Acceptable logotypeECO 2030. Principles of Economics-Price Theory

Labor Markets

Theory

  1. Derived demand (p, MPL)
  2. Labor-leisure tradeoff
  3. Demand shifts
  4. Supply shifts
  5. Minimum wage: March 2005 teenage unemployment, 14.5% (white), 32.6% (black or African-American)

Wage Determination

  1. Human capital - education and training (see Table 1 below)
  2. Compensating differentials: Many hazardous jobs are well-paid
  3. Unions: $32.83/hr vs. $22.84/hr (12/04, BLS)
  4. Discrimination (see Table 2, Table 3 below)
Table 1. How much money do people make?
Average employer costs per hour worked for employee compensation
  Total Wages and salaries Benefits Annual*
All Workers $25.57 $18.07 $7.50 $36,140
Management, professional and related $41.91 $30.11 $11.80 $60,220
Sales and office $19.39 $13.96 $5.44 $27,920
Service $14.26 $10.23 $4.03 $20,460
Natural Resources, construction, and maintenance $27.16 $18.42 $8.74 $36,840
Production, transportation, and material moving $21.08 $13.92 $7.16 $27,840
Goods producing $28.10 $18.50 $9.60 $37,000
Services producing $25.05 $17.99 $7.07 $35,980
Source: Bureau of Labor Statistics (http://www.bls.gov/news.release/ecec.t01.htm), 12/04
*Annual = 2000 Wages and salaries; BLS does not publish detailed information on household income, which includes not only wages and salaries, but also interest, dividends, pensions, etc. Information on household income is available from the U.S. Census Bureau.

See also: November 2003 State Occupational Employment and Wage Estimates

 

Table 2. Employment status of the civilian population by race and sex
(Household data, March 2005, numbers in thousands)
  White Black or African-American
Men, 20 years and over Men Women Men Women
Civilian labor force 63,497 52,055 7,403 8,507
Labor force participation rate 76.3 59.2 69.8 63.9
Employed 60,965 50,096 6,719 7,746
Employment-population ratio 73.2 56.9 63.4 58.2
Unemployed 2,532 1,959 684 761
Unemployment rate 4.0 3.8 9.2 8.9
Source: Bureau of Labor Statistics (http://www.bls.gov/news.release/empsit.t02.htm)

 

Table 3. Median usual weekly earnings of full-time wage and salary workers by age and race/ethnicity
(first quarter 2005 averages, not seasonally adjusted)    
  White Black or African-American Asian Hispanic or Latino
16 to 24 years $399 $338 $411 $337
25 to 54 years $716 $539 $784 $499
55 years and over $751 $548 $743 $485
Source: Bureau of Labor Statistics (http://www.bls.gov/news.release/wkyeng.t02.htm)
Note: Annual (50 week) earnings for white, black, Asian, and Hispanic workers aged 25-54 are $35,800, $26,950, $39,200, and $24,950, respectively.