job market

DEFINITION: The concept of the “job market,” also known as the “labor market,” is an abstraction corresponding to the totality of interactions between employees and employers in a given national or regional space.

In other words, the job market is a “virtual” market (not a physical location) in which employers seek employees possessing certain experience and abilities, and potential employees search for employers who can provide them with jobs meeting their financial and other requirements.

The idea of the job market helps to reveal the dynamic nature of the interaction and competition among various productive and labor forces.

Technically, these forces are symmetrical: that is, from the employers’ point of view, employees constitute the supply necessary to meet their demand for labor, while from the employees’ point of view, employers represent the supply necessary to meet their demand for a source of income.

However, in practice, the phrase “job market” tends to be used mainly from the employers’ point of view, in which employers provides the demand for labor and employees provide the supply of labor.

ETYMOLOGY: The origin of the phrase “job market” Is uncertain, but most likely the term was introduced in the early twentieth century.

The economic sense of the word “job,” meaning a defined “task” or “piece of work,” derives from the late seventeenth century word “job,” meaning “lump.” This explains the curious expression “job of work.”

The English noun “market” derives, via Middle English and Old North French, from the Latin noun mercātus, mercātūs, meaning “business,” “traffic,” or “trade,” as well as the place where the business or trade takes place, i.e., a “marketplace.”

Mercātus, in turn, is connected to the deponent verb mercor, mercari, meaning “to traffic in” or “to trade,” as well as the noun merx, mercis, meaning “goods” or “merchandise.”

USAGE: The job market’s fluctuations are caused by changes in the balance between labor demand and the available workforce supply.

Moreover, specific industry requirements—such as the need for particular educational backgrounds or skill sets—and essential job functions play a crucial role in shaping the job market. As a vital component of any economy, the job market is thus intricately connected to the demand for goods and services.

The job market shares a direct correlation with the unemployment rate. This rate represents the percentage of individuals in the labor force who are currently unemployed but actively searching for employment.

When the unemployment rate is higher, it indicates an increased supply within the overall labor market. A larger labor supply (pool of applicants) gives employers the advantage of being more selective or, potentially, of offering lower wages.

Conversely, a decline in the unemployment rate compels employers to compete more vigorously for available workers, often leading to an increase in wages.

Wages influenced by the job market provide significant information for economic analysts and policymakers, guiding decisions based on the state of the overall economy.

In times of economic hardship, unemployment tends to increase as employers lay off employees to save money, thus reducing the number of overall job opportunities and making it more difficult for job seekers to find work.

High unemployment rates can prolong economic stagnation, which is defined as little or no economic growth. It can also be a contributing causal factor leading to social unrest and political turmoil.