THE GREAT DEPRESSION
The Great Depression
During the time of great depression, there was a sharp increase in demand for labor however the supply for the jobs significantly decreased. According to the law of Supply, the more the wages available, the more people would want to work. Since people are not willing to work under conditions whereby there are low wages, the number of employees willing to work during this time reduced significantly as the wages was also low. During this time, the employers’ response would be to hire more workers thus increasing the number of employees and hence paying much lower wages. The main problem however, during this time of great depression was that employers were not hiring since their businesses were not doing well. Most factories saw no need of hiring employees to operate their machines as their goods were not being bought in the market. Goods were not being bought in the market since there was a high unemployment rate and people could not afford to buy the manufactured goods. Since there was a low demand for labor, many workers were retrenched. The few that were retained received lower wages. People could not afford to buy goods in the market hence the factories performed even more badly. There was a sharp decrease in supply of labor due to the low wages that were being paid by the employers (McElvaine, 1993).
The factors that affected the labor demand labor supply during the time of great depression included the wages that were being offered, the employers’ willingness to hire laborers and the performance of the businesses. Since there was low wages being offered, employees were not willing to take up the positions since the wages were low and the cost of living had significantly increased. Therefore, taking up those positions would not make any economic sense to the employees. Employers were also not willing to hire employees as their businesses were not performing very well thus reduced demand for labor (McElvaine, 1993).
References
Robert S. McElvaine (1993). The Great Depression: America 1929-1941 Times Books
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