Demand And Supply Of Labor - 1040 Words

The demand and supply of labor is determined by the labor market. There are two players in the labor market: the workers and the firms. All workers will supply their labor to firms in exchange for wages paid by the firms to produce manufactured Items. The need for laborers is comprised of the firms need to produce any given number of products to supply the consumers demand. Because of this, the labor market directly affects supply, demand, and the price of manufactured items. Of the three resources of production (land, labor,capital), the labor segment is the most important. Specifically, labor Unions and how they affect the labor market, how skills and education effect the labor market, and the fluctuating employment rates. First,†¦show more content†¦Industrial capitalism was leading the way and did not share the same ideology and vision of the labor movement. According to the heritage.org, labor unions today harm the economy because they function as labor cartels. Labo r cartels restrict the number of workers allotted in a company or industry resulting in an increase in wages for the union workers. Just as the Organization of Petroleum Exporting Countries (OPEC) attempts to cut the supply of oil to raise its price, companies pass on those higher wages that have to be paid to the union members to consumers through higher prices, and often earn lower profits, as reported by James Sherk, What Unions Do: How Labor Unions Affect Jobs and the Economy. Companies today have less power to increase prices on consumers without going out of business. Labor unions are also effective at taxing company investments through the negotiation of higher wages for their members causing a decrease in profits. Companies that are unionized, counter the negotiations through reduced investments, thus making the companies less competitive in the market. The graph below provided by heritage.org, displays union vs. non-union manufacturing employment trends. Because of this, j ob opportunities are reduced and the economy suffers. (1) Research has shown that unions make for a slower economic recovery. Over the long run, business investment is reduced due to labor cartels