Occupational labor mobility refers to the ability of workers to switch career fields in order to find gainful employment or meet the needs of industry. When conditions allow for high degrees of occupational labor mobility, it can help maintain strong employment and productivity levels. Governments may provide occupational retraining to help workers acquire the necessary skills and expedite this process.
Geographical labor mobility, on the other hand, refers to the level of flexibility and freedom laborers have to physically move from one location to another in order to find gainful employment in their field.
When labor mobility is high, economists predict a high degree of productivity and growth.
Low-skilled labor and workers with skills that are more general or can be more readily transferred will tend to experience greater occupational labor mobility.
Occupational mobility can be restricted through regulations. Licensing, training, or education requirements prevent the free flow of labor from one industry to another.
Labor mobility is the ease with which workers can leave one job for another. Workers may not be able to pursue new career opportunities in the event of layoffs or termination if their occupational labor mobility is limited. This can be true for workers who possess few or specialized skills that are only of use under limited circumstances. For example, a worker trained to operate a piece of machinery that only exists in one industry can face challenges seeking employment outside of that industry.
If an experienced worker who has earned a substantial salary attempts to switch career paths they may face a significant financial adjustment. This is because alternate jobs they could perform might not make use of their most developed skills, leading to a form of underemployment. For example, an archaeologist may have to find work as a landscaper if no more suitable positions are available. Such circumstances can lead to workers and professionals taking substantially lower pay than they are accustomed to or have been led to expect in the course of their education and training.
The ease with which employees can move from a job in one particular occupation to a job in a different occupation determines how quickly an economy can develop. This is because technological progress, innovation, and the creation of new industries and occupations are major components of economic development and also lead to the phenomenon of creative destruction, where the new industries and occupations displace older ones.
Labor mobility from obsolete industries and occupations into new ones is a necessary part of this process. Low occupation labor mobility can slow the adjustment to new conditions as the economy develops, and may even contribute to the darker side of progress known as destructive creation.
An easing of occupational mobility restrictions can do several things:
Increase the supply of labor in particular industries. Lower restrictions cause laborers to have an easier time entering a different industry, which can mean the demand for labor is more readily met.
Lower wage rates. If it is easier for laborers to enter a particular industry, the supply of labor will increase for a given demand, which lowers the wage rate until equilibrium is reached.
Allow nascent industries to grow. If an economy is shifting toward new industries, employees must be available to run that industry’s businesses. A shortage of employees means overall productivity can be negatively impacted because there aren’t enough employees to provide the service or work the machines used to make the product.
The decrease in the number of manufacturing sector jobs in favor of services-focused employment such as software development has diminished the occupational labor mobility for some workers.
The U.S. automobile industry, for example, faced ongoing staff cuts as production became more efficient and required fewer workers or was relocated overseas. Domestic job eliminations left many downsized workers unable to find employment that offered compensation that compared with their previous salary levels. Workers in other types of manufacturing-based careers have also dealt with issues of limited occupational labor mobility as their industries shrank.
Public and private employment training programs have been established to give workers the opportunity to increase their occupational labor mobility by teaching them new skills. The focus of such programs is to expand the potential career paths these individuals could succeed in. Companies can benefit from the existence of such programs because they increase the pool of potential hires for current job openings.
Occupational labor mobility can especially benefit emerging, innovation-oriented businesses. Such companies can see their productivity increase when there is a growing population of workers who possess skills that are in demand. For instance, a startup company could see its development plans stall until it hires enough software coders and programmers to work on its core product.