What determines a wage?

Workers with higher skills are
paid more than workers with
lower skills.

College graduates earn more
on average than those with a
high school education or less.

If you want a high wage...make
yourself SCARCE

Some Facts...

Real hourly wages (adjusted for inflation)
have increased at a more rapid rate since
the mid-1990's

The dispersion of wages between skilled
and unskilled workers has increased,
with college-educated workers gaining
over those without a college education.

The difference between the average wage of
women and men is substantial, although it
has narrowed in recent years.

The relationship between the quantity of labor
demanded by firms and the wage paid is
called ... LABOR DEMAND

The idea of profit maximization is applied to
the labor market...if you improve a firm's
profitability--you'll be hired!

Why get the skills in demand?

The decision to obtain skills--to finish High
School and attend a community college or
obtain a four-year college degree is much
like a choice between work and leisure.

Education and training plays a significant role
in acquiring the skills in demand in the
marketplace.

Economists view the education and training
that raise skills and productivity a form of
investment--the decision to spend funds or
time now because it pay off in the future.

Investment in post high school education
raises the level of human capital --
a person's knowledge and skill--an individual
can bring to the marketplace.

The return on human capital has increased in
recent years