laborLabor can be thought of a human capital and such this kind of capital can be influenced by both the supply and demand associated with it. Someone who processes a certain skill such as the...
Labor can be thought of a human capital and such this kind of capital can be influenced by both the supply and demand associated with it. Someone who processes a certain skill such as the ability to create complex computer security programs will likely be both in short supply and in high demand. The result of this is that such an individual is likely to command a high salary. That fact notwithstanding the ability of en employer to hire those individuals may be limited to their relative needs and how much financial capital they have available to pay high salaries. Likewise less skilled individuals command lower wages either because their skills are not unique or because there is less demand for those skills.
(A) Select three factors from the following list and explain how each of those selected factors may affect labor cost and availability:
(4) Economic conditions
(5) Licensing requirements
(6) Government policy
How can a company overcome these obstacles?
One aspect of how economic conditions affect labor is the rising number of people who are "overqualified" and "underemployed." People must do what they have to do to survive and take care of their families, but the underemployment factor is also harming the labor market because what were formerly jobs for the less qualified are now being filled by others and it is the poorest and least qualified people who are struggling to find work in what used to be the jobs that were less desirable and therefore available to those workers. In my field of education, there are many former full time teachers now picking up hours at the local, private "learning centers" -- a job that used to be filled by college students or on a part-time basis by teachers looking for a little extra income. Those people are now out of luck.
Implementation of the minimum wage by the government unfortunately creates unemployment. Although all agree that workers should be paid fairly, the expression of that desire in wage laws therefore skews the resources of an employer to those he or she currently employs -- since they all must have a base wage (regardless if such work warrants that wage) the employer has lesser resources to hire additional workers. In this case, it follows the classic supply-demand curve exactly. Raising the price of labor causes less demand for that labor.
Think of the effect of the current recession as an economic condition in specific areas of the US for example. In the southern states, a collapse in the housing market and because of that, the construction industry has led several hundred thousand people to leave those states in search of work elsewhere, and in the case of immigrants, to leave the country altogether. This is further proof that economics is the main force behind nearly all immigration.
Education is an important factor in labor cost and availability. Uneducated or under-educated workers command lower wages because they don't have the skills to be competitive against highly trained workers, both in laborer and administrative positions: a certified welder will command more in wages than a high-school trained welder just as an administrator with an MBA will command more than someone trained in a 2-year business school.
Other government policies that have a major influence on labor are those like minimum wages that are instituted in the goal of forcing employers to pay enough that a worker can have certain levels of income, etc. These can also lead to the migration of capital to sources of cheaper labor and sometimes backfire. They are also decried as artificial and government meddling in the free market which lower efficiency.
I read an article just last night about the impact of emigration on Poland. Since it was admitted into the European Union, now 2 million Poles live outside of the country, which has produced a massive brain drain. Economic conditions and the level of education in Poland have combined to encourage skilled Polish workers to leave their country so that Poland now is suffering a labour crisis in key areas.
Government policies affecting labor costs can be dealt with by trying to affect the outcomes of elections, by lobbying, and by applying political pressure through such means as public advertising. Members of the postal union, for instance, are currently using all three means to help preserve as many of their jobs as possible as the post office faces a growing financial crisis.
Immigration can increase the supply of labor and reduce its costs. Emigration can do the opposite. Licensing requirements decrease the supply of labor. They make people "jump through hoops" in order to be allowed to do a job. This decreases the supply of labor and makes labor more expensive in that particular industry.