Article Summary
As the economy is showing robust growth with the retail and construction sector expanding at a favorable rate, the demand for labor is also on the rise. The grim unemployment situation of the recession period of 2008-09 has now changed into a phase where the firms are facing shortage of skilled labor . The unemployment rate for the segment of population without a high school degree also fell in the past one year. The participation rate for the low skilled workers has also increased with increased demand for labor.
The retail sector has showed an employment growth to the tune of 44000 in October this year. Hiring also increased in the restaurant segment and construction industry. The construction segment was responsible for creating 31000 more jobs in October. Along with job growth wages have also increased. The increase in wages has been higher for educated workers. But the wage growth for workers even without a high school degree has shown a steep rise by 0.8 per cent .
It has been observed that there is a shortage for skilled worker in the labor market. Job market survey has revealed that 27 per cent of the small businesses were unable to fill their job openings. The construction sector has also expressed their inability to find enough skilled personnel to meet their requirements.
The increased labor demand with unchanged supply has resulted in a significant rise in the employment rate. The wage rate for the skilled workers has increased due to the shortage created by the high growth in demand. This situation has been depicted in the figure below. The increase in labor demand has been shown by a rightward shift in the demand curve from D0 to D1. Labor employment has increased from L0 to L1 resulting in the increase in the wage rate from w0 to w1.
w
S
w1
w0
D1
D0
Works Cited
Beilfuss, Lisa. "No High School Diploma? The Job Market's Looking Up." The Wall treet Journal 15 November 2015: 2. English.
Varian, Hal R. Intermediate Microeconomics A Modern Approach. 8th. New York: W. W. Norton & Company, 2010.
