South-Western College Publishing - Economics  
Tampa Bay
Subject Comparative Statics
Topic Labor Markets
Key Words Pay, Training, Experience, Labor Market, Wages, Cost of Living, Shortages
News Story

The Tampa Bay area has the reputation of being a low-paying area. Data from the U.S. Bureau of Labor Statistics corroborate this, but also show that the picture is much more complicated. Certainly, pay is low in customer assistance call centers where the skill level is low. However, for some jobs¾for example in information technology¾salaries are much higher, reflecting the national labor market. Even within occupations wages vary according to training and experience.

Explanations abound. Some believe that people are willing to accept low wages because of the advantages of the warm climate and the beaches. Others believe that workers in the area are not very militant. Another factor in low wages is the low cost of living¾when this is taken into consideration, Tampa does not appear as low paying. In addition, in some cases such as teaching, shortages indicate that salaries have been set too low.

(Updated December 1, 1998)
Questions

1. In labor market analysis, economists draw diagrams with axes representing real wages and employment levels. Why does it make sense to analyze pay levels in different labor markets in real terms? Refer to the article.
2. The news story includes some hypotheses for Tampa Bay's low wage rates.
  a) One possible reason is that many jobs are low-skilled, such as in the call centers. Draw a labor market diagram showing the supply and demand for labor in the region and the equilibrium real wage and employment levels. Show how a growing share of low-skill jobs affects the curve(s) and the equilibrium real wage.
  b) Likewise, in a separate labor market diagram, show how workers' preferences for living in a sunny coastal location may lower real wage rates.
3. There are differences in pay between jobs, of course.
  a) In a new diagram, show the equilibrium real wages and employment of highly-skilled work in information technology, compared to low-skilled work in call centers. Why are the technology workers paid more? Refer to the positions of the curves and the underlying reasons for their positions.
  b) In another diagram, show the labor market equilibrium of auto mechanics with little training and experience as opposed to mechanics with a lot of training and experience. Again, explain the differences in the positions of the curves and in the wage levels.
4. Tampa wage rates are not all at equilibrium levels. In labor market diagrams, show the effect on real wages and employment of
  a) minimally effective labor unions
  b) the underpayment of teachers such as to cause a shortage

Source Eric Torbenson, "A Burden, A Blessing", St. Petersburg Times, October 26, 1998.

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