Labor Immobility and the Labor Participation Rate

Labor Immobility-

You may be wondering what exactly is labor immobility?

Defining Labor Immobility: The mobility of labor refers to the ability of workers to change from one job to another both geographically and occupationally.

What is the labor force participation rate?

The U.S. Bureau of Labor Statistics defines the Labor force participation rate as: “The labor force as a percent of the civilian non-institutional population.” In other words the percentage of the total population that is working. The Organization for Economic Co-operation and Development (OECD) defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of the country’s working-age population (ages 15 to 64 in most OECD countries) that is employed.

Labor immobilityIn US labor market, around 29 million people are engaged in producing a wide range of goods and services. However, about 1.5 million among them are unemployed, indicating that labor market is not currently operating at peak efficiency.

Some of the unemployed people may be simply changing jobs and thus they are out of work for just a short period of time. After all, an economy is dynamic and specialized. So we ought to expect some unemployment since jobs are continuously being created, but at the same time some are also no longer needed. The typical example is that of a “buggy whip” maker. There is no need for many buggy whip makers today.

What is frictional unemployment?

Unemployment while people go on searching for jobs and fill them is known as frictional unemployment.

This is the main reason behind labor immobility and structural unemployment, which is caused due to disparity in certain skills and location between job seekers and job providers.

Immobility due to geographical location refers to obstacles that prevents labor from relocating from one place to another in search of job. What may be the general factors for this immobility? Family, social ties, financial costs that are involved in moving, imperfect market knowledge, and regional variations in house prices and cost of living.

What is occupational mobility? Occupational mobility refers to the hindrance that restricts labor from changing their type of occupation and to find a new job. There are several causes, which may be education, training, skills and work experience.

Measures Necessary to Increase Labor Mobility

  1. Affordable housing in area of low unemployment. Currently an example is North Dakota which has very low unemployment due to the Bakken oil field but does not have adequate housing and so RV camps are springing up and builders are rushing in to build houses. But in the mean time housing costs are extremely high. See: North Dakota Jobs Booming.
  2. Create adequate access to the area of low unemployment. Remote areas may have a surplus of jobs but it may be difficult or time consumining to get there. In the mean time, jobs remain vacant due to the “friction” and lost time trying to get workers to the remote location.
  3. Promote Communication- Workers looking for jobs must be aware of their availability. This may require job postings on the internet and other long distance communication media. Also Networking to Find a Better Job
  4. Educational retraining- if an occupation is becoming obsolete the workers need training in other careers in order to have a smooth transition to a new poition. Often employers that are desperate to recruit new employees will offer free training.  See: Get a Free CNA Education

Finally, there are government disincentives to relocation. The longer the government offers unemployment compensation the less incentive an unemployed person has to seek employment. The unemployed person therefore would have no incentive to pick up and move cross country to fill a remote job vacancy.

See Also:

How Continuing Education is Important for Your Career?

Benefits a Mechanical Engineering Degree

Networking to Find a Better Job

Get a Free CNA Education   North Dakota Jobs Booming

Spotting New Trends: Knowing When to Go Against the Grain

Why Facebook Works, and Democracy Does Not

Trends: Mexico and Canada  How to Save Your Money And Your Life

What is the Fiscal Cliff and How is it Affecting the Economy

Author’s Bio: Tina Walker is an expert consultant and is closely associated with reputed contact center services and solutions. She tells how these Educational retraining- if an occupation is becoming obsolete the workers need training in other careers in order to have a smooth transition to a new poition are able to give an advantage of quality lead generation and telemarketing to gain potential returns.

Photo credits: by kyz  |  Let the sparks fly

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