Environments of Compensation and Benefits Administration

Demand for Labor

Employment patterns (the demand for labor) constantly change, and these changes cause the labor force to reshape accordingly. The reasons why a change in demand for labor occurs include the:

• rise or fall of product demand
• increased or decreased efficiency of work methods
• change in location of an organization
• birth or death of organizations (employers)
• entrance or exit of labor force members (employees)
• search for better jobs by members of the labor force

The most serious threat to workers is the possible disparity between skills needed by jobs and skills the workers possess. It seems unlikely that the skills of workers in declining industries will fit the skill requirements in new growth areas. It is equally unlikely that unskilled workers will find jobs in the increasingly automated manufacturing sector. The service sector, which grew rapidly with demand for relatively unskilled labor, is now faced with many of these jobs being replaced by AI.

Demand for Skills

Each of the occupational categories (unskilled, semiskilled, skilled, clerical, technical, professional, and managerial) include different employee levels or skills. Today, these differences in skill requirements within and between categories are increasing.

For example, there is current demand for manufacturing employees with higher-level skills who can work with automation equipment and those with lower-level skills in service organizations. There is less demand for the traditional blue-collar worker who works on an assembly line.

Foreign competition and changes in consumer tastes have also resulted in shifts in the relative importance of industries. One notable change has been the rise in demand for professional, technical, and social workers.

Shifting Labor Demand

Labor demand varies by area. Job demand may be increasing in some areas (such as the Sunbelt), while declining in others (such as the Snowbelt). This rising demand in growing regions is met largely by migration from declining areas.

When labor demand shifts, people train for the jobs in demand and move to where these jobs are. The more the demand shifts, the more workers will have to change jobs.

Workers often regard enforced job changes as disaster rather than opportunity. Also, displaced workers may not have the qualifications to fill vacancies among the jobs in demand.

The service sector is different. Here, there are relatively unskilled jobs that over time don’t require significant changes in the way they are performed.