Labor is a very important part of any part of business. Investing in human resource is just as important as financial investment. The demand and supply of labor change depending on various factors. People running businesses have to be aware of these changes and their causes in order to make wise investment decisions. - See more at: http://www.customwritingservice.org/blog/a-sample-essay-on-factors-affecting-demandand- supply-of-labor/

1. Factors Affecting Demand and Supply of
Labor
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and-supply-of-labor/

2. Labor is a very important part of any part of business. Investing in human resource is just as
important as financial investment. The demand and supply of labor change depending on various
factors. People running businesses have to be aware of these changes and their causes in order to
make wise investment decisions.
One of the factors that greatly affects the demand and supply of labor is the wage rate. When the
wage rate goes up, employers will prefer to get fewer people working for them. For example, the
employer will prefer to get one person who can carry put a number of duties instead of getting
several people. When the wage rate increases, the profits will go down since the employer will
have to invest more in human resource. The demand for labor will go down and the supply will
go up.
The demand for a certain commodity will determine whether there will be demand for labor. A
company that provides certain goods or services will hire more people to increase production
levels when there is a high demand for their commodity in the market. Conversely, when there is
a drop in the demand for certain a goods or services in the market, then the supplier will only
require limited labor. Workers therefore work had to ensure quality assurance not only for the
benefit of the company at large but also so as to secure their source of income.
The profitability of a firm or business corporation will also affect supply and demand of labor.
When a company is making profit they will afford to employ more people. However, when they
are constantly incurring losses, they will not be in a position to hire more people. The supply of
labor will remain constant but the demand will go down.
The demographics of the population living around the region of business will greatly affect the
supply of labor. From the age bracket considered to be legal for one to be employed to the kind
of skills the people there possess, there are many factors that will determine the percentage of
people available to work. The education levels of the people living in a given region will
determine whether a given company will have a wide pool of people from which they can choose
employees or not.
There are jobs that people consider odder than others. For example, a funeral home may not have
very many people applying for the position of an attendant. People’s preferences will affect the
supply of labor. There are jobs that are held in high esteem in some societies more than others.
The kind of training that employees need before they are able to offer adequate services will also
affect supply and demand of labor. For jobs where short time training is required, there will be a
high supply of labor and vice versa.
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