Video instructions and help with filling out and completing Which Form 8815 Wages

Instructions and Help about Which Form 8815 Wages

Welcome to crash course economics I'm Adriene Hill and I'm Jacob Clifford and today we're going to talk about labor markets a pretty important topic unless you're independently wealthy or fine with living in your parents basement you probably need to get a job but how do you even get a job and what kind of job should you get in a lot of ways it comes down to supplying a skill that someone else demands this is Cristiano Ronaldo he makes about 20 million dollars a year playing soccer or football depending on where you live pretty much everybody would agree no one needs that kind of money but does he deserve it how do his employers the Rey al Madrid Football Club justify his huge salary admittedly the market for professional athletes is complex but on some level its supply and demand the supply of people that have the skills to be world-class soccer players is low and the demand for world-class soccer players is incredibly high Ronaldo might be willing to play for only 10 million dollars a year it's a lot of money he might even play for 5 million and if he really truly loved the beautiful game he might do it for free so why is he getting 20 million dollars this goes back to that really high demand having a superstar on your team generates millions in tickets and merchandise sales it might help you win some of the many cups up for grabs in international football so Real Madrid thought Ronaldo and his double scissor move were worth 20 million dollars and Ronaldo agreed so they have a contract these same ideas explain how wages are determined in nearly every labor market let's go to the thought-bubble usually when Stan goes the mall he's the buyer he demands sunglasses and giant pretzels and the businesses supply them but if he wants a job at the malls pretzel shop the roles are reversed since he supplies labor he's now the seller and the pretzel shop owner becomes the buyer a buyer of Labor now that's when wage negotiation into Stan could insist on a wage of $25 an hour for his pretzel skills but the owner will point out that they can easily hire other people for much less the owner could offer Stan a wage of only $1 per hour but Stan would point out that he could easily get paid more at the Froyo shop in the end they agree on a wage that makes each of them better off the owner gets some help around the store and Stan earns money so he can buy even cooler sunglasses economists call this voluntary exchange the supply of Labor depends on the number of people that are qualified to do the job so Stan would love to get paid more but since warming up pretzels doesn't require extensive skills the supply of capable workers as high and consequently the wage is relatively low that doesn't mean Stan's going to work for peanuts the wage offered has to cover his opportunity cost the value of this lost free time the money he could be making doing something the demand for labor depends on the demand for the products of business sells economists call this derive demand if pretzel demand is booming then store owners are going to want more pretzel makers if other stores also need more employees demand for workers will increase and drive up wages thanks top level supply and demand explain why wages are different for different professions engineers are in high demand because they produce the products that many consumers want and their supply is limited because the training for these jobs is pretty difficult social workers and historians aren't paid as much even though their work is important because demand is relatively low and supply is relatively high it's not rocket science supply and demand explain a lot but there are several reasons why wages in a labor market don't end up at a competitive equilibrium sometimes workers get paid less not because they have different skill levels but because of their race ethnic origin sex age or other characteristics this is called wage discrimination wages might also be unfairly low when a labor market is a monopsony when there's only one company hiring and workers are relatively immobile when you're the only employer workers have to take what you offer or they're out of luck take the n-c-double-a the organization that regulates college athletics in the u.s. many economists point out that high profile college athletes are generating millions of dollars for their schools but they're forced to accept a very low wage of a scholarship with free tuition now sure baseball and hockey players can skip straight to the pros but the NFL prohibits drafting football players until three years after high school and NBA teams can't draft basketball players until they're 19 there are some situations where wages might actually be higher than market equilibrium for example some employers might voluntarily offer higher than normal wages to increase worker productivity and retention economists call this efficiency wages Henry Ford double the wages of assembly line workers in 1914 to keep them from seeking jobs elsewhere and this still goes on today you may not be completely happy with your job but if it offers way more than what everyone else is paying you're less likely to quit unions can also drive up wages a union is an organization that advances the collective interests of employees and strives to improve working conditions and increase wages they do this through collective bargaining representatives for the workers negotiate with employers and if their demands aren't met workers go on strike and stop production altogether although unions were once very strong in the u.s. union membership and their strength has declined since the 1950s at their height approximately one in three American workers were in a labor union