Stephen J. Davis and John Haltiwanger write,
we think the information revolution has played a significant role in the trend declines in worker reallocation. Information about criminal records, credit histories, unfavorable media coverage, and even ill-advised web postings has become more abundant and cheaper to access and process. The likely result is a shift to stricter selection on the hiring margin and less use of trial employment arrangements that contribute to hires and separations.
I dunno about that one. If we had really high rates of hiring and firing, you could tell a story about the information revolution accounting for that phenomenon, also.
They also cite other factors, including regulations, that might be slowing down the rate of hiring and firing.
Meanwhile, the more recent figures show improvement.
At my workplace, I have definitely seen a transition to higher quality at the initial, entry-level and a higher rate of success ‘matriculating’ after making it through the probationary phase, with less turnover over all. I don’t know if that’s due to higher standards for hiring, or the greater effectiveness of due diligence in pre-hiring research, or other labor-market causes. It’s probably some combination of all of the above.
One possibility is that talented, conscientious people are pursuing human-capital-investment strategies that crowd certain popular fields that are real ‘tournament markets’ with positions that get distributed only to those with the winners with the highest productivity, and the losers getting nothing and having to settle for lower-paying ‘underemployment’ work outside their area of comparative advantage.
That makes it a ‘buyer’s market’ for quality labor, but it also means that labor with a record that signals ‘low-quality’ gets permanently locked out of everything but the bottom dregs of the market without any prospects for advancement, which causes a kind of despair and outright abandonment of the pursuit of a normal working life unless absolutely necessary for survival.
It seems just as likely the abundance of information has made decision making so difficult that employers are relying on more indirect methods. Too much choice can be a greater problem than too little when buried by it. The big problem though is with the economy operating below potential, there just aren’t that many openings to match or much motivation to fill those that are as there isn’t much urgency.