In DC Job Market, it is Who You Know, Not What You Can Produce

When making hiring decisions, how does one determine the productivity of a prospective worker? Assessing productivity is difficult even after you hire someone but it is even trickier when all you have to go on is a resume and some references.

Pete Thompson of the local DC NPR station (WAMU) had an interesting story yesterday on the DC job market. He interviewed George Mason economist James Bennett:

Bennett says it’s common sense that networking is the key to many jobs in DC including those in government, nonprofits, and especially politics.

But he says the end result is that many people — qualified or not — wind up wasting valuable time applying for open positions that have already been filled.

“All these people have job searches but half the time that’s show and tell, the real candidate has been picked out long ago,” he says, “but you have to go through the motions of government regulations, all this stuff’s been going for a hundred years.”

This, I think, is one of the ugly side-effects when government employment crowds-out private employment. As hard as it is to determine the productivity of a prospective worker, it is even harder when that worker is responsible for producing a public good instead of a marketable private good. And thus, compared with private employment, public employment is more likely to be subject to arbitrary standards.

In private industry, one can attempt to measure the marginal productivity of labor with the measuring rod of profit and loss: if I add one more man-hour, how does that affect my net profit? From this assessment, an employer can offer a wage based on some knowledge of the return he or she will get from hiring the worker. Of course, the prospective employee can reject that offer if he or she can find another firm that will pay more.

There are many ways to get tripped up—especially in complicated production procedures that require the collaboration of multiple workers and their machines. But competitive pressures help hone the estimation procedure: workers can leave the firm if another firm offers a greater wage (perhaps because, in using the new firm’s machines, the workers are more productive there). And as employees come and go, the employer can better-assess marginal productivity.

In public employment, however, there is no measuring rod of profit and loss and so employers must rely on more-arbitrary procedures. How does one determine how much a prospective congressional aide will add to the productivity of government? As Professor Bennett notes, a common shortcut is to look at who the job-seeker knows.