1

Concentrations of Worklessness –is there postcode discrimination?

Welsh Labour Market 2020Bevan Foundation and Joseph Rowntree Foundation

Wales Millennium Centre, Cardiff 22nd November 2012

Rebecca Tunstall, CHP, University of YorkAnne Green, IER, University of Warwick

Ruth Lupton, CASE, London School of EconomicsSimon Watmough, European University Institute, Florence

Katie Bates, CASE, London School of Economics

2

The hypothesis: Area reputations and ‘postcode discrimination’

Variations in neighbourhood reputations may be linked to variations in employment within

local labour markets

Explanations for variations:• Skills mismatches• Spatial mismatch within TTWAs• Area/neighbourhood effects:

- ‘Stigma’ is one of 15 potential causal mechanisms for neighbourhood effects identified by Galster (2011)- ‘Postcode discrimination’ by employers is one potential consequence of stigma

3

Research methods (1)

1) Review of literature 2) Case studies:

3 urban labour markets in England and Wales: ‘strong’, ‘medium’ and ‘weak’;3 neighbourhoods in each area: one ‘bland reputation’, two with ‘poor’ reputations

3) Street interviews about neighbourhood reputations4) Analysis of number of vacancies notified to Jobcentre Plus (on direct.gov.uk)

and competition in each area - Focus on jobs requiring limited education and skills: Sales assistants, security guards, cleaners, office admin, accounts clerks, kitchen hands

5) Street survey of job adverts6) Interviews: 14 relevant employers; 11 intermediaries;

57 young people – almost all job seeking, with limited education and skills, and most with other disadvantages

7) Experiment: Fictional CVs for ‘promising’ young people purporting to live in the 3 neighbourhoods, used to apply to 667 real vacancies requiring limited education and skills.

4

Research methods (2)

Experiment: Fictional CVs for ‘promising’ young people purporting to live in the 3 neighbourhoods in the 3 urban labour markets, used to apply to 667 real vacancies requiring limited education and skills

5

Evidence to date …

Numerous allegationsby job applicants/neighbourhood residents/

those who work with residents of poor reputation areas of ‘postcode discrimination’ in employment

- from the UK: A resident’s report of an employer’s rejection: “It’s not you, we think you’d do the job fine . . . but if you live in Benwell, [Newcastle] you either know a villain or you are a villain …” (Speak, 2000)

- from elsewhere (e.g. France, Australia, USA)

But UK interviews with employers suggests postcode discrimination plays only a relatively modest role (Nunn et al., 2010)

6

The experimentApplications to 667 real job vacancies:• Advertised on www.direct.gov.uk, gumtree.co.uk and number of other

employers and aggregator sites, Aug 2010-June 2011

• In which the job site appeared to be within 15 miles of the centre of the 3 local labour markets

• Which did not require degrees, higher vocational qualifications or substantial experience (cleaner, security guard, sales assistant, accounts clerk, office admin, kitchen hand)

• In which a main decision-maker appeared to be based in the local labour market

• To which applications could be made via email, upload to website or post

• Which did not appear to be offers of self employment

Covered the 1st stage of candidate selection i.e. up to interview or similar stage

7

The experimental candidates were relatively strong candidates for

the posts they applied for

Example: Candidates for office admin posts:• 22-24 year old women. They had at least 5 GCSEs at grade C and

above, which would have put them at least in the top half or two thirds of the cohort from their TTWAs, plus either A levels or a relevant post 16 vocational qualification.

• Starting with Saturday jobs while at school, they had 5 to 9 years’ work experience, depending on age and when they completed education. Their past jobs were mostly in office settings, with some retail work. They were in work when they applied.

• They had no breaks in employment, no criminal records and no stated caring responsibilities. If jobs required it, they had cars and clean driving licenses.

• They were seeking posts similar to ones they had held in the past. Where stated, the jobs offered pay between minimum wage of £5.93 an hour and about £10 an hour.

8

Experiment results

• 17% of applications received a 1st stage positive response (usually a request to attend interview/meeting)

• 13% received a negative response

• 69% received no response

• In 475 of the 667 jobs applied to, no candidates or all candidates received a 1st stage positive response

• In the remaining 192 jobs, employers expressed a preference for one or more candidates over the other/s

9

Did ‘poor reputation’ neighbourhood residents have worse chances?

1st stage positive response rate: all 2,001 applications, 2010-11

10

1st stage positive response rate, 192 cases where employer expressed preference out of 667 total, 2010-11

11

Discussion

Very slight net preference for candidates from areas with bland reputation BUT not statistically significant

• In this case, people living in neighbourhoods with poor reputations did not face ‘postcode discrimination’ in the labour market

• ‘Postcode discrimination’ in employment might exist outside scope of experiment: less-well-qualified candidates, other jobs, face-to-face and phone applications; at interview stage of selection

• However, centralised selection and electronic application and response have reduced potential for postcode discrimination outside the scope of the experiment: “you can say you’re from anywhere” (22 year old man, weak labour market)

12

2 out of 14 employers hinted at postcode preferences:“There are areas where you sort of think, hmm, you know, not too sure about that … where you have a large number of unemployed people, where you have council accommodation (medium labour market). “I am not going to be that prejudiced on areas… So you get ‘em in, and see what they’re like” (emphasis added) (strong labour market).

13

Other findings: Early applicants had considerably higher chances…

1st stage positive response rate by days elapsed between advert and application (experiment, 2010-11)

0%

5%

10%

15%

20%

25%

0-3 days 4-7 days 8-14 days 15-21 days 22 days plus

Pe

rce

nta

ge

re

ceiv

ing

1st

-sta

ge

po

sitiv

e r

esp

on

se

14

Stronger labour markets offered considerably higher chances…

1st stage positive response rate by labour market (experiment, 2010-11)

0%

5%

10%

15%

20%

25%

Strong Medium Weak

15

Spatial mismatch? Most low skilled vacancies were not ‘easily accessible’ to poor reputation neighbourhoods

Eg. Weak labour market

"

Legend

" Location of Job Seeker

30 minute public transport zone

10km Zone

Jobs

jobs

1

10

50

100

16

Most job seekers were willing to consider travelling for work…

“Well, my job search [part of JSA agreement] says an hour...” (22 year old woman, medium labour market)

“An hour’s commute wouldn’t be an issue…. I think the furthest one I’ve applied for is… about two hours’ commute when you’re taking buses” (24 year old man, medium labour market)

“Providing the money is decent enough to allow me to travel, I’ll go wherever you want.” (25 year old woman, medium local labour market).

17

But many employers had overt preferences for workers from ‘convenient’/’local’/’accessible’

neighbourhoods• “[Distance] matters a lot. Someone close by is better” (employer, strong

labour market)

• “[the main considerations are] previous employment history, qualifications, and travel-to-work” (employer, strong labour market)

• “We know from experience that it doesn’t work if people are too far away … so we try and place them within 5 miles” (intermediary, weak labour market)

See also: Green et al. (1991); Zenou (2002), Lupton (2003) Nunn et al. (2010).

• 76% of jobs applied to in experiment did not have standard (9-5) hours

18

And there were skills mismatches: The young job seekers interviewed were not

strong candidates

• The 57 young people interviewed in this research were almost all currently out of work. They were in their early 20s. Many had no GCSEs; most had fewer than 5.

• Some had 5 to 10 years’ work experience, in roles like those in the experiment, but it was usually episodic and marked by redundancies and contract ends, with little progression. Some had voluntary experience. Many had almost no work experience, up to 10 years after leaving school.

• Many women had caring responsibilities. Many had criminal records. Some had health problems. Few had cars or clean driving licenses. Most came from neighbourhoods with poor reputations, including the ones in the experiment.

• They were seeking posts similar to those in the experiment.

19

Their experiences of competition

“You send out all these applications and you never hear anything back, so you start thinking there’s no point sending any more off” (24 year old man, weak labour market)

“Once you’ve been knocked back a few times it hurts your confidence as well so I think you end up applying less and less and less, until you’re not applying at all. It hurts your confidence if you hear nowt” (25 year old man, weak labour market)

“I took my CV into [name of shop], they left it on the counter; the other worker who wasn’t a manager threw it in the bin, because people are trying to protect their own jobs, it’s dog-eat-dog at the moment.” (22 year old man, medium labour market)

20

Conclusion

• In this case, people living in neighbourhoods with poor reputations did not face ‘postcode discrimination’ in the labour market (… at this first stage in the selection process)

• ‘Postcode discrimination’ in employment might exist outside the scope of the experiment (and there may be forms of ‘postcode discrimination’ outside employment), but it seems unlikely to be a large and salient neighbourhood effect or explanation for variations

• The study revealed overt employer discrimination between neighbourhoods by convenience/ local accessibility, and strong circumstantial evidence for neighbourhood effects via spatial mismatch.

• The study found strong circumstantial evidence for skills mismatches and the effects of poor individual skills and intense competition.

21

Policy and practice implications

• Well-qualified candidates need not fear postcode discrimination

• Job search needs to be timely, targeted, intensive and electronic (… but not solely electronic)

• Advice needs to be local

• It would be helpful if employers could provide some kind of feedback to applicants

• There may be ways to reduce wastage of employers’ and applicants’ time

• Applicants for some job types and in some local labour markets may run out of vacancies to apply for over the course of a month: more vacancies are needed

22

For more information:

Disadvantaged young people looking for work: a job in itself?

http://www.jrf.org.uk/sites/files/jrf/young-people-disadvantage-jobseekers-full.pdf

Anne.Green@warwick.ac.ukInstitute for Employment Research, University of Warwick