Occupational Labor Mobility

408(k) Plan

What is professional mobility?

Professional mobility refers to the ability of workers to change careers to find gainful employment or to meet labor needs.

When conditions allow for a high degree of job mobility, this can help maintain high levels of employment and productivity. Governments can propose retraining to help workers acquire the necessary skills and speed up this process.

Geographic labor mobility, on the other hand, refers to the level of flexibility and freedom that workers need to move around in order to find gainful employment in their field.

Key points to remember

  • Job mobility refers to the ease with which a worker can leave one job for another in a different field.
  • When labor mobility is high, economists predict a high degree of productivity and growth.
  • Professional mobility may be limited by regulations. Licensing, training or education requirements prevent the free flow of labor from one industry to another.

Understanding professional mobility

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 layoffs if their job mobility is limited. This may be true for workers with little or specialized skills that are only useful in finite circumstances. For example, a worker trained to operate a machine that exists only in one industry may face difficulties finding employment outside that industry.

If an experienced worker who has earned a substantial salary tries to change careers, he may face a significant financial adjustment. Indeed, the alternative jobs they could perform may not use their most developed skills. For example, a doctor may have to find work as a taxi driver if no medical station is available. Such circumstances may cause workers and professionals to receive significantly lower wages which do not reflect the years of professional experience they may have.

The ease with which employees can move from employment in a particular industry to employment in another industry determines the speed with which an economy can grow. For example, if there were no professional mobility, we would still be hunter-gatherers, because no one could have become a farmer or a specialist.

Relaxing restrictions on job mobility can have several effects:

  • Increase labor supply in certain industries. Weaker restrictions make it easier for workers to access another industry, which may mean that demand for labor is more easily met.
  • Lower wage rates. If it is easier for workers to enter a particular industry, the labor supply will increase for a given demand, which will lower the wage rate until equilibrium is reached. (For more information, see: Explore the minimum wage.)
  • Enabling infant industries to grow. If an economy turns to new industries, employees must be available to run the companies in that industry. A shortage of employees means that overall productivity can be negatively affected because there are not enough employees to provide the service or work the machines used to make the product. (For related reading, see: Employability, labor and economy.)

Ways in which job mobility affects productivity

The decrease in the number of jobs in the manufacturing sector in favor of jobs focused on services such as software development has reduced the professional mobility of certain workers. The US auto industry, for example, has faced continuous staff reductions, with production becoming more efficient and requiring fewer workers or being relocated overseas. The job cuts at the national level have prevented many smaller workers from finding jobs that pay compared to their previous wage level. Workers in other types of manufacturing careers have also dealt with limited job mobility issues as their industries shrink.

Public and private employment training programs have been created to give workers the opportunity to increase their professional mobility by teaching them new skills. The goal of these programs is to broaden the potential career paths in which these people could succeed. Companies can benefit from the existence of these programs because they increase the pool of potential hires for current job openings.

Professional mobility can particularly benefit emerging companies, geared towards innovation. These companies may experience increased productivity when there is a growing population of workers with the skills they need. For example, a start-up might see their development plans slow down until they hire enough coders and software programmers to work on their main product.

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