A labor supply curve shows the number of people who will work in an occupation at different wages
A labor supply curve shows the number of people who will work in an occupation at different wages. A labor demand curve shows the number of workers employers are willing to hire at different wages There is a noticeable importance when there are changes in labor demands. It can be seen by the way they affect wage rates and employment in certain occupations. “Increases in labor demand for certain occupational groups result in increases in their employment; decreases in the labor demand result in decreases in their employment.” At the close of the twentieth century, the U.S. economy was progressing from being established on production to one established on information. We can see this displayed by the increase of some occupations and the decrease of others.
Labor supply and demand is an important indicator for the economy. There are many individual factors that affect the demand and supply of the economy. First, it is the wage rate of the labor. This is probably the most compelling impact affecting labor supply and demand. Most people don’t work because they want to however, they work because they need the wages and that is the deciding factor whether they will accept a job or look elsewhere. Higher wage rate increases the supply of labor and decreases the demand for labor.
The second factor is the barriers to entry. “Demand from hiring companies may go up because the employees they are seeking are specialized in some particular skill or have many requirements of new hires. But at the same time the labor supply decreases significantly because of these barriers.” For an example, if a firm will only consider a college degree holder for an opening, the availability of qualified candidates for the position is somewhat reduced compared to a firm who will consider all regardless of college background. When I interviewed for my current occupation within a business corporation, I had to take a pre-employment test before an interview would be scheduled. This requirement very easily could have reduced the competition for my job. When corporations participate in these types of testing their labor supply is reduced.
Third barrier, advancement of technology. It can cause for the demand of those labors to increase who are good in the latest technological development. Also, advance technology can shift operation to be more capital intensive rather labor intensive. Thus, demand of labor will come down. It will specially happen in case of the semi-skilled or non-skilled labor. Fourth barrier, economic scenario in the country. The times of recession brings less disposable income
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to a large group of labors involved in various companies. This leads to less production in
companies and brings reduced supply of labor. Now in this scenario, the supply of labor will easily increase with an increase in wages. Hence, there will be more workers willing to work in a company, where the pay is exceptionally good. On the contrary, in a booming economy, the demand for labor increases. Also, an increase in population will lead to an increase in the supply of labor. All four factors are important but, it’s not a one size fits all. It’s different for each firm.
So what occupations can we see the fastest growth in? (See chart 1) As the number of elderly in the United States increases, demand for health care goods and services can thus be expected to expand. For the workforce and workplace, the implication will be that the pharmaceutical and medical technology industries will demand more workers that are highly skilled in their areas. Already, the aging and the more obese population is driving strong demand for high-tech implantable devices to treat heart and orthopedic issues, and other conditions. Demand for health-related services such as long-term care will also change the mix of prospective workers.
If we see an increase in one area, then we must see a decrease in another. This brings about the most rapidly declining occupations. To name just a few, these jobs include locomotive firers, blue collar workers and computer programming. Hardly a surprise in the email era, post office workers makes the list. (See chart 2) Mail carriers are not prospering from the online shopping with deliveries being provided by private services like FedEx and UPS. As automation advances we will see a decline in manufacturing jobs. Robots and computers are already growing rapidly with the onset of self-driving cars, bank teller being replaced by the ATM, ordering kiosks at restaurants and robots that handle packaging of goods from places like Amazon. “The invention of a cheap robot could conceivably reduce the marginal product of labor, shifting the labor-demand curve to the left. Economists call this labor-saving technological change.” Another factor that has been playing a part for quite some time is globalization. Demand for electronics, clothing, and steel are also dropping due to cheap products manufactured overseas and U.S. companies outsourcing.
Between the years 2014 and 2024, a little over nine million new jobs are calculated to be added to the economy. The most rapid occupational growth is predicted to be in healthcare related fields as the U.S. population as a whole has been growing older as the baby boom generation ages. “Production occupations and farming, fishing, and forestry occupations are the only two occupational groups projected to decline. Of the 15 fastest growing occupations, 11 have higher median wages than the national median. Factors that affect the outlook for occupations, such as new legislation and technological advancements, are constantly shifting, and new projections are developed every 2 years to account for changes.”