Changes in wages

There is a marked increase that has occurred in the demand for labor in the oil and gas extraction industry. The number of oil and gas wells drilled in the United States doubled over the course of a few years reflecting the large incentive given to domestic exploration by both the rise in foreign oil prices and the deregulation of domestic oil prices currently. The demand for labor is derived from the demand for the product thus the increase in the number of drilling crews, geologists and petroleum engineers. This increase has caused the demand curve for labor to shift upward sharply in this industry.

Now lets take a look at the wages and their changes and employment in response to a situation of excess demand in the market. The first is that the absolute level of wages in the industry should rise. This prediction is borne out for this industry. Even the rise in prices is subtracted out by the earnings in real terms which still has advanced significantly.

One would wonder why we in the transportation industry with our wages are languish behind many other industries. It is time that we are entitled to a rise in wages. 

Changes in wages

An important function of the labor market is to allocate labor to its efficient use. This is not easy. On the demand side of the market, the demand for labor by employers is in a constant fluid state. Some employers are growing rapidly and need many additional employees, while others are laying off workers because of declining sales. The supply side of the labor market is also in a state of change. Each year over one-and-a-half million people enter the labor force looking for work and several million people who are already employed change jobs. Given the great demand of labor in each industry with their occupations and geographic area and the great supply of labor in terms of education, skill, job preference and desired geographic location how does the labor market efficiently match the job opening that the employers and the employees are seeking in work?