Question

Labor markets are an important concept to understand in terms of how wages are determined. Identify one demand and supply factor that can impact wages in markets. Explain one of the main reasons why the large wage gap exists in the United States and provide one solution of this wage gap.

Answer 1

Demand factor affecting wages in the market: When the demand for goods by consumers rises, more workers are needed to produce goods so that the demand can be met. Hence, labor demand increases. Also, it results in the rise in the wage of labor.

Supply factor affecting wages in the market: If there is a recession in the market, the investors will not invest in production. It will lead to a decrease in the supply of goods. Consequently, the firms would decrease the wages of labor which will increase the unemployment or underemployment in the economy.

The reason for the wage gap in the U.S. economy is the Gender Wage Gap. It means that there is inequality in the wages of males and females. Males are offered more pay for the same work than females. This creates inequality in society. To abolish this inequality, the government should start awareness and educational programs so that everyone gets his/her equal rights in society.