In figuring out how wages are set, supply and demand are super important in job markets. Let’s break it down simply:

Demand for Workers

• How many workers employers want depends on how well those workers can do their jobs.
• For example, if workers are becoming more productive because of new technology, companies will want to hire more people. This means the demand for workers goes up.
• In 2022, the average pay in the tech industry was about $105,000. This shows there is a high demand for skilled workers.

Supply of Workers

• The number of available workers can change based on things like education and training.
• In 2023, the unemployment rate was around 3.5%. This number means there are not many people looking for jobs, which is a tight job market.
• When wages go up, more people want to join the workforce, increasing the supply of workers.

Fair Wage

• The balance between how many workers there are and how many employers want to hire them sets the fair wage, or equilibrium wage.
• If there are more job openings than people to fill them, wages go up to attract more workers.
• But if there are more workers than jobs, wages go down.

Interesting Fact

• A study from 2021 found that when the demand for skilled workers went up by 10%, wages in big cities increased by 3-4% on average.

In summary, the balance of supply and demand has a big impact on how much workers earn in different jobs and skill areas.