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 JACKSON HOLE Wyo. (Reuters) - The U.S.
labor market has become steadily less dynamic since 1990, with
workers seemingly locked into particular jobs and a more sluggish
process of job creation and destruction in the private sector,
according to research to be presented to global central bankers on
Friday.
The research by two top labor economists portrayed the United States
as potentially losing one of its notable economic strengths - the
robust flow of workers between jobs, and the churn of employment as
companies succeed and fail.
They said the apparent trend had been caused by several factors:
dominant large retailers driving less labor-efficient firms out of
business; an aging workforce less likely to change jobs; and the
accumulation of regulations and more intense training requirements
that have made it harder to join some professions as well as fire
workers.
Those and other forces have driven down measures of labor market
"fluidity" by as much as 25 percent since 1990, a trend that could
translate into lower employment levels, productivity and wages,
economists Steven Davis of the University of Chicago and John
Haltiwanger of the University of Maryland wrote in a research paper
prepared for the annual central banking conference in Jackson Hole,
Wyoming.
This year's conference, sponsored by the Kansas City Federal Reserve
Bank, focuses on labor market issues, highlighting how employment
and wages have become central to the Fed's debate on the health of
the U.S. economy and when to raise interest rates.
Fed Chair Janet Yellen has argued some top-line economic indicators
including the unemployment rate, which has been falling faster than
expected, don't capture the full story of an economy where stagnant
wages and the concentration of new jobs at the lower end of the pay
scale weigh on the prospects of the middle class.
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The paper by Davis and Haltiwanger, which will be the first
presented at the two-day conference, suggests broad reasons for
concern.
The churn of workers and jobs between positions and among companies
is considered important to improving productivity, wages and
employment in general - reallocating labor to more efficient uses,
and opening up positions for younger workers or the unemployed when
existing jobholders move on.
Looking at data across industries, states and demographic
categories, the research examined the rates at which jobs were added
and eliminated between 1990 and 2013. It documented a steady
"secular decline" of about 25 percent.
That change could have particularly serious implications for
less-skilled Americans, lengthening periods of unemployment because
new jobs don't open as fast, and making it harder to progress in a
company or change employers.
"The loss of labor market fluidity suggests the U.S. economy became
less dynamic and responsive in recent decades," the two economists
conclude. "There are good reasons for concern ... Sustained high
employment is unlikely to return without restoring labor market
fluidity."
(Reporting by Howard Schneider; Editing by Paul Simao)
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