Students will be able to:
- Evaluate labor market conditions.
- Identify the factors that influence wages.
In this economics lesson, students will identify factors influencing wages.
Ask students if they have thought about what jobs or careers they would like to pursue after high school. Have them write down five factors that might go into determining their future wages. Tell them their answers will be used to work through a class discussion on how wages are set in the workplace.
Explain that “wages” is an economic term for income, and income (or wages) can vary greatly from one job or one career to another. Use the Wages and Me Slides 1-8 to review the factors determining wage rates with the following notes:
- Slide 2. Tell students they will be examining five factors that affect the wages they will earn. These include: demand and supply forces, productivity, the relative value that others place on the goods and services they are providing, the overall cost of labor, and the cost of living/government regulations in their area.
- Slide 3. Remind students that wages are the price paid for labor; therefore, the principles of demand and supply work basically the same as for prices of goods and services. Review the concepts presented in the slide.
- Slide 4. Tell students that workers who have greater productivity are more valuable to their employers and can command higher wages. Ask students if they can think of ways for workers to improve their productivity. Answers should include education, training, experience, etc.
- Slide 5. Review the factors, comparing them with the student answers to the previous question.
- Slide 6. Describe the four factors, explaining that relative value means the value of one job or career (even one person) is compared to the value of another; those with higher relative value will have higher wages than those with lower relative value.
- Slide 7. Ask students if they have ever interviewed a job without asking how much it pays. (Most will answer no.) Ask if they have ever quit a job or declined a job offer because it paid less than they expected or wanted. (Answers will vary.) Explain that wages, again, are like prices of other goods and services. If they want to buy something, they want to pay as little as possible but the seller wants to charge as much as possible. To make the exchange, they must meet in the middle. When deciding about wages, employers and workers must also agree. Employers are willing to meet workers at a point where they can cover the cost of the wages paid. They cannot afford to pay wages higher than their gains or the benefits received from the worker.
- Slide 8. Remind students that cost of living refers to the average cost of all basic necessities including food, housing, utilities, transportation, clothing and health care expenses – and it varies greatly from one state to another, or even one city to another. If it costs more to live in State X, then the workers in that state will expect higher wages to live and work there. Other factors might include income tax rates, sales tax rates, property taxes, and many other government policies. Ask students how their answers about factors affecting wages (asked in the warm-up) compare to the factors in the slide presentation. Make note of where students accurately identified factors and which ones they missed.
Tell students that having reliable information about wages is important, which is why the federal government has an agency called the Bureau of Labor Statstics whose purpose is gathering data about the labor market in our country. Explain that they will be viewing Facts on the BLS, a short video about the BLS and completing a group activity about the agency. After showing the video, put students into small groups and distribute copies of BLS Facts to each group. Review the instructions and give groups 10 minutes to complete the activity. Debrief the activity by having students share their answers with the class.
Distribute the Exploring Career Options worksheet to each student, explaining they will have the opportunity to explore two careers in this assignment. Review the instructions, and briefly introduce the five web sites they will use to complete the assignment: Career OneStop; Interest Assessment; Skills Matcher; Interest Profiler and Occupational Outlook Handbook. Allow students 20 minutes to complete the activity. Ask them to share their career options and what they learned about them with the rest of the class. Debrief the activity by reminding students of these two points: 1.The forces of supply and demand are key to determining wage rates in our society. 2. Understanding what factors affect wages will help them make more strategic choices about their future occupations and maximize their potential income.
Have students write a short-response essay answering the following question: How will understanding the factors that influence wages help me make better career choices and have a more secure future? (Note: Accept a variety of answers. Full credit should be given to students who include the majority of factors influencing wages both from the perspectives of the employer and jobseeker.)
Show the CEE video on Productivity to emphasize the importance of productivity in the labor market. Have students complete the included Kahoot! Quiz to measure their understanding of the concepts.
Ask students to determine what people working in their city or one near them would need to earn to match the income of someone living in New York, New York; Los Angeles, CA; and St. Louis, MO. Have them explain the differences in wages and cost of living adjustments. Use the following web site to complete this activity.
Use the slides in the BLS Productivity 101 lesson to examine the the basics of productivity, how it is measured, why it is important, and how it influences wages.