Here are some additional questions:
- How does an increase in the demand for restaurant meals affect the extra revenue generated by an additional worker?
- How would the change in the extra revenue generated affect the demand for workers?
- How would the change in demand affect the equilibrium wage?
Wages Rise at Restaurants as Labor Market Tightens
by: Eric Morath and Jeffrey Sparshott
Feb 28, 2015
Click here to view the full article on WSJ.com
by: Eric Morath and Jeffrey Sparshott
Feb 28, 2015
Click here to view the full article on WSJ.com
TOPICS: Labor Markets
SUMMARY: Wage growth is breaking out in an unexpected corner of the U.S. economy: the nation's restaurants and bars. Food-service employment has surged since the recession ended six years ago.
CLASSROOM APPLICATION: Students can use supply and demand for unskilled workers to evaluate the effect of increased demand on the wages of these workers. The article makes two interesting points for instructors to emphasize. First, skilled workers with restaurant jobs are frequently looking for work in other fields. Hence, the market for skilled workers employed in the restaurant industry could be broader than just the restaurant industry, while the market for unskilled workers employed in the industry could be dominated by the industry. Second, rising pay at restaurants "doesn't necessarily translate into higher wages at call centers or in banking," said Kevin Kliesen, economist at the Federal Reserve Bank of Kansas City. Rising wages for servers, dishwashers and cooks typically are a result of strong demand for labor in other fields, not a leading indicator signaling that pay will grow more broadly.
QUESTIONS:
1. (Introductory) What factors are driving the increased demand for restaurant meals?
2. (Advanced) What factors are driving the increased wages in the restaurant industry for unskilled workers? What factors are driving the increased wages in the restaurant industry for skilled workers?
3. (Advanced) How do economists determine whether to establishments, possibly in different industries, are in the same labor market for attracting skilled workers? Is the market for skilled labor employed in the restaurant industry broader than the market for unskilled labor employed in restaurant industry?
1. (Introductory) What factors are driving the increased demand for restaurant meals?
2. (Advanced) What factors are driving the increased wages in the restaurant industry for unskilled workers? What factors are driving the increased wages in the restaurant industry for skilled workers?
3. (Advanced) How do economists determine whether to establishments, possibly in different industries, are in the same labor market for attracting skilled workers? Is the market for skilled labor employed in the restaurant industry broader than the market for unskilled labor employed in restaurant industry?
Reviewed By: James Dearden, Lehigh University
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