The Effects of Employment Website on Success in Wage Negotiations

Research proposal: The Effects of Employment Website on Success in Wage Negotiations
Motivation
Years after desegregation in the Civil Rights Movement, the racial pay gap in the United States remains substantial. According to the U.S. Census Bureau (Semega et al., 2020), the real median household income of non-Hispanic White households is $76,057 in 2019, whereas this figure is $45,438 for Black households, $56,113 for Hispanic households, and $98,174 for Asian households (2020).
The differences in average pay among occupations and the lack of educational opportunities are not the only factors behind the pay discrepancy between whites and racial minorities. Among male college graduates with professional white-collar jobs, the median pay for White, Black, Hispanic, Native American, Pacific Islander, and Asian is $71,500, $63,500, $66,600, $66,600, $69,400, and $84,000, respectively, controlling for years of experience and job types (Gruver, 2019).
Chronologically, several stages at work could contribute to the racial pay gap, such as wage negotiation at job entrance and asking for a promotion later in life. Scholars argue that the wage discrepancy racial minorities experience has already begun at job entrance because racial minorities negotiate for lower wages than whites (Seidel et al., 2000). Fortunately, social networks and friends who work at the employing company could offset this gap in wage negotiation. The mechanism of social networks on wage negotiation remains unclear, but scholars propose that the crucial yet often secretive information that social networks convey could be helpful during wage negotiations.
Even though social networks could resolve the wage discrepancy racial minorities experienced, not everyone is fortunate enough to have a friend at the employing company. Many people increasingly use employment websites such as Indeed.com and Glassdoor.com to find information about salaries of job positions of interest. In light of the wage discrepancy and the popularity of employment websites, it is worth researching the effectiveness of employment websites, in particular, whether employment websites alleviate the inequality in wage negotiation by providing information.
In the following paper, I will present a brief literature review on social networks and wage discrimination, followed by a detailed outline of my research question and hypotheses. Then, I will elaborate on my plan for data collection and data analysis. Finally, I will write about the expected findings and their significance to the broader literature.
Literature Review
Numerous studies have highlighted the importance of social networks in improving a candidate’s job prospects, including John Hopkins sociologist Mark Granovetter’s famous study paper “The Strength of Weak Ties: A Network Theory Revisited.” In his research on how ideas and influence expand in social settings, Granovetter discovered that people, including hiring organizations, are more likely to be receptive toward those they are acquainted with. Workers tend to find jobs through formal sources and personal contacts, which he categorized into weak and strong ties. Weak ties refer to those acquaintances one is less likely to be socially involved with or where many of the possible relational links are missing, while strong ties denote one’s close friends or where many of the possible relational links are present. Granovetter (1983) further determined that the tendency of weak ties to connect several dense knit clumps of close friends heightened their value in job searches. Provincial views and knowledge capital tend to circulate within strong ties so that the members of a group are insulated from forces far beyond their perception.
Weak ties tend to link different groups and individuals and extend further than strong ties, thereby facilitating the further spread of ideas and influence. The significance of weak ties is that they are more likely to connect to larger social circles that are different from one’s own than strong ties. Former classmates, neighbors, and relatives draw their information from extensive sources and are therefore more likely to learn of a job opportunity faster than one’s closest friends. However, although weak ties avail information and resources outside those available in one’s social circle, strong ties possess the greater motivation to be of assistance. Because searching for a job involves looking for wage offers from various offer distributions, the extensive reach of weak ties is essential to accessing information about available job vacancies. However, strong ties are better at accessing job-specific information and influencing positive labor market outcomes. Weak ties are better exploring for job opportunities, while strong ties are critical to marshaling the social resources needed to secure a job opportunity.
A study by Seidel et al. (2000) determined that members of racial minority groups tend to negotiate markedly lower salaries than their counterparts. More importantly, the researchers found that this effect was significantly lowered after controlling for social ties to the hiring firm: having a social tie to the organization considerably improved salary negotiation results, although minority groups were less likely to have such a social tie. Discriminatory wage differences between white and minority workers are well documented and appear to be the result of a myriad of factors. One of the reasons for the wage gaps between the two demographic groups is the inherent discrimination existing in the hiring, promotion, and termination process. Another reason is the fact that minority groups tend to concentrate in certain industries and occupations that pay less compensation. Within-job wage discrimination, where minority workers with the same qualifications and working in the same organization as their counterparts, is largely tied to the first reason. Overt racism is also tied to the tendency among individuals to rate the performance of a member of a minority group lower than their actual job performance.
However, wage inequities tend to manifest during the screening of prospective candidates. Owing to the growing reliance on informal, word-of-mouth recruitment channels for recruitment, minority groups are further segregated in the job market. The tendency among minority employees to negotiate lower salaries has been linked to several reasons. Company representatives conducting salary negotiations negatively stereotype minority candidates as having less information about the company’s salary limits. Racial hostility towards a minority group may also cause the company representative to be less willing to agree to a salary increase. Besides, ineffective cross-cultural negotiation may hamper the ability of minority candidates to negotiate for higher salaries. The importance of having more information about the hiring organization’s position in salary negotiations heightens the importance of social ties for members of racial minority groups. Social ties not only provide the job applicant with the necessary information needed to ensure successful absorption into the company, but they also help communicate information about the candidate’s skills and attributes, which are difficult to discern during the formal hiring process, to the employer.
Social ties help to enhance the employer’s perception of the applicant’s competence and may incentivize company representatives to increase the candidate’s salary offer. Unfortunately, minority workers tend to have fewer strong ties within their company than their peers (Seidel et al., 2000). They are also less likely to be included in social events that avail opportunities to engage in same-race and cross-race professional networking. Moreover, social networks tend to favor the demographic groups in the numerical majority. In a company where white staff comprises the majority, minority social networks are less well developed because there are fewer opportunities for homophilous ties to grow. Social ties tend to favor the recruitment and selection of candidates similar to themselves, thereby furthering within-job wage discrimination. The study by Kramarz & Skans (2014) further demonstrates the importance of social ties in determining job opportunities and labor market outcomes. The study determined that social ties were particularly important when the graduate’s position is weak when information on potential placements is scarce, and during high unemployment years.
Young workers who are new to the job market benefit from social ties in terms of having faster access to placements, experiencing better wage growth, and likelihood to stay in the job longer as compared to other entrants. Current literature on the influence of networks in job searches indicates that organization representatives tend to spread information about job vacancies to their strong social ties and only inform their weak social ties if closer friends are already employed. Young, untested workers have a hard time convincing the prospective employer of their abilities and therefore rely on social ties to improve their employment ...