Labor Market Segmentation

The Significance of Labor Markets

Labor markets are social and economic constructs that organize the process by which labor—or, in the Marxian context, one's labor power—is purchased and sold. This socioeconomic exchange exists between the laborer (who may be defined as an individual who must sell his or her labor or labor power to capitalists as a means of earning wages) and the [Page 823]employer (who owns the means of production specific to a given labor market or occupational niche). According to the writings of early labor market scholars such as Richard Edwards, Michael Reich, and David Gordon, a labor market functions as the socio-economic context through which various institutions merge to govern and determine the interactions between the laborer and the employer.

Within the published scholarship on the labor market process, two leading schools of thought emerge. A more conservative and orthodox economic argument posits that the labor market is composed of various key actors who enter into a competitive labor market with varying levels of human and skill capital. The market is seen as an imperfect yet efficient system that best organizes the labor process, the production and cost of goods and services, the wages of laborers, and the profits of employers or corporations. At the core of this system is the Western economic principle of supply and demand, which is perceived as being pivotal to the organizing of every aspect of the labor market process.

A more radical perspective about the labor market process also exists within the published scholarship. This perspective is grounded in the Marxist tradition and, therefore, begins with the fundamental assumption that the labor market process seeks only to generate or accumulate profits for capitalists. The ability of capitalists to accumulate profits is linked to the structure of the labor market, which creates a system of wage laborers whose well-being and survival are dependent on their ability to sell their labor or labor power to those who own the means of production. Because of this inequitable arrangement, the labor market's most important, if not its most central, function is to maintain a hierarchical relationship between laborers and employers, on the one hand, and to legitimize a stratified distribution of resources, power, and opportunities among all workers, on the other.

Although the exchange of labor power for wages—or various occupational rewards—is a defining and underlying process associated with labor markets, this interchange often occurs in a context that is unde-tectable or constantly being redefined. In other words, a labor market is also a series of interlocking and invisible boundaries. A boundary can be defined as a physical construct that marks a territory and, subsequently, restricts or regulates the movement both within and outside its parameters. As it relates back to the concept of labor markets, the idea of boundary can also function as a metaphor for how labor markets exist. Regardless of the work performed, most laborers find themselves bound to specific work sites, workspaces, or geographical regions, thereby demarcating a physical characteristic or boundary of labor markets.

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