Let's leave the labor market alone

The US labor markets are enormously flexible and dynamic. So why regulate them?

Rick Bowmer/AP/File
In this April 2012, file photo, job seeker Alan Shull attends a job fair in Portland, Ore. Salerno argues that the US labor market doesn;t need any government intervention.

If we want want laborers and employers to come together to  discover and create value-productive jobs, then the prescription is simple:  leave labor markets alone and let them churn.

Bloomberg.com columnist Caroline Baum reports some  interesting statistics drawn from the the Bureau of Labor Statistics’ job openings and labor turnovers survey, or JOLTS.  These figures illuminate the enormous flexibility and dynamism of U.S. labor markets.  Last year, 48.2 million Americans lost or left a job, while 50 million Americans found a new one.  The new hires represented 38.1 percent of total employment, which was down from 47.2 percent in 2005 at the peak of the Fed-fueled  bubble economy.   Now this figure does involve some double counting because some workers may have experienced multiple job separations and findings during the year.  Still in all this is a notable performance with the economy still languishing in the doldrums in the aftermath of a major financial crisis, the effects of which are being prolonged by government and central bank interventionism.   One can only imagine how much more creative job churning and productivity and employment growth we would have, if labor markets were completely freed from stifling government regulations and mandates as well as the massive uncertainty and distortions imposed by Fed monetary policy.

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