THE US LABOR MARKET

The US Labor Market and How Nursing Wages Are Calculated



The US Labor Market and How Nursing Wages Are Calculated

The US Labor Market: A Brief Discription

The labor market is the main arena in which employers and workers interact, and the institution that determines hiring, firing, wages, benefits, and hence profits. In economic terms, the labor market is composed of all the buyers and sellers of labor and is the market that allocates workers to jobs and coordinates employment decisions. Any understanding of labor markets needs to account for the analysis of labor supply and demand (Bertrand and Mullainathan, 2003). The demand for labor accounts for employer behavior in renting labor, and the supply of labor describes the behavior of workers in and out of the labor force.

Neoclassical economic theory dictates that, under conditions of perfect competition, perfect mobility, and full information, the equilibrium conditions that result from the interaction of supply and demand result in the allocation of workers into various industries, occupations, and geographic regions as well as working conditions and wages. Labor economists critical of the neoclassical paradigm suggest that such employment outcomes are part of a wider historical-political relationship between workers and employers. The critics also tend to emphasize class and the bargaining power of workers and employers, in addition to structural demand-side considerations.

The study of labor markets aims to explain the social and individual behavior associated with work, and therefore is important in understanding some of the causes of poverty. Natural questions arise surrounding the existence of labor market discrimination, unemployment, unions, immigration, and a host of other pressing social issues. The analysis of labor markets can also foster the adoption of public policy to address the effects of work-based antipoverty programs, antidiscrimination laws, occupational health and safety standards, and minimum/living wage laws (David, 2004).

The U.S. government, since the early 1960s, has been involved in policies to reduce structural unemployment and hence alleviate poverty. From the Manpower Development and Training Act of 1962 (classroom and onthe-job training) and Comprehensive Employment and Training Act of 1973 (job training with emphasis on public sector) to the Job Training Partnership Act of 1982 (public-private training initiatives), the U.S. government has operated job-training programs with a focus on human capital accumulation for unemployed workers (David, 2004).

Recently the Workforce Investment Act (WIA) of 1998 has signaled a shift in emphasis of U.S. unemployment policy. The emphasis of WIA has resulted in a systematic movement away from a human capital accumulation approach of investing in workers toward emphasizing labor force attachment services that facilitate unemployed workers' job search.

U.S. unemployment policy is quite illuminative of the failings of neoclassical labor economics as a whole. At their best, unemployment programs have presumed that unemployed workers lacked the skills required by the labor market; at their worst the active labor market programs “presumed a 'deficit model' of the unemployed: that one of the reasons why they are out of work is that they do not know (or have somehow forgotten) how to work” ...