Unit 1
Unit 2
Economic Markets
Labour Markets
Although it might not seem obvious at first, a wage is really just another type of price. This means that we can use the forces of supply and demand to explore the market for employees in the same way as we would any other market.
Many people hope to work in a job that will offer them a very high wage. An understanding of some basic economic concepts can help you to maximise the chance that this will happen. In very broad terms, your long term wage will be high if you work in a job that is in very high demand, or for which the supply is limited. On the other hand, if you choose to work in a job that has very low demand, or a job that many people are both willing and able to do, then it is far less likely that you will be able to command a high price for your services.
Some young people choose to leave school early, and as a result they do not have any qualifications. This tends to mean that they end up working in relatively low skilled positions, such as stocking shelves in a supermarket or behind the counter in a fast food restaurant. These positions usually have very low wages. As you do not need to be qualified to work in these industries, it means that almost anyone can accept a position if it is offered. In other words, there is a very large supply of people who are willing and able to fill these positions, and this keeps the wage down.
On the other hand, some people choose to continue studying for many years after school. While this can delay entry into the workforce, studies by the OECD have shown that post-graduate education will add at least 8% to your lifetime income. For example, a person who goes on to become a medical doctor might find that they need to spend almost ten years studying to achieve this goal. Very few people are technically capable of mastering the necessary skills, and an even smaller number of people are actually committed enough to complete the course. In other words, the supply of medical doctors is limited, and for this reason they usually earn a much higher wage than others in the community. The same is also true for others who go on to study advanced degrees, such as architects, scientists and lawyers.
Education is certainly not the only factor that can determine whether or not you get a very high wage. There are some positions that are highly skilled, dangerous or scarce, and each of these can also attract a very high rate of pay.
For example, not everyone is willing to work on an oil rig in the middle of the ocean. You might be away from your family for an extended period, access to other facilities (such as entertainment) is limited, and the job is dangerous. If you are willing to work in a position such as this, then you will be offered a much higher wage than a person who is unwilling to take on these challenges. Similarly, some people will choose to leave school so that they can complete an apprenticeship. Although they will receive a very low wage at the beginning, by the end of this course these people will possess skills that are in high demand in the Australian economy, but are still considered rare. Brick layers, plumbers, carpenters, electricians, cabinet makers and mechanics can all earn very high incomes, because they possess skills that most people do not have.
One of the challenges facing school students is to try and choose a path of study that will create opportunities for them in the future. For example, many people at the beginning of this century were studying computer based skills that are no longer relevant, and as a result some of these people have found it difficult to earn satisfactory incomes after completing their study. This isn’t because IT based skills aren’t in demand, it is because the supply of IT based graduates has been very high, and more people are able to do IT based work that was previously done by professionals. For example, in the late 1990s most photographs were taken on film based cameras, the developed and printed by professionals. Digital cameras have given us the ability to do these things at home.
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