Employer practices

Employer Practices and Worker Outcomes: A Landscape Report

A Research Report

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This landscape report was commissioned by WorkRise through a multidisciplinary team of researchers at the Massachusetts Institute of Technology (MIT) Sloan School of Management. It summarizes research on employer practices and their influence on economic security and mobility for workers who experience structural disadvantages and exclusion from opportunity in the labor market. The report also proposes several promising new directions for research to build knowledge and advance policies and practices that support workers’ mobility in the labor market. The authors consider a defined set of practices and the channels through which they can shape mobility outcomes: wage-setting and pay practices; scheduling; paid and unpaid leave; hiring, retention, and promotion practices; work systems, or how jobs and tasks are designed and organized; and policies to promote diversity, equity, and inclusion (DEI) in the workplace. The researchers also explore how employers can achieve better outcomes for workers and firms through complementary practices and those that build social capital and trust between workers and employers.

Key findings:

  • Pay and wages: Pay varies greatly across firms for similar workers, suggesting that employers exercise discretion in setting wages. The evidence does not support the idea that pay increases will pay for themselves through greater productivity or cost reductions for the firm, which means employers need additional incentives to raise pay. External pressures such as tight labor markets, minimum-wage legislation, labor union pressure, or informal norms across industry sectors can influence employers’ decision to raise wages.
  • Scheduling: Unstable, precarious scheduling reduces economic security through increased income volatility and job exits, but more research is needed on its long-term consequences for mobility. Evidence shows that greater scheduling stability can benefit employers through reduced turnover and greater productivity.
  • Leave Benefits: Employer-provided leave benefits are more likely to be available to higher-wage, white-collar workers, so public policy interventions are needed to promote economic mobility for low-wage workers through paid leave. Paid leaves support job continuity and women’s labor force participation, although longer leaves can hinder women’s economic attainment and employment prospects. More research is needed on the long-term economic mobility impact of leaves.
  • Hiring:
    • Evidence shows degree requirements in job postings for roles where current job holders do not have a college degree have increased, suggesting job requirements are flexible and could be broadened to provide greater mobility for noncollege workers.
    • Sector-based training programs that move beyond single-employer strategies for hiring and promotion show promise in creating pathways out of low-wage work. Yet these programs can be highly selective and screen out workers who would benefit from them. Delivering them at scale also poses a challenge.
    • Formalized hiring processes that limit managerial discretion and increase transparency, coupled with accountability and oversight measures, could reduce racial or gender biases in hiring.
    • Apprenticeship and internship opportunities at firms can mitigate hiring biases by allowing workers to build skills and social ties within a firm.
  • Promotion: Internal promotion is currently not a dominant pathway out of low-wage work, because low-wage workers are often segregated into separate job tracks or limited by insufficient high-wage positions to move into. Structured career ladders and clear pathways for skill building and job switching are necessary for low-wage workers to achieve mobility through promotion practices.
  • Work systems: How jobs are structured and designed can provide opportunities for workers to build skills, contribute to the organization, and stay motivated and engaged. A set of complementary practices known as “high-involvement work systems”  have the potential to improve job quality, increase worker satisfaction and job tenure, and make firms more productive, but their ability to provide mobility for low-wage workers needs to be studied further.
  • DEI practices and policies: These can effectively broaden access to good jobs to workers of color, who experience historic and structural disadvantage in the labor market, and create inclusive environments where such workers remain in those jobs. These practices include goals and numerical targets for recruitment and hiring; employee resource groups and structured mentorship opportunities; and diversity task forces and committees to gather data and oversee firm-wide DEI initiatives and diversify management ranks. Mandatory diversity training is a less effective strategy for creating inclusive workplaces; evidence shows it can create backlash or bias against workers of color.
  • Complementary practices and social capital: Firms and workers can maximize the benefits of specific practices when they complement and reinforce one another; pursuing practices in isolation or implementing contradictory practices will have modest or negative impact. Similarly, employer practices can either build or erode social capital and trust between employers and workers.

Promising approaches for future research:

  • Design practice-specific research studies: Researchers recommend designing and fielding studies that isolate the impacts of specific practices on worker outcomes and business measures such as productivity. These studies could compare outcomes for workers at different employers either through natural or randomized experiments.
  • Build data infrastructure to capture long-term trends and invest in holistic approaches: Investing in large-scale longitudinal datasets that track individual workers over time and across employers while also providing details on workers’ experiences with specific practices could advance mobility research.
  • Engage employers in field experiments: Partnerships between researchers and employers could yield meaningful evidence on innovative approaches employers are piloting and their impact on earnings, job satisfaction, and well-being.
  • Link employer and employee survey data: In addition to new data infrastructure linking employer practices with worker outcomes, other avenues with existing datasets can be pursued, including (1) matching smaller samples of employer data with longitudinal datasets that track individual worker mobility and (2) asking richer questions about employer practices and jobs on worker survey panels.

Learn more on our blog: 

Employer Practices and Economic Mobility: What Does the Evidence Say? 

Employer Practices and Economic Mobility: Future Directions for Research