A Brief History of Hiring

Walter Licht on the skills gap and what companies used to do about it.


Jan|Feb 2013 Contents
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Like any book that addresses a pressing current-day problem, Peter Cappelli’s new volume has a fittingly forward-looking subtitle: The Skills Gap and What Companies Can Do About It.  But it’s also enlightening to look back, at what American companies used to do about skills gaps.  After all, skills gaps are as old as work itself; no one is born knowing how to design an engine block, touch-type, or drill a rivet.  Companies have always been challenged to find, or develop, capable workers.  Walter Licht, the Walter H. Annenberg Professor of History, is an authority on the different ways American firms have gone about it.

When you look back to the turn of the 20th century, one thing that’s readily apparent is that companies have lacked faith in American schools for a long time.  This was especially true when it came to manufacturing firms.  Yet whereas today’s business executives routinely call on schools to get with the program—specifically, their program—blue-collar enterprises of the early to mid 20th century did not typically view schools as being responsible for grooming potential workers. 

“For one, many of these firms had very firm-specific technologies,” Licht explains.  “So they were going to have to re-educate these kids anyway.”  Since the school systems of the day were mainly designed to teach generalized skills, these employers had little faith—or expectation—that graduates would be any better prepared for a particular job than their unschooled peers. 

That being the case, employers typically recruited blue-collar workers through family and personal networks.  A foreman might ask a line worker if he had a nephew interested in a job, for example.  “They took the guess that the kid would be better connected to the firm through these personal connections—because the uncle wanted the kid to succeed,” says Licht.  Likewise, the kid would feel a social or familial pressure not to let his uncle down.  Companies “felt that these connections would give them a more diligent worker and a more loyal worker.”

There’s a reason Licht uses the word kid.  “When the laws allowed them to go after 14-year-olds, they’d go after 14-year-olds,” he says.  “When the law said the kids had to be 16, they’d go after the 16-year-olds.” 

On-the-job training was integral to this style of recruitment, which persisted into the 1940s and 1950s. 

In the middle of the century, that system came under legal and bureaucratic pressure.  Employers’ reliance on personal networks was increasingly seen as a discriminatory practice.  “And it was,” Licht says.  “Because you had all this networking going on, and that’s one of the reasons African-Americans had such a hard time getting in.”

The legal underpinning of this shift may be found in the Equal Protection Clause of the 14th Amendment, which had been adopted in 1868, but it took a somewhat more mundane impetus to spur compliance.  Licht calls it “the outlawing of discrimination practices through a lot of paperwork.”  As companies were required to collect and report information for things like Social Security or occupational-safely purposes, they gradually formalized their recruitment process to feature open advertising and open eligibility for jobs. 

This set the template for hiring that, in broad contours, still exists today.  Open eligibility has tended to increase the value of prior educational achievement, leading to the certifications arms race that Cappelli decries today, even for jobs whose skill requirements don’t have a strong connection to typical high-school or college curricula. 

The history of hiring in the white-collar world, however, is “entirely different”—and furnishes an example of how things can work when the interests of employers and schools coincide.

The context here is the growth of banks and insurance companies into truly large firms at the turn of the 20th century. 

“In the old days, when you needed clerks, you basically recruited kids out of the managerial class, and the clerkships were basically apprenticeships into managerial positions,” Licht says.  These apprentices, unsurprisingly, were virtually all male. 

“But you couldn’t do that when you had an insurance company that needs 4,000 or 5,000 clerks,” he continues.  “So here there was a reliance on the schools—and there was a great match.  Because at this point there was an expansion in girls’ high schools.  The first girls’ high school in Philadelphia was Girls High, created in 1893.  And within those schools, you had commercial course degree programs.

“There was never a better fit between schooling and jobs than the Catholic school connection of the girls taking a commercial course degree,” Licht says.  “Here were families that didn’t want the girls to work in the mills—and there was a pipeline right into a safe, downtown office, and she’d be there for a couple years, and then she’d get married, have kids, and then move next door.  And it was a perfect fit for the schools, because this gave them a clientele.

“It’s a wonderful deal for the firms,” he adds, “because these firms have very generalized needs—not firm-specific technology.  They need someone who knows how to type, they need someone who knows how to run an addressograph, hopefully someone who knows how to do shorthand. 

“The white-collar firms don’t want to spend a cent, and don’t want to waste a second, on on-the-job training,” Licht remarks.  And they didn’t have to.  “They’ve got these high schools—they’ve been handed a fantastic facility to get trained workers at zero cost.

“There’s little investment in these girls in terms of training,” Licht goes on, “because the training has been done for them for free —with taxpayers’ dollars, or private tuition dollars at parochial schools.  And second, they don’t make that investment because they don’t expect them to stay very long.  They see them staying until 22 or 23, and then leaving the workforce to have children.  But there’s a constant pool of new people.”

The expectations of employers and workers are quite different today.  But insofar as many contemporary employers share similar attitudes about the expendability of labor, the past perhaps lives on in the present. —T.P.

Why Good People Can't Get Jobs:
The Skills Gap and What Companies Can Do About It
By Walter Licht
Wharton Digital Press, 2012
eBook $6.99; Paperback $14.99

Download this article (PDF)
Illustration by Graham Roumieu




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Last modified 01/05/13