Low Churn Locks Up Jobs

One reason for the sluggish economic recovery may be a slowdown in the pace at which workers move in and out of jobs.

Chicago Booth economist Steve Davis finds that labor market fluidity, or churn, fell more than 25 percent since 2000; most of that happened between 2007 and 2010, Bloomberg Business reports.

In the recession, firms stopped hiring while people stuck with their jobs. Unemployment stayed high because those who lost jobs found few vacant posts. Higher wages often come from a move to a better job or when companies try to retain their best workers. Hence low churn for long periods also helps explain suppressed wage growth.