The discussion in the last two chapters concentrated on the development of mechanisms of external recruitment. Recruitment from outside the firm was, by definition, the only source of unskilled labor available to employers. Employers seeking to hire skilled labor could also hire workers on the external market, selecting them from job seekers at the factory or actively recruiting workers either through their own agents or by using employment agencies and public labor exchanges. But employers seeking to fill skilled positions possessed several additional alternatives not available to employers of unskilled labor. They could choose to train workers within the firm and fill skilled vacancies through internal promotions, or they could modify the production process to reduce or alter skill requirements. During the late-nineteenth and early-twentieth centuries, employers pursued all these options to varying degrees. This chapter explores the interactions between these different choices, arguing that employers' responses to the relative scarcity of skilled workers in external markets were an important factor encouraging the reorganization of labor allocation and training within firms at this time.

External recruitment of skilled labor was possible only in occupations characterized by a well-defined and reasonably stable cluster of skills, the possession of which could be easily documented or verified by potential employers. In these instances, a variety of different mechanisms emerged to organize external markets. Because of the strategic value of labor market information in influencing employment conditions, however, control over these mechanisms emerged as an important point of contention between workers and employers.