The Case Against The Case Against Education: Pre-Employment Testing

In the continuing saga…wait. Before I dive in, I want to reiterate something. Sending fewer kids to college is an excellent goal. But we need a realistic case to argue, one that understands how we arrived at this point, what the pressures are to keep it this way, and what are realistic alternatives. Caplan’s 0 for 3. That’s irritating, particularly since Caplan is personally in favor of killing all public education funding, which I absolutely do not support. He makes all these wild statements while many reviewers go the chinstroker route, pretending to take him seriously but actually cherrypicking some of his arguments they agree  or disagree with–yes, this is all very interesting and we should think about it–without engaging with the consequences of his proposals.

The most common explanation for the deep emphasis on credentialing in America is  that employers use college degrees as a proxy for cognitive ability for fear that they’ll be sued. In most circles, this is referred to as the Griggs problem, for the Griggs v Duke Power decision. In the past, employers routinely gave cognitive ability tests for jobs not requiring college degrees, to ensure the applicant has a baseline ability level–or even just to hire the smartest candidate. However, the  Griggs decision severely constrained their ability to test employees if it resulted in a disparate impact by race or gender, so employers began using education credentials as a proxy for ability. Caplan calls it “IQ laundering”; take the IQ, stick it in college for a few years, and then hey, presto, that dirty cognitive ability has been converted into a shiny new, entirely legal, credential, since credentials are not held to the disparate impact ruling.

Caplan thinks IQ laundering proponents are wrong. He thinks it’s obvious that employers “fear” high IQ people who don’t go to college–it signals non-conformity and low conscientiousness. He argues that IQ laundering has to face an “awkward fact”:

10-30% of large employers admit they use cognitive ability tests. (page 89)

Then he continues:

“…the total number of employment discrimination cases filed in federal court peaked at about 23,000 in 1998, then gradually declined to about 14,000 in 2007. The average cash award if you win a trial is large–about 1.1 million for 1990-2000. But only 2% of plaintiffs acutally go to trial and win, so annual awards sum to less than $600 million. Most plaintiffs–58%–manage to get an out of court settlement. Settlements are usually confidential, but the average settlement is about 5% as large as the average trail award. Annual settlements therefore sum to less than $800 million. If plaintiffs’ lawyers work for a 40% contingency fee, and defense outpsends them by a factor of three, employers’ legal costs still sum to less than 1.7 billion. Updating these mid-1990s figures for inflation, employers’ total legal burden sums to under $5 billion per year.

Compared to total labor costs, $5 billion is trivial…[But] Only 4% of federal discrimination cases brought between 1987 and 2003 alleged disparate impact. That amounts to under a thousand annual cases against any form of employment testing. If disparate impact cases cost the usual amount, employers’ total test tax is under $200 million a year. (page 89)

So to restate, Caplan thinks employers aren’t interested in finding high IQ people, but only people who have managed to go through college, which presumably signals a decent IQ. Employers don’t have any interest in cognitive ability testing. If they did, they would, because the pittance they’d pay in lawsuits would dwarf the savings they’d find in high IQ workers. They don’t do this. Ergo, they don’t want high IQ workers. They want conforming conscientious folks.

So first, on the 10-30% of corporations testing. I actually heard about this argument several months before, on Twitter,  and called bullshit. I’m amazed no one else noticed. The article, The Benefit of a Degree in I-O Psychology or Human Resources, lists 2 prior surveys and does one of their own:

• Terpstra, Rozelle, 1993:  201 companies, 20% did cognitive ability testing
• Drogan, Yancy, 2011: 122 credit unions, 27% did cognitive ability testing
• Wang, Yancy, 2012: 94 credit unions, 11% did cognitive ability testing.

I do not see how Caplan can use these three papers to assert that 10-30% of all corporations do cognitive ability testing. The papers themselves make no such claims.

Next, Caplan thinks that, since corporations spend billions in labor costs, they should shrug off a few hundred millions in court settlements in exchange for more efficient hiring. But labor costs will be in the billions no matter what. Suppose hiring the perfect employee every time saves employers collectively $1 billion each year.  Tests are expensive. Developing a test that will pass muster in the event someone sues would be extremely expensive. The tradeoff isn’t billions against $200 million, but more like $1 billion against $200 million and the cost of developing a test that passes EEOC in the event of a lawsuit. Morever, $200 million might be the total test tax for all corporations, but it’s not spread out among them evenly. Just ask Target ($2.8 million) or Federal Express ($54.9).

But the gaping hole in Caplan’s case is government hiring. The Civil Service exam was one of the great achievements of the late 19th century governance, but it didn’t last 100 years before the federal government abandoned it under pressure of a consent decree rather than lose at trial because of the test’s disparate impact. Teacher credential tests are routinely challenged for disparate impact and although they’ve been winning for 30 years, every so often a test is rejected for disparate impact and content that can’t be directly linked to the needs of the position.  But teachers have it easy next to  firefighters and cops–in no small part because firefighters and cops get promotions that have to be defensible and racially balanced.

Caplan doesn’t mention the extensive case history on government employment testing and disparate impact, possibly because he is unaware of it, possibly because it interferes with his easy, brief dismissal or, most likely, because he has some glib reason that he’ll use to argue in favor of ignoring it. But I find it difficult to justify his failure to take into account the hundreds of government cases on testing and disparate impact. The cases weren’t cheap, certainly, and it’s quite possible many large employers are scared off testing because of the many times courts have thrown out even carefully calibrated tests for seemingly random reasons. Toss that in with the $200 million “test tax” and the huge expense of developing a test against the likelihood of a loss–which happens to governments all the time, reminding corporations of what they could be wasting–and it’s far more reasonable, contra Caplan, to think that perhaps corporations don’t want the risk of cognitive ability testing.

Caplan occasionally mentions the “defenders of the IQ laundering theory”–those misguided souls who think Griggs had any sort of impact. For those looking for an excellent argument otherwise, see  Griggs vs. Duke Power: Implications for College Credentialing (O’Keefe/Vedder).  As Vedder and O’Keefe point out, employment tests were ubiquitous in this country before the Griggs decision. Now they’re very rare, other than in the EEOC-approved college credential path. In contrast to this history, Caplan’s simplistic, skeletal treatment of Griggs‘ potential impact on the rise of college credentialism undercuts his already weak argument for the employment value of conformity and conscientiousness.

Furthermore,  Caplan erred in saying that Griggs was codified in the Civil Rights Act of 1991. It was codified in the Equal Opportunity Employment Act of 1972, a distinction that matters because the court cases immediately following this codification supported Griggs. But  (Note: The Equal Opportunity Act didn’t codify Griggs, it just expanded the scope. I was misled by wording in the Vedder/O’Keefe piece. Thanks to Robert Verbruggen for pointing this out.)

But those of us blaming Griggs are focusing on the wrong target. In 1989, the Supreme Court threw out key elements of Griggs in a case known as Wards Cove , restoring the original 1964 understanding of the requirement.

Congress was much better at getting things done back then, and President Bush was running for re-election. So Teddy Kennedy proposed an amendment that resulted in the Civil Rights Act of 1991, overruling the Supreme Court’s decision and reinstating disparate impact.

This strikes me as important for a several reasons. First, it shows again that Caplan’s not a reliable narrator. He read the O’Keefe/Vedder article; it’s in his (excellent) bibliography. But he presented the information in such a way that utterly evades the complexity and controversy behind the disparate impact requirement.  Naw, it’s just like the 55 mph speed limit–a formality. Everyone breaks it. And that’s just not true.

Next, the Supreme Court appears to be once again forcing the conversation back towards equity and away from reverse discrimination–and this time, Congress and the President aren’t inclined towards swift action. What happens if disparate impact is ruled discriminatory in some future case?

Because, finally, Congress’s reaction to the Ward’s Cove decision overruled the Supreme Court, which doesn’t happen very often. What made this case special? Similarly, employers flagrantly violate all sorts of laws, but most of them are very leery of taking on the cognitive ability test and disparate impact. It’s almost as if institutionally, there might be a powerful counterforce pushing political and business leaders away from cognitive ability testing.

Hmm. What on earth could that counterforce be? But I’m at 1600 words already, so that’s the next article.

I can’t prove Caplan is wrong about employers and disparate impact. Caplan doesn’t take the long view, and it’s quite possible that today, given the ubiquitous nature of college attendance, employers do see failure to attend college as a sign of either low intellect or low conformity. But because Caplan elides or omits a great deal of importance from his argument, he makes the issue seem simple  when it clearly isn’t. Again, I don’t get the sense he’s making a serious case. Griggs wasn’t decided by stupid people. They had a reason for trying to stop employers from using cognitive ability as a hiring criterion.

I learned a great deal in fact-checking Caplan in this section. Most importantly, I learned that those of us who blame Griggs aren’t telling the whole story. Griggs was declared unconstitutional and then its elements were explicitly forced back into law by Congress and President Bush I. Disparate impact might not be similarly rescued in the future.

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