Historical Example of Labor Supply and Demand
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Historical Example of Labor Supply and Demand
The unfortunate events of the Great Depression provide a telling example of labor supply and demand. The stock market crash of 1929 marked the beginning of the Great depression. The resulting uncertainty of financial institutions led many Americans to withdraw what money they had from banks. These events continued to spiral downward until banks were forced to go out of business, businesses had no lenders to turn to, and the labor market was subsequently devastated.
American industry was among the hardest hit by this event in our country’s history. “In 1933, 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work” (Smiley, 2008, para. 1). With manufacturing plants shut down, the blue collar workers of America found themselves in desperate times. As the labor demand continued to decrease, the unemployment rate continued to rise. This excess supply of labor had nowhere to turn for relief.
The extreme events of the Great Depression illustrate the relationship between the health of U.S. markets and labor stability. The ruin of the major financial institutions led to distrust on the part of the American people for those institutions that remained. Investments by businesses and individuals alike were lost in the stock market crash and ensuing events. Since the manufacturing industry was one of the largest employers in the U.S., as it crumbled, so did the lives of the blue collar workers. These low to moderate skill level jobs were no longer available, resulting in record unemployment numbers.
References
Gene Smiley. "Great Depression." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved August 6, 2010 from the World Wide Web: http://www.econlib.org/library/Enc/GreatDepression.html
The unfortunate events of the Great Depression provide a telling example of labor supply and demand. The stock market crash of 1929 marked the beginning of the Great depression. The resulting uncertainty of financial institutions led many Americans to withdraw what money they had from banks. These events continued to spiral downward until banks were forced to go out of business, businesses had no lenders to turn to, and the labor market was subsequently devastated.
American industry was among the hardest hit by this event in our country’s history. “In 1933, 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work” (Smiley, 2008, para. 1). With manufacturing plants shut down, the blue collar workers of America found themselves in desperate times. As the labor demand continued to decrease, the unemployment rate continued to rise. This excess supply of labor had nowhere to turn for relief.
The extreme events of the Great Depression illustrate the relationship between the health of U.S. markets and labor stability. The ruin of the major financial institutions led to distrust on the part of the American people for those institutions that remained. Investments by businesses and individuals alike were lost in the stock market crash and ensuing events. Since the manufacturing industry was one of the largest employers in the U.S., as it crumbled, so did the lives of the blue collar workers. These low to moderate skill level jobs were no longer available, resulting in record unemployment numbers.
References
Gene Smiley. "Great Depression." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved August 6, 2010 from the World Wide Web: http://www.econlib.org/library/Enc/GreatDepression.html