Where the Jobs Went: Introduction

I’d like to talk to you about the labor market.  This is tricky, since talking about the labor market is a lot like talking about “the stock market” in aggregate.  “The stock market” is, of course, made up of thousands of individual stocks, each of which has a different value (read: market capitalization), fair value, and so forth.  In much the same way, “the labor market” is made up of millions of individual workers, each of which with a different value (salary they command), fair value (salary they are actually worth), etc.

Workers—and potential workers—likewise have fundamentals and technicals, though not quite in the same way stocks do.  Fundamentals are demonstrated experience and results, skill sets, and education—the sort of things you’d put on a résumé.  The comparison with technicals is more ineffable, but worker “technicals” basically boil down to the worker’s immediate emotional and performance state.

So how does thinking of the labor market as a stock market help?  Well, the key word in each is “market.”  If something is a market, that means it generally is going to operate under the rules of supply and demand.  Where there is a labor shortage, demand for labor outstrips supply; where there is a labor surplus, supply of labor outstrips demand.

There are a variety of trends that have given rise to the labor-market troubles, among them:

• Automation
• Globalization
• Demography
• Tax uncertainty, and
• Business risk aversion

In this series we’ll talk about how each of these feeds into the slow recovery of the labor market from the 2008-2009 recession.