Labor mobility

Labor or worker mobility is the geographical and occupational movement of workers.[1] Worker mobility is best gauged by the lack of impediments to such mobility. Impediments to mobility are easily divided into two distinct classes with one being personal and the other being systemic. Personal impediments include physical location, and physical and mental ability. The systemic impediments include educational opportunities as well as various laws and political contrivances and even barriers and hurdles arising from historical happenstance.

Increasing and maintaining a high level of labor mobility allows a more efficient allocation of resources. Labor mobility has proven to be a forceful driver of innovations.[2]

International labor mobility

International labor mobility is the movement of workers between countries.[3] It is an example of an international factor movement. The movement of laborers is based on a difference in resources between countries.[3] According to economists, over time the migration of labor should have an equalizing effect on wages, with workers in the same industries garnering the same wage.

Impediments to worker mobility

In the United States:

The free market theory of perfect mobility of labor has been contradicted by economic history. For a number of reasons, labor is relatively immobile and does not readily move from employer to employer, from occupation to occupation, or from area to area, even where the differences in hourly wage rates are considerable.

In the first place, it is usually costly and inconvenient for workers to move from one locality to another, and they may lose working time in making any change of jobs. Therefore, an employer in a locality may enjoy what has been called a “spatial monopoly.” This would be especially the case in an isolated company town. The recent trend toward decentralization in such industries as hosiery, rubber, autos, and auto accessories tends, of course, to increase the spatial monopoly of such employers in the purchase of labor.

Secondly, especially before the internet, workers were frequently ignorant of their opportunities in other markets, and a job is such a complex of factors that it may be difficult for the worker to determine whether he would really be better off if he were working for another firm in another area. He has to consider noneconomic as well as economic factors and to consider the long-run as well as the immediate prospect.

Thirdly, there are many restrictions on shopping around in other labor markets. The worker sells his services, which require his presence on one buyer's premises during working hours when the process of hiring normally occurs. Therefore, a worker may be unable to look elsewhere for work without quitting his present job. Furthermore, he is usually unable to acquaint other buyers with the real quality of his wares (services), for the present buyer is the only one who knows the present quality of the worker's services, and the present buyer only knows what their quality is under his particular working conditions. Any other buyer may not be able to judge accurately the value of such services until he has begun to purchase them.

Fourthly, unemployment may be an obstacle to mobility. If there is any unemployment in another market, a worker will hesitate to move to that other market to seek work as an “outsider,” even though real wages there may be higher. As Joan Robinson has pointed out, it is probable “that workers are influenced almost entirely by the chance of finding a job, and that relative real wages exercise only a slight pull upon movements of labor.”

Fifthly, the worker knows that by moving from one employer to another he will lose any seniority rights or privileges as well as any good will or other elements of value connected with his present job that he cannot transfer to a new job. As a new employee in another firm he may be the first one to be laid off. Especially would a worker not change employers if he had acquired considerable skill and knowledge that is peculiar to and valuable to the firm for which he works, such knowledge of company policy and procedures, but which would be of little or no value to other employers. This might be true of supervisors, management, some white-collar employees, and some highly skilled workers.

Sixthly, recent practices and attitudes of employers reduce the mobility of labor. Where employers have the practice of hiring workers early in their working lives with the notion that they will remain for the rest of their working days, the mobility of labor is reduced. The practice in industry of having a hiring deadline under 40 or 50 years of age had the same effect of preventing older workers from changing their employers. Pension programs, group insurance, and other employer devices for attaching employees to one particular firm likewise contribute to reducing labor mobility and turnover. Mobility and labor turnover also tend to be reduced by any feeling on the part of employers that a worker who has changed employers frequently is likely to be an undesirable employee, by money debts that the employee owes to his employer, by employment contracts entered into by workers for an entire season, by the practice of not paying workers in full upon demand or by other means of control of the worker by the employer.[4]

Historically in the past, the free market failed to supply enough jobs that could support a bare minimum of subsistence making labor mobility no solution to inadequate wages.

Surveys in Britain in the 1870s found eleven to twelve-year old boys from the upper-class public schools were on average five inches taller than boys from industrial schools, and at all teen-ages three inches taller than the sons of artisans. When the British people was for the first time medically examined en masse for military service in 1917, it included 10 per cent of young men totally unfit for service, 41.5 per cent (in London 48 - 49 per cent) with 'marked disabilities', 22 per cent with 'partial disabilities' and only a little more than a third in satisfactory shape.[5]

In the United States a report of the Senate Subcommittee on Wartime Health on January 2, 1945, stated that 40 percent of America's young men were unfit for military service and that about one-third of all selective service rejections were caused directly or indirectly by nutritional deficiencies.[6]

  • Inadequate social safety nets. The average job hunt can take anywhere from 4 to 8 months in the US;[7][8] most experts agree that workers who wish to quit should financially prepare with at least 6 months worth of living expenses.[9][10] However, 69% of Americans have less than $1000 in savings,[11] which is less than 1 month worth of living expenses in the US.[12] The risk of running out of savings before a replacement job is found is a major disincentive to switching jobs.
  • "Right-to-work" laws which reduce worker bargaining power, resulting in lower wages and less worker benefits,[13] which compound the problem above.
  • Inadequate infrastructure and housing to accommodate fast-moving changes in labor demand[14]
  • Binding ties to a geographic location. e.g., a worker's inability to sell his home for a price that covers his existing mortgage[15]
  • A worker's lack of education or access to education[15]

In the Asia-Pacific:[16]

  • National and regional differences in the qualifications necessary for different jobs
  • A lack of standards for skills and vocations
  • Discrimination based on citizenship or national origin

In Caucasus region:

  • Few job opportunities (difficulties to find job positions even for professionals)
  • Mainly low-medium salaries (undervalued employees)
  • Occupational inequality
  • Shortage of career growth opportunities
  • Remittances [17]

For example, in Armenia one in eight individuals lived in extreme poverty in 2015.[17] The situation has slightly improved from then. However, even today the salaries are mainly low: currently (May, 2019) the average is AMD 177.000 ($480) per month according to "Trading economics".The role of remittances in poverty reduction is very high. People are moving to more developed countries to lead a better life, then helping their relatives/friends with money. However, lately because of political reasons, mainly the Velvet Revolution (31 March 2018 – 8 May 2018), labor migration towards Armenia has increased, having a positive impact on the economic situation of the country.

Similar tendencies have been witnessed in Georgia after their revolution. Azerbaijan is currently striving towards making similar changes in their political situation.

Other impediments:

  • Discrimination based on social class
  • Systems of economics that impede workers.

See also

References
  1. Long, Jason. "Labour Mobility" (PDF). Oxford Encyclopedia of Economic History. Retrieved 24 February 2011.
  2. A Legal Bridge Spanning 100 Years: From the Gold Mines of El Dorado to the 'Golden' Startups of Silicon Valley By Gregory Gromov, 2010.
  3. Krugman, Paul (2005). International Economics: Theory and Policy. Daryl Fox. ISBN 0-201-77037-7.
  4. Richard A. Lester, Economics of Labor, The Macmillan Company, copyright 1941, p. 106-108
  5. Eric J. Hobsbawm, The Pelican Economic History of Britain, Volume 3, From 1750 to the Present Day, Industry and Empire, 1969, p. 164-165
  6. Ernest L. Bogart and Donald L. Kemmerer, Economic History of the American People, Longmans, Green and Company, copyright 1947, p. 772
  7. "It takes 16 weeks to get a new job - Workopolis". Workopolis. 2014-04-21. Retrieved 2017-04-04.
  8. "Table A-12. Unemployed persons by duration of unemployment". bls.gov. Retrieved 2017-04-04.
  9. "How Much Do I Need to Save Before Quitting My Job? - GoGirl Finance". GoGirl Finance. 2015-03-30. Retrieved 2017-04-04.
  10. "How To Financially Prepare To Quit Your Job". Money Under 30. 2014-10-06. Retrieved 2017-04-04.
  11. "69% of Americans Have Less Than $1,000 in Savings | GOBankingRates". GOBankingRates. 2016-09-19. Retrieved 2017-04-04.
  12. "http://cost-of-living.careertrends.com/l/615/The-United-States". cost-of-living.careertrends.com. Retrieved 2017-04-04. External link in |title= (help)
  13. ""Right-to-Work" States Still Have Lower Wages". Economic Policy Institute. Retrieved 2017-04-03.
  14. "North Dakota's Oil Boom is a Blessing and a Curse". Governing Magazine. Archived from the original on 2016-03-23.
  15. Krugman, Paul (2009). Macroeconomics. Worth. ISBN 978-0-7167-7161-6.
  16. Jurado, Gonzalo. "Labor Mobility Issues in the Asia-Pacific Region" (PDF). Philippine APEC Study Center Network. Archived from the original (PDF) on 2012-04-25.
  17. "Economic and Social Mobility in Armenia, Azerbaijan and Georgia" (PDF).
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