How Are Supply And Demand Is Influenced By The Labor Market? What Role Does The Labor Union Play In This?

How are supply and demand is influenced by the labor market? What role does the Labor union play in this?

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How are supply and demand is influenced by the labor market? What role does the Labor union play in this?

Introduction

According to the law of supply and demand, the prices paid for goods and services by the consumers are affected, and its effects are reflected which also affect the labor market. The variations and fluctuations between labors and the market place. In the case of the labor market, the organizations are the buyers while the individual provides labors or these are considered as supply. Both the parties act as wage-takers, the business takes these labors and pay the wages that are set according to the demand of the market. There are many small businesses which have problems from the labor unions and that is the major source of discomforts. Labour unions protect the rights of the employees and they increase the wages of the employees and reduce the equality within the organization with labors. The role of a labor union is to protect the rights of the employees and maximize their benefits. The non-unionized firms are influenced by this decision, and they work for the organized benefits.

Discussion

Labor demand refers to the needs of the firm to hire labors in order to produce their goods for consumers. The number of labors demanded by the businesses depends on many factors. These factors include the cost of labors, it influences the market wage rates and the number of labors the firm requires. To enhance the profit of the business, firms initially focus to increase the number of labors from the market (Azhar et al., 2016). It results in a downward slope in the demand curve as it relates to the wages rate of the labor. The firms hire more labor which decreases the rates of wages. When the demand of firms decreases and they decide to hire fewer workers that results increase the wages.

Labour supply is the decision and willingness of labors to offer their services to organizations in the given set wages. When the workers ask for higher wages the supply of the labors also increases. The supply of labors decreases when the wages are decreases. With lower wages, people avoid to work and quite their workplaces. The supply curve is basically an upward slope line, however, the line may be different for different individuals. Every person has different opportunities which can make choices for them how to spend their time. When the supply of the workers is equal to the demand of the labors in a perfectly competitive labor market. The equilibrium is shown in the graph when the supply and demand curve intersect each other (Eichhorst et al., 2015). The shifts in equilibrium produce either a shortage of labor or the surplus of labor in the market. When the wages increase in the labor market, theories suggest that the demand for labor decreases and the supply of the labor will increase. As a result of the market wages decline, the demand for labor increases than the supply of labor.

Labour union is the organization that negotiates with the business organizations on behalf of the union members. The trade unions represent workers of the particular industry to protect their rights and solve their issues. The labor unions have the power to influence the supply and demand of the labors in the labor market. Unions often use different methods to increase the demand for labors and also to enhance the wages of the labors. Labour unions raise the marginal productivity of the workers and often do it through training.

Conclusion

The demand and supply of labor influence the wages of the labors. The increase in the supply of labor in the market can reduce the wages of the labor. The businesses hire labors when the increase their production due to the higher demand for their products in the market. To meet their target production and fulfill the demands of the customers the demand for labor increases. There is an equilibrium when the demand for labor is equal to its supply. Here the wages neither increase nor decrease. The labor unions are convincing corporations to protect their rights and increase their wages.

References

Azar, J., Marinescu, I., & Steinbaum, M. I. (2017). Labor market concentration (No. w24147). National Bureau of Economic Research.

Eichhorst, W., Marx, P., & Tobsch, V. (2015). Non-standard employment across occupations in Germany: the role of replaceability and labor market flexibility. Non-Standard Employment in Post-Industrial Labour Markets: An Occupational Perspective, Cheltenham, UK, Edgar Elgar, 29-51.