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.