Academic journal article ABA Banking Journal

Un-Peaceful Coexistence: Labor Issues in a Global Market

Academic journal article ABA Banking Journal

Un-Peaceful Coexistence: Labor Issues in a Global Market

Article excerpt

EMPLOYMENT FRIDAYS HAVE become the marquee day of the month for financial market analysts, much as the money supply release was for a prior generation. However, the extensive reporting of employment data naturally leads to contradictory results. In recent months we have seen evidence of both labor shortages and excess labor. The explanation for this apparent paradox is recognition of the globalization of the labor market.

It is an understatement to say that U.S. firms have created 3.7 million new jobs in 25 consecutive months of job gains. The monthly employment report records only jobs created in the U.S., overlooking all the jobs U.S. firms created abroad. The number of jobs reported fails to address the new reality that the labor market has become increasingly globalized.

Global competition has meant the redistribution of global production, which carries with it implications for employment gains in every, sector. As a result, any increase in U.S. domestic demand increasingly is being satisfied by supply from abroad. Thus, the pace of employment gains has lagged the increase in output.

A growing shortage of labor is evident in four observations. First, the pool of available workers has dipped quite noticeably over the past two years. The number who seek jobs or are unemployed as a percent of those available has dipped from 6% three years ago to 5.5% today.

Second, the number of workers employed part-time for economic reasons has declined by 200,000 workers over the past two years. Third, the portion of people voluntarily leaving their jobs has risen from 9% to 12% during the same period. …

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