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Factors that would lead to increase in demand for labor

In the production chain, labor is one of the most applied resources but there should be a control to determine what enough labor is. The law of diminishing returns explains that there is a tendency to lower the workers' individual output when the number of workers is increased (Rittenberg et al, 2008). One of the factors that would lead to increased demand for labor is increased demand for the products but this should not lead to hiring of more workers than the firm requires. In the production process there is the maximum output that each worker can afford and considering that the current labor force is only able to produce the current product output at its optimum, then an increase in demand for the products means that the firm will have to add more workers who will ideally work to meet the new demanded output. However, this is not necessarily in the ratio of the increased amount of products demanded and especially due to the use of machines that may be operated by the same workers who worked within the earlier capacity.

Another factor that may lead to an increased demand for labor is increased competition in the market that may require more workers. More workers will be required in production to ensure a higher quality of the products which may be difficult to achieve with limited number of workers (Hamermesh, 1996). More often when the labor force is stretched to the limit it the quality of the products may not be guaranteed as the emphasis shifts to maximizing on the quantity produced. An increased competition will require the firm to improve the quality of the products and this is only achieved by increased by increasing the number of workers thereby increasing the demand for labor. In the sales front, more sales workers will be helpful in venturing into new markets and also to match the competitors more effectively or outdo them when possible.

If the price of the products from the firm increases then the company will increase its labor force as it will have a higher capacity to pay more workers. More often than not, a firm will strain its resources in the beginning due to the uncertainty on the likelihood of the success of the business. For this reason, the workers are likely to be outstretched beyond their capacity as a strategy to minimize the cost of production and maximize profits. However, an increase in the price of the firm's products will lead to an increased margin between the cost of production and the sales. This will allow the firm to hire more workers and it will also ensure an increased quality of the products as the workers will give their optimum output which will most likely improve the quality of the products (Taylor & Weerapana, 2009).

The workers will require some skills which will help them increase their effectiveness in the production chain. They will receive regular training on how to operate the machines and also on how to work as a team so as to ensure support and a cover-up for each of the workers' weaknesses. This will be important in maximizing efficiency from the workers and also in promoting the image of the firm (Rittenberg et al, 2008). A negative image of the firm is detrimental and especially because the products are sold to consumers who already know the firm. If they have a negative attitude towards the company then they will be out to criticize even the slightest of the faults of the firm's products. When the workers are given a good working environment they will also act as indirect sales people as they will help in portraying a good image of the firm to the potential consumers whom they associate with.

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