Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Job Market

What it is:

The job market is the group of individuals seeking employment within an economy.

How it works (Example):

As with any market, there is a supply and a demand for employment opportunities that directly affects wage and salary levels. Labor supply and demand depends on an economy's unemployment level. A low unemployment rate places upward pressure on wages and salaries because employers compete with one another for a smaller number of job seekers. Conversely, a high unemployment rate forces wages and salaries down because a larger number of job seekers compete with one another for fewer available jobs. Assuming a constant supply of jobs, this phenomenon can be expressed graphically as follows:

The of the red demand curve to the right represents a decrease in the unemployment rate. This results in an upward shift in wages and salaries on the y-axis. Similarly, a shift to the left would suggest a rise in the unemployment rate and a commensurate decline in wages and salaries.

The overall wage and salary levels in the job market represent an average of multiple industries and types of work. At a given point in time, the supply and demand for labor in the job market can vary from sector to sector.

Why it Matters:

Wage and salary levels set by the job market are an important indicator for analysts and economic policy makers. More important, the job market fosters economic productivity by creating jobs and cycling money through the economy via wages and salaries.

Related Terms View All
  • Umbrella Insurance Policy
    Businesses also obtain umbrella policies to mitigate any lawsuits or judgments. For...
  • Tape Is Late
    Let's say that trading volume on the NYSE quintuples one day after the government...
  • Xetra
    Started in 1997, about 250 participants (mostly brokerages, dealers, and market makers)...
  • Lease to Own
    For example, let's say John Doe's son, Jake, wants to learn to play the flute. Flutes...
  • Managed Futures Account
    When you buy a managed futures account, in essence you're hiring an expert to buy, sell...