What is a labor surplus area in business?

In order to
understand what a labor surplus area is, we have to look at the three words that make up this
term.

First, we have the word labor.  This word refers to people who are
willing and able to work in a given economic situation.  We call these people the pool of
labor.  Second, we have the word surplus.  A surplus exists when the supply of a given product
or resource is greater than the demand for it.  In other words, if there is more of something
than people want, there is a surplus of that thing.  Finally, there is the word area.  This
refers to a specific geographical place.  Putting these together, we can see that a labor
surplus area is a geographical place in which there are more workers than there is demand for
workers.  In such an area, there will be high unemployment because many people want to work even
though there are not enough jobs for all of them.

The US government specifies
which areas of the country are labor surplus areas.  It bases this designation on the
unemployment rate in that area when compared to the unemployment rate in the country as a
whole.