Labor If we’re going to explain why some people earn a great deal of income while others earn very little, we must consider both the supply and the demand for labor. We usually ask ourselves why does the average college graduate earn over $40,000 while the average high school graduate earn less than $25,000? To find answers to these questions we must examine the behavior of labor markets. We first must start by looking at supply …showed first 75 words of 1047 total…

…showed last 75 words of 1047 total…that a minimum wage reduces the quantity of labor demanded, increases the quantity of labor supplied, and creates a market surplus. Because the federal minimum had not been raised for 5 years the 50 cents per hour hike in October 1996 caused few job losses. According to Federal Reserve estimates, the 1997 wage hike may have reduced employment growth by only 100,000 to 200,000 jobs. However, the further minimum wage rises above the markets equilibrium wage, the greater the job loss.