Higher Paid Jobs Vs. Lower Paid Jobs, Why?
Using the laws of demand and supply, we can now explain why an economist is paid more than a labourer, or a sales assistant or warehouse personnel. Wage rates will be higher on average:
If the job requires special talents, qualifications and experience; nearly all workers could become machine minders or refuse collectors, so the supply of these workers is very high. Very few workers have the right talents, qualifications and experience to become directors of companies, so the supply of these workers is very small. For example, if there is shortage of supply of economists then this will result in a rise in wages. Workers do not have the same education, training and ability. E.g. an economist is a more skilled worker than a sales assistant. If both workers were paid the same amount, very few people would be willing to undertake the many years of studying that are required to become an economist. Because the training period for certain jobs is so long the supply of these particular worker may be very low and as a result there wages maybe very high. People with skills that are in very short supply relative to demand for those skills will tend to be offered very high wages.
