Will Job Testing Harm Minority Workers?

Because of the near-universal …nding that minorities fare poorly on standardized tests, the use of such tests for employment screening is thought to pose an equity-e¢ ciency trade-o¤: improved selection comes at a cost of screening out more minority applicants. This paper investigates the consequences of standardized testing for minority employment and productivity. We analyze the experience of a large, geographically dispersed retail …rm whose 1,363 stores switched from paper to electronic job applications during 1999 and 2000. Both hiring methods use face to face interviews, but the test-based screen also places substantial weight on a computer administered personality assessment. We …nd strong evidence that testing yielded more productive hires –increasing median employee tenure by 10 percent, and slightly lowering the frequency at which workers were …red for cause. Consistent with prior research, minorities applicants performed signi…cantly worse on the employment test. Had stores initially screened workers in a manner uncorrelated with the test, simple calculations suggest that testing would have lowered minority hiring by approximately 10 to 25 percent. This did not occur: applicant testing had no measurable impact on the racial composition of hiring at the …rm’s 1,363 sites; and, moreover, productivity gains were uniformly large among both minority and non-minority hires. As we show formally, these results imply that employers were, in e¤ect, statistically discriminating prior to the introduction of employment testing –that is, their hiring practices already accounted for expected productivity di¤erences between minority and non-minority applicants. Consequently, testing improved the accuracy of selection within each applicant group (minorities, non-minorities) without generating measurable cross-group shifts in hiring. JEL: D63, D81, J15, J71, K31, M51 Keywords: Job testing, Discrimination, Economics of minorities and races, Worker screening, Productivity, Personnel economics We thank Daron Acemoglu, Joshua Angrist, David Card, Roland Fryer, Lawrence Katz, Edward Lazear, Michael Greenstone, Sendhil Mullainathan, Roberto Fernandez, and numerous seminar participants for insightful suggestions. We are indebted to Tal Gross for superb research assistance and Alan Baumbusch of Unicru, Inc. for generous assistance with all data matters. Autor gratefully acknowledges …nancial support from the National Science Foundation (grant SES-0239538) and the Alfred P. Sloan foundation.