Question

3. In the US economy, nearly half of all workers employed by private firms work at the 0.3% of firms that have 500 or more employees.

a. What does this relationship mean for the power relationship between large firms and the labor force?

b. What do you think these large firms having such a market share of labor means for labor prices (wages)?

c. Can you propose a policy that would counteract this power imbalance?

Answer 1

A Number of factors affect the labour market in US like immigration, discrimination, labour unions, unemployment, and income inequality between the rich and poor.

Labour represents the human factor in producing the goods and services of an economy, people with right skills with the increasing demand for skilled labour is very important as the rapid increase of demand for goods and services would definetely create new job opportunities for the labour.

The Price of Labour is always determined by the demand and supply for goods and services for example when the demand for labour increases automatically the price of labour also increase thereby influencing the growth of economy.

As firms grow they tend to change the employee class number size so if they cross the 500 number category then they are automatically classified as Large firm employment.

The total number of employees are gradually reduced as the firms grow and the firms start employing staff in various categories as per the requirement.

Therefore the simple policy to be adopted by the firms is to increase productivity and employ more labour by hiring them with the correct wages and thereby improving the effieciency of the Economy the firms also should cut down unnecessary expenses and this would help the firms to establish themselves in the longer run.