The pandemic has contributed to many changes in the world of dance, as the community has openly criticized long-held cultural practices and norms. However, no one has questioned the structure (or rather the absence of structure) of the labor market. As a now-retired ballet dancer of nearly a decade and a PhD student in economics at Harvard, I know that incorporating the basic lessons of economics could be a game-changer for dancers and directors.

The ballet job market is what an economist would call a “matching market” – you can’t just choose where to go, but you must also be chosen. What makes the ballet market special is that, unlike most professional sports markets, directors have very different preferences for dancers and they generally don’t (and can’t) compete for hires with salaries. On the contrary, dancers are first and foremost determined to find their best artistic fits and are often willing to work for less than they are worth.

This phenomenon would not be as problematic if the dancers and directors were nevertheless paired effectively. Unfortunately, there are two major failures that plague the current system.

First, although many, but not all, major ballet companies in the United States operate under the aegis of the dancers’ union AGMA, there are virtually no regulations when it comes to hiring. Deadlines for arranging auditions, renewing or canceling contracts are company-specific and are not standardized across the industry. This is problematic because when streams of dancers are released to the audition market at different times, companies and dancers can end up with undesirable results.

Here is an example: A dancer knows that she will be laid off at the start of the season and immediately begins a job search. Other companies, those who hold auditions later or whose dancers have several months to return their contracts, do not know how many places they will have available and so they tell him that they may or may not make an offer later. She may then feel pressured to accept an offer expiring in a few weeks from another less preferred company.

Still, she’s better off than the dancer who lets go after the auditions are already over. I’ve also known directors who rescinded verbal offers to dancers very late in the season, setting off a chain reaction that not only makes the situation worse for the dancer, but also for other companies who would have preferred to hire her but couldn’t do it. .

This coordination failure is compounded by the fact that many dancers wishing to leave their current job usually do not announce their departure until they have obtained other positions, and for good reason. But executives at saturated companies can’t make additional offers until they know who’s leaving for good. This is what I call the “hold-up”. There are many favorable “trades” available in any company, but either someone has to give up their job first without a guarantee from another, or a director has to seek additional funds in order to start the negotiation process.

This is where market design comes in. This field, which seeks to find economic engineering solutions to practical problems, has studied similar failures in markets such as the medical residency matching program, public school choice and vaccine allocation.

One of the central tenets of good market design is to create market “thickness” or to bring together as many people as possible at once in order to achieve the best results. By centralizing contract renewal dates and industry-wide audition deadlines, companies would not only avoid coordination failures, but it would also eliminate the unnecessary anxiety that dancers face in not knowing not when they might get an offer and when they should take one.

This practice has become common in other highly competitive settings in the United States, such as legal internships and doctoral programs, which do not require students to accept offers by a standardized date. This is also the reason why most markets that bring together various traders, including the New York Stock Exchange, open and close at the same time every day.

In other contexts, centralized clearinghouses have been extremely effective in eliminating similar market failures. Specifically, what I have in mind is a variation I devised of the well-known algorithm for best trading cycles. It would work something like this: once all departures from the company were announced and auditions took place, dancers and directors would simply submit their preferences to a centralized algorithm that would quickly determine final assignments based on these preferences. Although it may seem radical, variants of major business cycles have been used in schoolwork and most notably in the Kidney Trading System in the United States, an innovation for which economist Alvin Roth received the Nobel Prize in 2012.

The effectiveness of the missions resulting from this process is guaranteed. The process also encourages all dancers to honestly submit their preferences to companies, eliminating another major element of anxiety. By streamlining hiring in this way, both parties get the most out of their preferred counterparts, while trades between companies at full capacity can happen quickly and without the need for additional expense.

Of course, centralized clearinghouses are more effective when the majority of the market agrees to participate. Although executives might worry that this would force them to give up some control, they would only make offers to dancers that they would in the best possible scenario, and the gains they would make by thickening and coordinating the market would exceed away the perceived losses.

As new leaders begin to take the reins of businesses around the world, time will tell if they will be brave enough to challenge the status quo and reshape the market in ways that really work for dancers and directors.