Question

Wages are determined by the interaction of supply and demand in labor markets. The shortages of workers in many industries will impact the wages that both firms will need to offer, and the wage workers will receive. Explain how firms will be able to deal with the shortage of workers in a strong labor market. This assignment will require 3-5 paragraphs.

Answer 1

Labor shortages occur when employers are struggling to fill job vacancies due to insufficient job applications. Labor shortages can occur in areas of geography or in occupations with special skill or function requirements. Labor shortages in sectors such as retail (Christmas) and agriculture can also be seasonal

Lack of geography. An region with a booming economy, but poor housing, may experience shortages of labor faster than the rest of the country. London has a strong demand for jobs in the UK, but is suffering from high rent rates which make It increasingly unattractive for workers, creating shortages of labour.
Highly qualified jobs. Occupations which require specific skills / qualifications only have a limited pool of staff that can apply. Of example, a career such as physicians / nursing requires a long time of practice. If there is a shortage, the education of new workers will be significantly lagging in time.

Unpleasant jobs. There are some jobs that are difficult to fill in in the service sector or in agriculture due to non-monetary costs and negative social perceptions of the job. Fruit picking, for example, is long hours, tedious work, and exposed to the elements. Farmers will struggle to fill these low-paid jobs in a developed economy with high expectations, which are perceived as undesirable. The dignity in culture. It's not just about wages, but the dignity attached to work occupations. There has been a movement in the UK to raise rates for university students. Vocational work like plumbing, electricians and technicians are seen as fairly unattractive for many schools and parents. The retail sector has a reputation that it is just a' temporary' work and many would like to avoid a career in this field.