Historical Example of Labor Supply and Demand

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Historical Example of Labor Supply and Demand 1

Historical Example of Labor Supply and Demand
Rose Fromm
Axia College, University of Phoenix

Historical Example of Labor Supply and Demand 2
Historical Example of Labor Supply and Demand
One of the most severe disastrous economic incidents that ever happened was called the great depression which, had formed in 1929 and lasted until 1939. The Great Depression caused many businesses to drastically reduce spending in order to remain profitable, which in turn decreased the demand for labor. There was an excess supply of labor, since many companies laid off workers in order to maintain a normal profit. β€œThe unemployment rate had reached almost 25%; certain sectors, such as certain industries, had unemployment rates of almost 30% to 35%”(Carey Nelson) because of less spending and demand and hence of production. During the great depression the labor demand was decreased and the labor supply was increased, this could have happened by so many factors, such as productivity was decreased and a decrease in profits by many employers; which this had caused a decrease in demand for labor during the Great Depression. Additionally, the rising wages that occurred until the Great Depression increased the supply for labor as many Americans dreamed of living in a middle class life. Unfortunately, the increase in wages did not follow the increase in supply of labor, leaving many potential employees jobless during the Great Depression. The decrease in the amount of disposable income was also an issue, as many Americans became bankrupt after the collapse of the banks. The result of the dramatic increase in bankruptcies caused the supply of labor to increase dramatically, especially in the blue collar sector, due to the fact that many Americans entered the industrial and manufacturing labor markets looking for an entry level employment. The Great Depression ended when President Franklin D. Roosevelt enacted the New...
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