Labor Market Flexibility

Just how limber is the labor market?

Labor market flexibility looks at how flexible firms are in hiring, firing, setting hours, and setting working conditions.

Why would they be less limber, you ask? Because of laws and regulations. The fewer regulations are, the higher the labor market flexibility. Things like minimum wage, safety regulations, child labor laws, and labor unions can all make the labor market a bit less...bendy.

Labor market flexibility can be controversial. Those in favor of a less flexible labor market point out things like...maybe the kids should be in school instead of factories, and maybe those dudes building skyscrapers should be wearing helmets and getting paid a bit more. Those in favor of a more flexible labor market point out that the unemployment rate could be lower, and GDP would be higher. One thing is clear: usually those on either side of the labor market flexibility debate are not very flexible themselves (and we don’t mean in the bedroom...though probably not there, either, we’d imagine).