Does it pay to have a network contact? Social network ties, workplace racial context, and pay outcomes

This article investigates how social network use to find work affects pay. Analyses using the Multi-City Study of Urban Inequality consider the extent to which a network contact’s influence level affects a job applicant’s pay, whether this effect differs for white, black, and Latino contacts, and how workplace racial context moderates this relationship. Three main findings emerge. First, having an influential contact—one with hiring authority—compared to having no contact yields higher pay. Second, white and minority contact influence on pay differs: among minority contacts, being an outsider (i.e., someone not employed by the firm to which the applicant applies) is associated with higher pay, but being an employee of the firm—an insider—is not. Third, regardless of workplace racial context, black and Latino contacts’ influence is most beneficial when their race/ethnicity is not known to the hiring agent. We offer a new interpretation of the mixed findings with regard to the relationship between social network use and pay.