Conventional wisdom tells us not to quit a job until we've found a new one, and a new study from the Federal Reserve Bank of New York proves it.

The study surveyed 3,447 individuals and analyzed their job offer results, splitting them into two groups: those who were employed when they received the offer, and those who were not.

While the unemployed received more job offers in absolute terms, that's likely because they spent much more time sending out applications. Calculations show that the employed received more job offers relative to the amount of time they spent applying.

job interview with a man looking skeptical at interviewee

Photo Source: Getty Images.

More importantly, the study shows that unemployed job seekers receive significantly worse offers by a number of measures.

Their wage offers are 48% lower than those of employed job seekers. Even after accounting for the different qualities of job seekers and employers, unemployed job seekers still receive wage offers that are 23% lower than the employed get. Unemployed job seekers are also offered fewer benefits, with about 63% of the offers they received coming with no benefits at all.

This largely comes from the fact that employed job seekers are more selective, able to wait out mediocre job offers until they receive something exceptional. People searching for jobs while they're unemployed are three times more likely to accept an offer simply because it's their only option. This is a terrible position to be in as a job seeker, as it leaves you with no bargaining power.

Why are employers so reluctant to hire the unemployed?

It's one of those unfortunate truths in life that those who need a job most often have the most difficulty finding one. Few states have any laws on the books prohibiting discrimination against the unemployed, although this is slowly changing, with Oregon, New Jersey, and Washington D.C. leading the way.

An AOL interview with employers who posted job ads specifically stating they would not hire anyone who was unemployed at the time turned up the following reasons for the discrimination:

  • A job is proof that an applicant is valuable.
  • There's no way to be certain of why an unemployed person lost their previous job.
  • People who are employed will transition into a new job more quickly.
  • The employed have fresher job skills.
  • People who have been out of the job market for a while might lack work ethic.

Of course, plenty of talented and hard-working people aren't currently working. They may be stay-at-home-parents or workers who were laid off for reasons beyond their control, for instance. Judging an applicant based on that factor alone is unfair, and many companies are beginning to realize this.

In the meantime, how can you improve your job search odds if you're stuck in this catch-22? By proving reluctant employers wrong.

Improving job offers if you're already unemployed

If you're already unemployed and looking for a job, all hope is not lost.

The most important step in improving your offers is to find a better answer to the question of what you're doing right now. Your answer can't be "nothing." Find productive ways to fill your time that will make you a more desirable applicant.

One thing you want to prove to a potential employer is that your skills haven't dried up. Consider signing up for classes and workshops or getting a new certification that's relevant to your field. Look through the course offerings at your local community college, or try an inexpensive online course.

Combat the notion that you might be lazy or have trouble transitioning by finding a temporary job, unpaid internship, or volunteer position. You don't have to disclose to potential employers that your work is unpaid. Take what you can get, and use it as a stepping stone.

It may be slightly unconventional, but if you really want to give yourself some bargaining power, offer to briefly work for free. This is particularly effective if you work in a skills-based industry. You can explain to the employer that you'd like to provide them with a free consultation, a free website redesign, or a free sample budget, for example, in order to prove to them that you can offer significant value. While I normally wouldn't recommend working for free, it can pay off in this situation by giving you something to leverage in negotiations.

Whatever you do, don't wait too long to accept an offer. A resume gap of a few months will be easy to cover up a few years down the line, but gaps of a year or more require continual explanation.

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