Labor Hoarding

Labor Hoarding

The practice in which a company does not lay off employees when it otherwise would (as during a recession). Labor hoarding is high risk as it reduces a company's profitability during a difficult time, but it guarantees employee talent will be available to that company (and, just as importantly, not to its competitors) when growth resumes.
References in periodicals archive ?
* Giulia Giupponi and Camille Landais, London School of Economics, "Subsidizing Labor Hoarding in Recessions: Employment & Welfare Effects of Short-Time Work"
(2014), "The genealogy of the labor hoarding concept", The Center for the History of Political Economy Working Paper, MI State University, USA.
A prominent example of the potential role of labor market frictions is traditional labor hoarding theory.
What is less appreciated is the phenomenon of labor's rising share of income well in advance of the peak in economic activity and for reasons unrelated to labor hoarding.
In a fascinating retrospective, Biddle (2014) traces intellectual thought on the cyclical behavior of productivity to its early foundations and explains how labor hoarding emerged as the leading explanation.
Eight essays by international contributors explore topics such as the shaping of public economic discourse in postwar America, American institutionalism after 1945, the genealogy of the labor hoarding concept, and what to tell a graduate course in macroeconomics about Keynes.
We call this "labor hoarding." This, I submit, was happening in 2007-2008.
"You only pay them when you need them." This marks a shift from what economists used to call "labor hoarding": Companies typically retained most of their staff throughout recessions, hoping to ride out the downturn.
They attribute this to what's called "labor hoarding."
Labor hoarding refers to the tendency to use workers less intensively in recessions than in booms, It reflects the desire by firms to smooth employment and paid hours per worker, despite fluctuations in output, to avoid labor adjustment costs.
For example, what appears to be a decrease in productivity during a recession may instead be attributed to a decrease in the utilization rate of certain inputs ( for example, labor hoarding or excess capacity).
This prediction also emerges in models that allow for labor hoarding and variable capital utilization rates (Burnside, Eichenbaum, and Rebelo, 1993 and Burnside and Eichenbaum, 1996).