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Pursuing Equal Opportunity: Mobility is Key

Equal opportunity is not always a straightforward policy discussion and can be challenging to understand. Previously, I have covered what equal opportunity does and does not look like and why it is a significant fixture in any society. One additional aspect of equal opportunity that I would like to cover is the effect mobility can have on economic prosperity.

One important way to increase an individual’s opportunities is through upward mobility in the workforce. When institutions promote agency in the labor market, they allow people to move freely to their preferred occupation. By finding a job or starting a business, citizens can open the door to a wide range of opportunities.

Occupational mobility allows individuals to attain higher quality outcomes particular to their desires and creates long-term economic growth for future generations. Contrarily, workforce productivity suffers when governmental regulations and high barriers to entry stifle agency, and thus, mobility. This reduced productivity is especially detrimental because even minor impacts on the growth rate of labor productivity can have sizably negative impacts on the wider economy, including GDP per capita. Though they can appear somewhat abstract, growth rates are important, and hampering them with harmful policies hurts individuals of all income levels. To increase quality of life for all people, laws restricting freedom in the labor market should be approached skeptically and frequently questioned and tested.

Furthermore, stifled mobility in the labor market can have grave consequences. According to t Mobility deterring labor laws can hurt economic growth because they increase labor misallocation. Employers are more hesitant to hire people if there is a higher regulatory burden, cost of firing and hiring, or administrative burden attached to their employment. Similarly, employees are less likely to enter a field when faced with higher barriers to entry, such as licensing and labor restrictions, and individuals are less likely to start new businesses when there are higher startup costs. All of these factors prohibit people from entering productively into economic life. It is then no surprise that GDP growth rates are negatively affected.

Policies that stagnate economic mobility continually negatively affect those active in economic life. According to the National Federation of Independent Business, small business owners listed taxes and regulatory costs as their second and third biggest concerns. This trend is consistent with the Institute for Justice’s License to Work report that “measures burdens for 102 lower-income occupations across all 50 states and the District of Columbia.” It finds that “licensing laws can pose substantial difficulties for job seekers and would-be entrepreneurs” and that average labor laws require “nearly a year of education and experience, one exam, and over $260 in fees.” These barriers to workforce mobility can lead to people feeling stuck in their current occupation and can deter employers from hiring employees that are former offenders, a population that stands to benefit greatly from the opportunities presented by employment.

In sum, effective governance requires the empowerment of those in in the labor market in order to achieve upward mobility. It allows individuals to attain higher quality outcomes particular to their desires and sustains long-run economic prosperity. Finally, a more efficient labor force, stemming from reduced misallocation in the labor market, can increase GDP growth and positively influence living standards for citizens on all rungs of the income ladder.