Will job testing harm minority workers?

the long version

Because minorities typically fare poorly on standardized tests, job testing is thought to pose an equity-efficiency trade-off: testing improves selection but reduces minority hiring. We evaluate this trade-off using data from a national retail firm whose 1,363 stores switched from informal to test-based worker screening. We find that testing yielded more productive hires - raising median tenure by 10 percent and reducing the frequency of firing for cause. Consistent with prior research, minorities performed significantly worse on the test. Yet, testing had no measurable impact on minority hiring, and productivity gains were uniformly large among minorities and non-minorities. We show formally that these results imply that employers were effectively statistically discriminating prior to the introduction of testing - that is, their screening practices already accounted for expected productivity differences between applicant groups. Consequently, testing improved selection of both minority and non-minority applicants, but did not alter the racial composition of hiring. Keywords: Job testing, Discrimination, Economics of minorities and races, Worker screening, Productivity, Personnel economics. JEL Classifications: D63, D81, J15, J71, K31, M51.