Labor Markets Topic Index

EconData Online keeps you informed on today's most crucial economics data. Steve Hackett and Bud Culbertson (Humboldt State) provide commentary, analysis, and current and historical data. Return to EconData topic index.

Data Connections and Additional Resources
Average Weekly Hours, Manufacturing

The quantity of hours worked in the labor market is a reflection of supply and demand. For example, if demand for a firm's good or service rises, then the firm will either demand more hours of work out of its existing labor force, or it will increase labor by hiring new workers. Increasing hours worked by the existing labor force will be favored if the firm is not certain that the increase in demand for its product will last very long, if the cost of training new workers is high, or if relatively little overtime must be paid.

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Civilian Unemployment Rate

Prior to the Great Depression, many classical economists assumed that high rates of unemployment would only be transitory. Wages and salaries would adjust downward in the labor market in response to a decrease in labor demand, preventing a prolonged deviation from full employment. Keynes became prominent by arguing persuasively that unions, minimum wage laws, oligopolistic industrial employers, and various institutional factors create labor market rigidities that prevent downward flexibility in wages.

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Consumer Price Index (CPI)

During times of accelerating and unstable inflation, workers may be unable to negotiate adequate wage increases, which means that their standard of living declines. This is particularly true of wages that are rigidly set in collective-bargaining agreements between unions and management. In contrast, during times of deflation these same wage contracts make workers much better off.

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Housing Starts

Housing starts serve as an indicator of labor demand for the various residential construction trades such as laborers, carpenters, painters, masons, plumbers, and electricians. Because of the cyclical nature of residential construction, the labor markets for the various construction trades are also highly cyclical, and workers can experience wide swings in demand throughout the business cycle.

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Labor Cost Per Unit of Output

Labor markets help determine one of the most important factors in labor cost per unit of output- wage and benefit costs. In a particularly tight labor market, such as when unemployment rates fall far below those usually associated with full employment, wages and benefits can rise faster than labor productivity, causing unit labor costs to rise. Rising unit labor costs reduce profits and put pressure on prices.

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Labor Productivity

Gains in labor productivity cause the demand for labor curve to increase, and thus raise the equilibrium wage. When labor productivity increases, the revenue added by a unit of labor (marginal revenue product) also rises, and the labor demand curve is also the marginal revenue product of labor.

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