Question

How are wages determined in the U.S.? What are the most significant trends in wages over the past five years? (Must be at least 500 words) Your answer should address the following:

1. Demand for labor
2. Minimum Wage legislation
3. Role of Unions
4. Outsourcing of jobs

Answer 1

In the U.S, the wage is declining over the years.

1) The labor market in the U.S is competitive in nature where the DD(demand) and SS(supply) of the labor decide how many labors will be employed and what will be the wage.

2)Minimum wage law is the law in which an employee cannot hire workers below the given wage.

3)A labor union is an association of labors that talks with the employers about the wages and working environment of the labor.

Explanation:

In the U.S, the wage is declining over the years but there is no such clear agreement between economists and other academics about what factor contributed to the wage determination in the U.S.

1)     SS(Supply) and DD(demand) for labor: The labor market in the U.S is competitive in nature where the DD(demand) and SS(supply) of the labor decide how many labors will be employed and what will be the wage. The DD side of labor is the number of jobs available. If the SS of the labor for a particular job is more and DD is less then the wage rate will be less. Similarly, the opposite will be true if the DD is more and SS is less.

2)    Minimum wage legislation: Minimum wage law is the law in which an employee cannot hire workers below the given wage. In the U.S it is set at a particular level that ensures the survival of low-paid unskilled worker and is adjusted regularly according to inflation. Different states have different minimum wages than the federal level which reflect the local cost of living.

3)     Labor union: A labor union is an association of labors that talks with the employers about the wages and working environment of the labor. It changes the balance of power between labors and employers by dealing collectively rather than individually. About 11% of the U.S workers belong to the union. The Bureau of labor and statistics gave this data. The strong labor union gives more power to the workers and they demand more wage with the employer.

All of the three factors along with other factors contribute to the determination of wage in the U.S.