What is the Value of an AI-Generated Cover Letter?

Source: https://chatmaxima.com/

Cover letters used to provide insight to hiring managers and helped them identify which candidates to select for an interview. A well-written cover letter signaled something about the quality of a candidate. Moreover, a well-tailored letter also could signal that a candidate was serious about the particular job opening. Do cover letters still have signaling value in the age of AI?

Several months ago, Jingyi Cui, Gabriel Dias, and Justin Ye published a working paper titled "Signaling in the Age of AI: Evidence from Cover Letters." They studied over 5 million cover letters submitted to 100,000 jobs on freelancer.com platform.  The examined the impact of a new feature on the platform that uses AI to generate cover letters for job candidates.  Perhaps not surprisingly, "Access to the tool increased textual alignment between cover letters and job posts and raised callback rates."  

However, that is not the end of the story.  The key finding pertained to a substantial drop in the correlation between cover-letter tailoring and invitations to interview, as well as a significant drop in the correlation with job offers.  On the other hand, workers' review scores (a metric developed by the platform to evaluate past work experiences) became more meaningful.  The authors conclude "These patterns suggest that as AI adoption increases, employers substitute away from easily manipulated signals like cover letters toward harder-to-fake indicators of quality."  

Finally, the scholars examined whether people spent time revising or editing the AI-generated cover letter.  Many people did not.  Yet, those people who did edit the letters increased their probability of landing the job!   

Interestingly, another study by Galdin and Silbert also studied job candidates on the freelancer.com platform.  They found that the length of applications increased after the introduction of AI tools to help candidates.  At the same time, "employers had a high willingness to pay for workers with more customized applications in the period before LLMs were introduced, but not after."  In short, they discovered a drop in the value of the well-crafted application as a signal of quality.  That drop had important implications.  They write, "Without costly signaling, employers are less able to identify high-ability workers, causing the market to become significantly less meritocratic: compared to the pre-LLM equilibrium, workers in the top quintile of the ability distribution are hired 19% less often, workers in the bottom quintile are hired 14% more often." 

Have We Failed to Prepare Gen Z Properly for the Workforce?

Have We Failed to Prepare Gen Z Properly for the Workforce?  NYU Professor Tessa West tackles this question in today's Wall Street Journal.  She argues that many recent college graduates do not have the social skills required to communicate clearly, manage conflict, and respond well to constructive feedback. She argues that they lack these skills for three main reasons:

1. West points out that a substantially lower percentage of younger workers have experienced a romantic relationship. Therefore, they have not developed the social competencies that are cultivated through these types of complex relationships. Those competencies (such as how to express emotions and deal with conflict) often are critical for effective workplace interactions.

2. Online education has harmed their ability to collaborate effectively on in-person teams.

3. The heavy reliance on digital communication (texts and instant messages) have made them unprepared to handle high-stakes interactions such as key presentations and in-person meetings, as well as unplanned moments of engagement with their managers.

West has some helpful suggestions for improving the ability of younger workers to navigate the workforce. I particularly liked her thoughts about creating a "culture of asking." Here's an excerpt:

Create a culture of asking. Anxiety leads us to retreat, rather than asking how to approach situations. There will be many times when new employees are unsure of whether the criticism they faced was normal or toxic, if they should approach the team first or their boss over an interpersonal conflict, and what “casual Friday” really means. Leaders should showcase asking. Start with established employees doing it—asking for clarity over jargon in a meeting is a good place to start. People should feel comfortable asking, “Was this feedback negative from the boss? I can’t tell.” They will build social connections while learning the landscape.