Who works, what kind of work do they do, and how much do they get paid? These are the key questions for any understanding of the civilian labor force; economists have been asking them for two centuries.
But as times change and the nature of work changes, too, the statistical categories economists use to study labor have to change, too. For example, America’s booming service sector has made older white collar/blue collar categories inadequate. As a result, most economists now prefer occupational categories based on education and skill.
The wages these workers earn are influenced by several factors. In America’s free market economy, basic principles of supply and demand largely determine wages. But the government also influences wage rates, most significantly by setting a minimum wage. And in some industries, unions also influence wages.
What's a fair wage for a day's work? That question is probably a lot more interesting than you think... read on to find out why.
Economists are never happier than when they are organizing things—sorting people and things into categories and translating complex conditions and processes into tidy and powerful charts and graphs. This can be useful. For example, economic statisticians' obsession with categorizing workers can help you decide where your greatest job opportunities lie and where the most money can be made.
That’s right. Economists do a great job of tracking wages. But they can’t do much about them. Wage rates—the price of your labor—are determined like most everything else in our free market economy, by laws of supply and demand. This is known as the market theory of wage determination.
But we’re getting ahead of ourselves. If you really want to understand all this—and if you want to understand why you might earn more in Stockton than in Bakersfield—read on.