Flexibility can enable a city, or country, to respond to changing social and economic pressures. It can be difficult to build this sort of resilience into a community, but doing so could enable Memphis to provide its growing numbers of millennials with a more flexible workstyle and a better range of opportunities.

What is a Flexible Labor Market?

A flexible job market is one in which employment is available in a number of different sectors, people can move between different jobs or types of employment over the course of their working lives, and businesses are able to react to changes in demand. Companies can hire more workers when they need to increase production or when their services are in greater demand, but they may be hiring people on short term or temporary contracts, outsourcing certain tasks, shifting employees between different roles or hiring people to work on flexible schedules. Companies are also freer to fire people when they no longer need their services in a flexible market, which can cause problems, particularly when there are no other companies around looking to hire.

Why Labor Market Flexibility Matters

Having a flexible labor market can be important not just for a city’s economic health, but for its social wellbeing too, by enabling growth when opportunities open up while also potentially helping to reduce long-term unemployment. JP Morgan Chase surveyed 3500 businesses across the country and found that 67% of small businesses and 73% of middle-sized companies felt optimistic about their future, expecting their sales to rise this year. With enough flexibility, these companies would find it easy to hire new workers to take advantage of these increasing sales.

Too much flexibility can create problems, however, by tipping the balance of power too far in favor of employers. A flexible market has been blamed by the IMF for having a negative impact on employment in some markets, but it has also been credited by the OECD with providing a boost to employment in other circumstances. According to the OECD’s report on labor flexibility, having a less rigid market may have helped some countries to cope better with economic shocks such as the 2008 recession, at least in terms of their levels of unemployment. Highly flexible markets, where people tend to move more often between employment and unemployment, are more likely to adjust without a significant increase in long term, structural unemployment. This may have helped the US employment rates to recover more easily than those of many countries in Europe. The right amount of labor market flexibility can allow an economy, and the businesses operating in it, to react to changes in demand and to hire people as and when they are needed. A city that has an adaptable employment base can react to new opportunities faster and be more resilient in the face of difficulties such as recession, the loss of a major employer or a downturn within a particular sector of the economy.

Flexibility is Not Just for Employers

Flexibility can enable employers and employees to adapt to individual needs as well as to economic changes. Workers today are increasingly likely to move between employers, switch careers, or take advantage of opportunities like flexible working hours, telecommuting or parental leave, although some may still prefer the security of guaranteed working hours or a permanent position. Working on a short contract can make people feel as if they are on borrowed time, making it difficult to commit to the work or to major lifestyle choices like buying a home. The effect can be particularly stressful in countries where the traditional model of stable, lifelong employment still holds cultural sway, as described by Kerry Rittich in the Saint Louis University Law Journal (extracts to be found on the employee labor posters from Labor Law Compliance Center). However, in the right market, with plenty of job opportunities and the right support to develop new skills, these flexible workers are the ones who can find the best work-life balance.

How Flexible is Memphis’ Labor Market?

Memphis’ economy has traditionally relied on its location and convenient transport links to attract manufacturing industries and distributors. FedEx still has its busiest hub in the country, but although various large corporations still maintain bases in Memphis, the city, like many others in the US has shifted away from manufacturing and towards services since the 1950s. Unlike those, like San Francisco, that have recently experienced a resurgence of manufacturing according to Citibank, Memphis remains a largely service based economy.

Memphis was, in effect, forced into developing a more diverse and flexible economy, if it was not to fall into terminal decline, so it developed into the financial, food processing and pharmaceutical sectors, as well as, more recently, building a new share of the film and entertainment industries. These are the types of industries that are being targeted for growth across Tennessee, according to LabFour, a local company that focuses on training workers with the types of skills that might enable them to succeed in a more flexible marketplace. However, while the Memphis economy is growing more diverse it may still lack the flexibility that can be so important for resilience.

If the OECD is right that flexibility influences an economy’s ability to recover from shocks such as recession, then looking at hoe Memphis has fared since 2008 might give us some insight into how well it can adapt to change. The Urban Institute reports that the economic recovery in Memphis has tended to be slow relative to the national recovery, with high unemployment and an absence of job opportunities, particularly for lower skilled workers. The city lost many jobs, particularly in construction, when the recession began.

Despite this, it was named by Businessweek as the 19th strongest job market in the US in 2010, when 18% of employers surveyed in Memphis said that they were hoping to hire more workers by the end of the year, with most of the growth coming from skilled sectors such as electronics and technology. However, by 2014, Memphis was being ranked by Forbes as one of the weakest cities in the US, with a 0% change in hiring expected during the first part of the year.

The average nationwide was 13%, and despite the problems caused by an unusually harsh winter, the US economy as a whole appears to be growing stronger. The country has now regained the private sector jobs it lost during the recession, and growth of 1.3% during the first quarter of the year is expected to rise during the next quarter to generate a 3% annual growth rate for 2014, according to reports in Memphis’ Daily News.

A More Flexible Memphis

Memphis is still clearly in need of more economic growth and a reduction in unemployment if it is to recover fully from the recession, but it could also be important to build more flexibility into the economy in order to make it easier to adjust to these types of ups and downs in the future. The young professionals and technology workers who are currently flocking to the city are just the type of high skilled employees who are most likely to enjoy and benefit from a flexible workplace, but there will still be sectors of the workforce who need more security. Creating and maintaining the right level of flexibility, with the support of skills building programs for the Memphis region, could help to make the city stronger and happier.


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