What if There Just Aren’t Enough Jobs to Go Around?
22nd July 2016
Despite steady job growth over the past six years, the U.S. labor market—by some accounts—has become a stagnant place where fewer people switch jobs and workers linger in the same roles for longer.
Recent research exploring the causes of this declining labor-market dynamism has focused on supply restrictions, such as state-based occupational licensing regimes, which make it harder for licensed workers to relocate across state borders, or prohibitively high rents in job-rich cities, which impede mobility. A drop in labor-market fluidity reduces overall employment rates, affecting younger and less-educated workers most of all, research by economists Steven Davis and John Haltiwanger shows. White House economist Jason Furman has also cited occupational licensing as a barrier to job fluidity.
A new paper says the problem is not supply. It’s that firms just don’t have enough demand for labor.