Employer practices

Employer Practices and Economic Mobility: Future Directions for Research

Archana Pyati June 17, 2022

This is one of two posts that share findings from a new report on employer practices and their influence on workers’ economic security and mobility. Commissioned by WorkRise, researchers at the Massachusetts Institute of Technology (MIT) Sloan School of Management produced a report that summarizes the evidence base and identifies salient open research questions on how employer practices can promote economic mobility. This work will inform and guide the development of WorkRise’s research agenda and grantmaking on this topic. This post highlights promising research opportunities that could advance the state of knowledge, policy, and practice in support of worker mobility. An earlier post focuses on what MIT Sloan researchers found in their review of the evidence.

 

Employer practices have a profound effect on the ability of workers and families to meet their basic needs and avoid hardship and poverty. What is less clear is how these practices and policies affect a person’s ability to get ahead in the labor market in terms of greater earnings and access to higher-quality jobs. Given the long-term decline in earnings and mobility for millions of workers—particularly those without college degrees and others who experience discrimination and structural disadvantage in the labor market—and a renewed urgency to fix systemic inequities, now is an opportune moment to understand how employers can support mobility and reduce inequality.

WorkRise commissioned a team of researchers at the MIT Sloan School of Management to review empirical studies and gather evidence on what, if any, employer practices promote long-term economic mobility. The researchers set parameters around their review and focused on the following discrete set of practices: wage-setting and pay; scheduling, paid and unpaid leave; recruitment, hiring, and promotion; work systems, and diversity, equity, and inclusion (DEI).

Their review of more than 100 empirical studies shows that specific practices—predictable schedules, paid leave, formalized hiring processes, and sectoral training programs—can improve workers’ economic outcomes through particular mechanisms: promoting greater labor force attachment, making jobs sustainable so workers don’t quit, reducing bias in hiring, and expanding access to higher-wage jobs. But much less is known about whether these practices lead to long-term economic gains or how these practices operate in low-wage industries to benefit hourly and frontline workers.

The MIT Sloan team delineates several promising avenues for research and evidence building. They offer the following four recommendations to advance a research agenda on employer practices and economic mobility:

Design practice-specific research studies

The research team recommends designing studies that isolate the effects of specific practices on worker outcomes and business measures, such as productivity. These could be natural or randomized experiments comparing employers that raise wages with those that don’t or comparing companies that pilot new scheduling strategies and those that don’t. Studies could also evaluate the shorter- and longer-term effects of state and municipal laws on minimum wages, fair scheduling, and paid leave and how they differ by employer and industry.

Preliminary findings on inclusive hiring strategies that widen the candidate pool for higher-wage jobs suggest these approaches can work, but more research is needed on barriers to adoption and efforts to scale such efforts. The researchers recommend additional studies on how career ladders and high-involvement work systems—jobs that combine skill-building, autonomy, and a high level of engagement—could maximize benefits for workers in low-wage industries and sectors. More research is also needed on the long-term effects of DEI programs, particularly in low-wage settings.

The researchers also encourage qualitative and mixed-method studies to directly study the adoption and implementation—and challenges therein—of specific practices in a single employer or across employers. These case studies could provide roadmaps for peer organizations to implement promising practices.

Build data infrastructure to capture long-term trends and invest in holistic approaches

Labor market mobility research is still a nascent field. It is limited by a lack of large-scale, longitudinal datasets that track individual workers over time and across employers while also providing insights on their workplace experiences. “Upward mobility is a long-term, cumulative, and typically multijob process, and we need to measure it as such,” they write. Investments in data infrastructure that allow researchers to track long-term trends in earnings and other indicators and tie those to employers’ practices will be key to advancing mobility research.

In addition, novel approaches are needed to develop a holistic understanding of drivers or barriers to mobility, measured in higher earnings and access to better jobs. In their review of evidence, the researchers found studies that focused either on the effects of specific employer practices and job quality elements on workers or firms, or on racial or gender disparities in access to good jobs; few studies examined both. Effective mobility research should break down siloes between academic disciplines and research approaches and consider both the microeconomic effects of job quality and effective strategies for reducing racial and gender inequities. 

Engage employers in field experiments

The researchers point out that in the current tight labor market, employers are struggling to hire—particularly in low-wage positions—and increasing wages and making other job quality improvements to attract workers. Now would be an opportune time for researchers to partner with employers to field experiments on some of these innovative approaches. Randomized experiments—in which researchers compare outcomes for a treatment and control group to establish cause and effect—could generate high-quality evidence on mobility outcomes, such as earnings growth, as well as job satisfaction and workers’ well-being. These types of studies are expensive to field and difficult to scale and may or may not be generalizable to an entire industry or sector. But randomized evaluations nonetheless offer a gold standard of evidence that could compel employers to change and policymakers to act.

Link employer and employee survey data

Federally administered surveys of employers and employees exist in the US, but there are few examples of datasets that capture employers’ practices and workers’ experiences. These types of linked surveys are more common in countries such as Germany, which takes data from an employer survey and links it to individual worker administrative and social security records, suggesting this approach could be accomplished in the US. One recommendation is to match smaller samples of employer data with longitudinal datasets that track individual workers’ mobility. In addition, the researchers suggest richer questions about employer practices and jobs should be included in worker survey panels. These surveys could ask workers retrospective questions about their past employment experiences.