduced bias in hiring.

Other Protected Classes

The study also examined other protected classes, like gender, age, and sexual identity. Notably, on average, companies did not treat male and female applicants differently for entry-level jobs. (This aligns with other studies, which show discrimination against women generally begins later in careers.) Some industries, such as construction, favored males at twice the rate of contacting women, while other industries, like apparel stores, contacted women at twice the rate of men. 

On average, the study found organizations did not penalize resumes using nonbinary pronouns, but including membership in LGBQTA+ organizations, suggesting the applicant was gay, resulted in a small penalty for white applicants and a benefit for black applicants.

What Employers Can Learn

The results of the study show several patterns companies can use to reduce bias. For example, companies contacting applicants from a central HR office using a centralized recruitment team generally correlated with less discrimination. When hiring was from individual stores or warehouses, the bias tended to be more significant. This demonstrates that the HR function owning the recruitment function organization-wide may reduce discrimination claims and bias.

Likewise, diversity among recruiters themselves may result in less discrimination and may help target recruitment efforts toward diverse populations. Employers may consider attending industry events aimed at certain demographics (for example, women in STEM or men in fashion) or providing recruiting marketing materials in languages other than only English to help broaden the applicant pool.

Several of the companies that showed non-racial bias in the study also stopped requiring college degrees for many positions, instead hiring based on specific skills and experience. In 2023, nearly half of employers dropped degree requirements in favor of prioritizing applicants’ skills. This encourages hiring managers to focus on the requirements of the position when reviewing applications.

The study by economists lasted from 2019 to 2021, encompassing the racial unrest of 2020 and many organizations’ renewed commitment to diversity, equity, and inclusion. Still, the study found that common diversity initiatives, like employing a chief diversity officer or offering diversity training, did not decrease discrimination for entry-level hiring.

Employers Council has a variety of resources to help employers tackle potential discrimination concerns. Contact us if you need assistance or for more information.

Maggie Roddy is an attorney for Employers Council.