Economic situation Essay
Official statistics provides sufficient information about the wage levels across different industries and economic sectors. Apart from revealing a large wage gap between certain groups of professions, the statistical research suggests that the reasons and implications of these wage differences should be studied in more detail. The mean annual wages in management sector do not exceed $97,000; business and financial professionals annually earn $62,410 in average.
Computer and mathematical science occupations seem to do better than those in financial area with $72,190 per year, while engineering occupations do not bring more than $68,800 annually. Average earnings in community and social services area are $40,540; in legal occupations – $88,450; in arts, design and entertainment – $48,410. Food preparations and serving related occupations are ranked the lowest and did not exceed $19,440 in 2007 (Bureau of Labor Statistics, 2008).
The major question is what drives wages? There is no single answer to that. From the neoclassical viewpoint, the marginal product for labor usually equals the wage’s amount for every additional worker. Furthermore, depending on the specific occupation and profession, wages may be driven by one or several factors: compensating differentials, human capital, natural abilities, or the superstar phenomenon.
Compensating differentials arise from nonmonetary characteristics
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Superstars are traditionally formed in the markets where the customers want to be supplied by the best producer and at a relatively low cost. We see that wages in computer technology professions are definitely driven by superstar phenomenon, where one supplier tries to satisfy all customers, and where the wage depends on one’s ability to support the company’s “superstar” image.
The level of wages is usually determined by supply and demand of labor in specific labor markets; however, the discussed factors substantially change the situation, and add to the constantly changing economic situation in the national and international workforce markets.
Bureau of Labor Statistics. (2008). Occupational employment and wage estimates. Retrieved July 26, 2008 from http://www. bls. gov/oes/oes_data. htm