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People differ in their view of what role government should play in the contemporary workplace. While some advocate for joint action between organizations and government to protect employee interests, others believe market-driven change offers the best opportunities and should proceed without interference. All countries must address these issues, though they often take different approaches.

Governments typically focus on fair pay practices, safety nets for unemployed or disabled workers, and protections like minimum wage and overtime rules. In addition to being a party to all employment relationships, government units are also employers and purchasers. Consequently, government decisions also affect conditions in the labor market. The government not only employs a large share of the U.S. workforce but also shapes labor demand and supply through spending, taxation, legislation, and monetary policy.

Laws designed to protect certain groups, such as schooling mandates and occupational licensing, can also limit their participation in the labor market. Immigration policy and how rigorously it is enforced is an increasingly important factor in labor supply.