Labour Transition in 21st Century American Economy

Abstract

The American labour market experienced fundamental changes in the since the turn of the millennium as workers are becoming more precarious, experiencing higher dismissal rates and lower job-retention rates. This trend has been captured by the literature since the 1970s and has extended into the 2000s (Stewart 2002, 1999). On the other hand, with the recent raise of the gig economy, This study first plots the probability of any worker either not in the labour force, employed, or unemployed in the previous survey year transitioning into one of either three possible categories in the next survey year. This visualization shows the increasing polarity between employed and unemployed/exited workers2. I find that the probability of previously unemployed/ exited workers securing employment in the current survey year is decreasing, while the probability of employed workers being employed in the next survey year is increasing. Employed workers’ chances of dropping out of the labour force is also decreasing. Secondly, I investigate the decreasing trend by comparing the marginal effects of various ethnic and gender groups in American society provided by the March Current Population Survey (March CPS) with a probit model. I find that high school dropouts face the most difficult circumstance in a traditional labour market. Meanwhile, other demographic groups such as black, female, and single workers saw their transition probability almost unchanged from 2002 to 2016. This study shines light on the experience of different demographic groups in America, and hopefully informs readers about the current economic and political climate.