Bringing the Boss Back In: Employer Size, Employee Schooling, and Socioeconomic Achievement

Abstract

Employers play a crucial role in the process of social stratification in the U.S.: the jobs they provide are the primary mechanism by which individuals are distributed among occupations and by which earnings are distributed among persons. But the vast majority of sociological work on socioeconomic achievement ignores employers completely, and nearly all related work by economists either ignores employers or else ignores characteristics of workers, substituting one omission for another. In the theoretical section of this paper, we review and combine sociological work on organizational structure, sociological studies of social stratification, and economic research on labor markets, industrial wage differentials and human capital. In this review, we hypothesize that the size of an employer organization works indirectly through other dimensions of organizational structure to alter the effect of workers' schooling on their wages and occupational attainment. In particular, we hypothesize that the effect of workers' schooling on earnings and the effect of workers' schooling on occupational SES increase as logarithmic functions of the size of the organization which employs them. Since the relationship between schooling and occupational attainment is a central part of social stratification research, and because the effect of schooling on earnings is afundamentalfeature of sociological and human capital research on earnings, this hypothesis links organizational structure to the very heart of current issues in social stratification and human capital studies. In the empirical section of the paper, we divide a national probability sample of workers into five groups, depending on the size of the establishment in which they work. Fitting models of earnings and occupational attainment in each of these groups and then relating schooling effects to the size of the establishment which defines the groups, we find that the effect of workers' schooling on earnings and SES increases approximately as a logarithmic function of the size of the establishment for Which they work. Indeed, we find zero-order correlations between schooling effects and log establishment size to be between +.88 and +.95, and statistically significant at the .025 level or better. Implications of our research are discussed.