Why Do Low-Paying Jobs Have Such Elaborate Hiring Processes?

A reader writes in: “I have read your entries on wacky hiring practices, and it is good stuff. But one thing I would like to know is why companies put you through all these hoops just to offer a low-wage job?”

It is a fair question. We have somehow reached a place where a company can offer $45,000 a year (just over half the current median household income) while requiring multiple interviews, assessments, personality tests, panel interviews, presentations, references, and perhaps an audience with the regional vice president. The hiring process says elite opportunity. The paycheck says we hope you already have a roommate. So why does this happen?

Employer Self-Importance

Companies frequently confuse the prestige of the organization with the value of the position.

A large, successful, or well-known company may genuinely be a desirable place to work. But that does not automatically make every job within that organization desirable. Nevertheless, the hiring process often reflects the company's opinion of itself rather than the economic value of the job being offered.

The result is an attitude that employment with the company is itself part of the compensation. Candidates should feel fortunate simply to have been selected.

There is nothing inherently wrong with being selective. But if you believe only exceptional candidates are worthy of working for you, eventually someone should ask why you are paying ordinary, or below-ordinary, wages for exceptional people.

Abundant Applicants

Online applications have made applying for jobs extraordinarily easy. Employers can receive hundreds of applications for a single opening.

That creates an illusion of abundance.

If 400 people apply, the employer naturally assumes it can afford to be extraordinarily selective. So it adds filters: recruiter screening, hiring-manager interview, panel interview, assessment, final interview.

But 400 applications do not necessarily mean 400 qualified people genuinely want the job. Many candidates apply broadly, some are poorly qualified, and the strongest applicants frequently have several opportunities available to them.

A large applicant pile can make an employer feel powerful without actually improving its talent pool.

Institutional Risk Aversion

Companies hate making bad hires.

More importantly, managers hate being responsible for making bad hires.

That encourages organizations to spread hiring decisions across more and more people. The recruiter approves the candidate. Then the manager. Then the team. Then another manager. Perhaps a director or vice president gets involved.

Each additional layer feels like additional protection.

But there is a point of diminishing returns. A fifth interview doesn't necessarily reveal something the first four missed. Sometimes it merely ensures that if the employee turns out badly, five people can share the blame.

Hiring-Process Inflation

Some positions legitimately warrant extensive vetting.

If you are hiring a senior executive who will control a $100 million operation, multiple interviews, presentations, references, and extensive due diligence make sense.

The problem is that these practices migrated downward.

Processes originally designed for executives and highly compensated specialists are now routinely applied to ordinary professional and administrative positions. Nobody seems to have stopped along the way and asked whether the cost and complexity of the hiring process should be proportional to the job itself.

Thus we arrive at the six-interview, two-assessment selection process for a job paying $21.63 an hour.

Compensation Anchored in the Past

There is another problem: $45,000 still sounds like more money than it is.

It was a respectable professional salary once. Employers, particularly established organizations with rigid salary bands, can remain psychologically anchored to those old numbers long after inflation has destroyed their purchasing power.

A salary that sounded solid twenty years ago can sound exactly the same today while buying dramatically less housing, transportation, food, healthcare, and financial security.

The number remained the same.

The money didn't.

Employers Feel Burned

This may be one of the biggest reasons of all.

Employers offering low wages often become accustomed to encountering undesirable behaviors in their applicant and employee populations: poor attendance, unreliability, rapid turnover, weak communication, lack of professionalism, exaggerated résumés, disappearing after accepting an offer, and so forth.

Management gets burned enough times and eventually concludes:

We need to screen people better.

And perhaps they do.

But there is another possibility they often overlook: they have a compensation problem masquerading as a recruiting problem.

When a company offers substantially below-market compensation for the experience, reliability, judgment, and professionalism it expects, many of the strongest candidates simply go elsewhere.

The employer then repeatedly encounters the problems associated with a weaker or less stable applicant pool and responds by making the selection process even more elaborate.

The Feedback Loop

This creates a wonderfully dysfunctional cycle:

Low compensation → weaker applicant pool → bad hires → distrust of applicants → more screening → stronger candidates refuse the hassle → weaker applicant pool.

The company believes it is solving the problem when it may actually be reinforcing it.

There is an especially cruel irony here. The strongest candidates are often the people most capable of walking away.

An experienced, competent professional sees $45,000, six interviews, two assessments, and a presentation and says, “No, thank you.” To be fair, they see the salary and swipe to the next job posting. 

Someone with fewer alternatives may endure the entire process because they have fewer alternatives.

Eventually the hiring gauntlet can begin selecting not for excellence, but for desperation and tolerance for corporate nonsense.

The Bottom Line

There is nothing wrong with employers being selective. Reliability, competence, professionalism, and good judgment matter at every salary level.

But expectations and compensation eventually have to meet somewhere.

If you require an unusually talented, experienced, reliable, thoroughly vetted employee, you have made an excellent argument for paying an unusually talented, experienced, reliable employee.

You cannot reasonably advertise a job as an ordinary opportunity, compensate it as an ordinary opportunity, and then conduct the hiring process as though admission should be considered a great personal honor.

Or, more simply:

If only exceptional candidates are good enough for the job, perhaps exceptional candidates should be good enough for the payroll.