What Could Cause A Change In Labor

Chapter 4. Labor and Financial Markets

iv.1 Need and Supply at Work in Labor Markets

Learning Objectives

By the end of this section, you will be able to:

Predict shifts in the demand and supply curves of the labor market
Explicate the bear upon of new technology on the demand and supply curves of the labor market
Explicate cost floors in the labor market such as minimum wage or a living wage

Markets for labor have demand and supply curves, only like markets for goods. The police force of demand applies in labor markets this way: A higher salary or wage—that is, a higher cost in the labor market—leads to a subtract in the quantity of labor demanded by employers, while a lower salary or wage leads to an increase in the quantity of labor demanded. The law of supply functions in labor markets, too: A higher price for labor leads to a higher quantity of labor supplied; a lower cost leads to a lower quantity supplied.

Equilibrium in the Labor Market place

In 2013, about 34,000 registered nurses worked in the Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin metropolitan area, co-ordinate to the BLS. They worked for a diversity of employers: hospitals, doctors' offices, schools, wellness clinics, and nursing homes. Figure 1 illustrates how demand and supply determine equilibrium in this labor market. The demand and supply schedules in Table 1 list the quantity supplied and quantity demanded of nurses at unlike salaries.

This graph shows how equilibrium is affected by demand and supply. The downward- sloping demand curve and the upward-sloping supply curve intersect at equilibrium salary. — **Figure 1.** Labor Marketplace Example: Need and Supply for Nurses in Minneapolis-St. Paul-Bloomington. The demand curve (D) of those employers who want to hire nurses intersects with the supply curve (S) of those who are qualified and willing to work as nurses at the equilibrium betoken (E). The equilibrium salary is $70,000 and the equilibrium quantity is 34,000 nurses. At an above-equilibrium salary of $75,000, quantity supplied increases to 38,000, merely the quantity of nurses demanded at the higher pay declines to 33,000. At this to a higher place-equilibrium bacon, an excess supply or surplus of nurses would exist. At a beneath-equilibrium bacon of $sixty,000, quantity supplied declines to 27,000, while the quantity demanded at the lower wage increases to 40,000 nurses. At this below-equilibrium salary, backlog need or a surplus exists.

Annual Bacon	Quantity Demanded	Quantity Supplied
$55,000	45,000	20,000
$60,000	40,000	27,000
$65,000	37,000	31,000
$seventy,000	34,000	34,000
$75,000	33,000	38,000
$80,000	32,000	41,000
Table one. Need and Supply of Nurses in Minneapolis-St. Paul-Bloomington

The horizontal centrality shows the quantity of nurses hired. In this example, labor is measured by number of workers, but some other common way to measure the quantity of labor is by the number of hours worked. The vertical centrality shows the price for nurses' labor—that is, how much they are paid. In the existent world, this "toll" would be total labor compensation: salary plus benefits. Information technology is not obvious, but benefits are a meaning office (equally loftier as thirty percent) of labor bounty. In this example, the price of labor is measured by salary on an annual basis, although in other cases the price of labor could be measured by monthly or weekly pay, or fifty-fifty the wage paid per hour. As the salary for nurses rises, the quantity demanded will fall. Some hospitals and nursing homes may cut dorsum on the number of nurses they rent, or they may lay off some of their existing nurses, rather than pay them higher salaries. Employers who face higher nurses' salaries may also try to replace some nursing functions past investing in concrete equipment, similar figurer monitoring and diagnostic systems to monitor patients, or by using lower-paid health intendance aides to reduce the number of nurses they need.

As the bacon for nurses rises, the quantity supplied will ascent. If nurses' salaries in Minneapolis-St. Paul-Bloomington are higher than in other cities, more nurses will move to Minneapolis-St. Paul-Bloomington to find jobs, more people volition be willing to train as nurses, and those currently trained as nurses will be more probable to pursue nursing every bit a full-time job. In other words, at that place will be more nurses looking for jobs in the expanse.

At equilibrium, the quantity supplied and the quantity demanded are equal. Thus, every employer who wants to hire a nurse at this equilibrium wage can find a willing worker, and every nurse who wants to work at this equilibrium bacon can detect a task. In Figure 1, the supply curve (S) and demand curve (D) intersect at the equilibrium point (East). The equilibrium quantity of nurses in the Minneapolis-St. Paul-Bloomington area is 34,000, and the equilibrium salary is $70,000 per twelvemonth. This example simplifies the nursing market past focusing on the "boilerplate" nurse. In reality, of class, the market for nurses is actually made upwardly of many smaller markets, like markets for nurses with varying degrees of experience and credentials. Many markets incorporate closely related products that differ in quality; for instance, even a simple product like gasoline comes in regular, premium, and super-premium, each with a unlike price. Even in such cases, discussing the average price of gasoline, like the boilerplate salary for nurses, tin all the same be useful because information technology reflects what is happening in about of the submarkets.

When the toll of labor is not at the equilibrium, economical incentives tend to motility salaries toward the equilibrium. For example, if salaries for nurses in Minneapolis-St. Paul-Bloomington were in a higher place the equilibrium at $75,000 per yr, so 38,000 people desire to work equally nurses, but employers desire to hire only 33,000 nurses. At that higher up-equilibrium salary, excess supply or a surplus results. In a state of affairs of excess supply in the labor market, with many applicants for every chore opening, employers will take an incentive to offering lower wages than they otherwise would have. Nurses' bacon will motion down toward equilibrium.

In contrast, if the salary is beneath the equilibrium at, say, $lx,000 per yr, then a situation of backlog demand or a shortage arises. In this instance, employers encouraged by the relatively lower wage want to hire xl,000 nurses, but but 27,000 individuals desire to work as nurses at that bacon in Minneapolis-St. Paul-Bloomington. In response to the shortage, some employers will offer higher pay to concenter the nurses. Other employers volition take to match the higher pay to keep their own employees. The higher salaries will encourage more nurses to train or work in Minneapolis-St. Paul-Bloomington. Once again, cost and quantity in the labor market volition motion toward equilibrium.

Shifts in Labor Demand

The demand curve for labor shows the quantity of labor employers wish to hire at whatever given bacon or wage rate, nether the ceteris paribus assumption. A change in the wage or salary will result in a change in the quantity demanded of labor. If the wage rate increases, employers will want to hire fewer employees. The quantity of labor demanded volition decrease, and there volition be a motion upwardly along the demand curve. If the wages and salaries decrease, employers are more likely to rent a greater number of workers. The quantity of labor demanded will increment, resulting in a downward move along the demand curve.

Shifts in the need bend for labor occur for many reasons. One key reason is that the demand for labor is based on the demand for the good or service that is being produced. For example, the more new automobiles consumers demand, the greater the number of workers automakers will need to hire. Therefore the demand for labor is called a "derived need." Here are some examples of derived demand for labor:

The demand for chefs is dependent on the demand for eatery meals.
The need for pharmacists is dependent on the need for prescription drugs.
The demand for attorneys is dependent on the need for legal services.

As the demand for the goods and services increases, the demand for labor will increment, or shift to the right, to come across employers' product requirements. As the demand for the goods and services decreases, the demand for labor will subtract, or shift to the left. Table 2 shows that in addition to the derived demand for labor, need tin can also increase or decrease (shift) in response to several factors.

Factors	Results
Need for Output	When the demand for the good produced (output) increases, both the output price and profitability increase. As a event, producers need more than labor to ramp up product.
Instruction and Training	A well-trained and educated workforce causes an increase in the demand for that labor past employers. Increased levels of productivity inside the workforce will cause the demand for labor to shift to the right. If the workforce is not well-trained or educated, employers will non hire from within that labor puddle, since they will need to spend a meaning amount of time and coin grooming that workforce. Demand for such will shift to the left.
Technology	Engineering science changes can deed as either substitutes for or complements to labor. When applied science acts as a substitute, it replaces the need for the number of workers an employer needs to rent. For instance, word processing decreased the number of typists needed in the workplace. This shifted the demand curve for typists left. An increase in the availability of certain technologies may increment the demand for labor. Technology that acts as a complement to labor will increase the need for certain types of labor, resulting in a rightward shift of the demand bend. For example, the increased use of word processing and other software has increased the demand for it professionals who tin resolve software and hardware issues related to a house's network. More and better engineering science will increase demand for skilled workers who know how to use technology to enhance workplace productivity. Those workers who practice not adapt to changes in engineering science volition experience a decrease in demand.
Number of Companies	An increase in the number of companies producing a given product will increase the need for labor resulting in a shift to the correct. A decrease in the number of companies producing a given product will decrease the demand for labor resulting in a shift to the left.
Government Regulations	Complying with government regulations can increase or subtract the need for labor at any given wage. In the healthcare industry, regime rules may require that nurses exist hired to comport out certain medical procedures. This will increment the demand for nurses. Less-trained healthcare workers would be prohibited from carrying out these procedures, and the demand for these workers will shift to the left.
Price and Availability of Other Inputs	Labor is not the only input into the product process. For example, a salesperson at a phone call heart needs a telephone and a estimator final to enter data and tape sales. The demand for salespersons at the phone call center volition increase if the number of telephones and computer terminals bachelor increases. This will cause a rightward shift of the demand curve. As the amount of inputs increases, the demand for labor will increase. If the last or the telephones malfunction, then the demand for that labor force volition decrease. As the quantity of other inputs decreases, the demand for labor volition decrease. Similarly, if prices of other inputs fall, product will become more profitable and suppliers volition demand more labor to increase production. The contrary is too true. Higher input prices lower demand for labor
Table 2. Factors That Can Shift Need

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Shifts in Labor Supply

The supply of labor is upward-sloping and adheres to the constabulary of supply: The higher the cost, the greater the quantity supplied and the lower the price, the less quantity supplied. The supply curve models the tradeoff between supplying labor into the market or using time in leisure activities at every given toll level. The higher the wage, the more than labor is willing to piece of work and forego leisure activities. Table 3 lists some of the factors that volition cause the supply to increase or subtract.

Factors	Results
Number of Workers	An increased number of workers will cause the supply curve to shift to the right. An increased number of workers tin be due to several factors, such as immigration, increasing population, an aging population, and changing demographics. Policies that encourage clearing will increase the supply of labor, and vice versa. Population grows when birth rates exceed death rates; this eventually increases supply of labor when the erstwhile attain working historic period. An crumbling and therefore retiring population will decrease the supply of labor. Another example of changing demographics is more women working outside of the home, which increases the supply of labor.
Required Education	The more required didactics, the lower the supply. There is a lower supply of PhD mathematicians than of high school mathematics teachers; there is a lower supply of cardiologists than of primary care physicians; and there is a lower supply of physicians than of nurses.
Government Policies	Government policies can likewise affect the supply of labor for jobs. On the 1 manus, the government may back up rules that fix high qualifications for certain jobs: academic training, certificates or licenses, or feel. When these qualifications are made tougher, the number of qualified workers will decrease at any given wage. On the other hand, the government may also subsidize training or even reduce the required level of qualifications. For example, government might offering subsidies for nursing schools or nursing students. Such provisions would shift the supply curve of nurses to the right. In addition, government policies that change the relative desirability of working versus not working also affect the labor supply. These include unemployment benefits, maternity leave, child care benefits and welfare policy. For case, child care benefits may increment the labor supply of working mothers. Long term unemployment benefits may discourage chore searching for unemployed workers. All these policies must therefore exist advisedly designed to minimize any negative labor supply effects.
Table three. Factors that Can Shift Supply

A change in salary will lead to a movement along labor demand or labor supply curves, merely information technology will not shift those curves. Still, other events similar those outlined here will crusade either the need or the supply of labor to shift, and thus will motility the labor market to a new equilibrium salary and quantity.

Applied science and Wage Inequality: The 4-Step Process

Economical events can alter the equilibrium salary (or wage) and quantity of labor. Consider how the wave of new data technologies, like computer and telecommunications networks, has affected depression-skill and loftier-skill workers in the U.Due south. economic system. From the perspective of employers who need labor, these new technologies are often a substitute for low-skill laborers like file clerks who used to keep file cabinets full of paper records of transactions. However, the same new technologies are a complement to loftier-skill workers like managers, who benefit from the technological advances past being able to monitor more information, communicate more than easily, and juggle a wider array of responsibilities. So, how will the new technologies affect the wages of loftier-skill and low-skill workers? For this question, the four-pace procedure of analyzing how shifts in supply or demand affect a marketplace (introduced in Need and Supply) works in this style:

Step i. What did the markets for low-skill labor and loftier-skill labor look like before the arrival of the new technologies? In Figure 2 (a) and Figure two (b), Southward₀ is the original supply curve for labor and D₀ is the original demand curve for labor in each market. In each graph, the original signal of equilibrium, Eastward₀, occurs at the price W₀ and the quantity Q₀.

The two graphs show how new technology influences supply and demand. The graph on the left represents low-skill labor, and the graph on the right represents high-skill labor. — **Figure 2.** Applied science and Wages: Applying Demand and Supply (a) The need for low-skill labor shifts to the left when applied science can do the chore previously washed by these workers. (b) New technologies can also increase the demand for high-skill labor in fields such as information technology and network administration.

Step 2. Does the new technology bear upon the supply of labor from households or the demand for labor from firms? The technology change described here affects demand for labor by firms that hire workers.

Step 3. Will the new engineering increase or decrease need? Based on the clarification earlier, as the substitute for depression-skill labor becomes bachelor, demand for low-skill labor will shift to the left, from D₀ to D_one. As the technology complement for high-skill labor becomes cheaper, demand for loftier-skill labor will shift to the correct, from D₀ to D₁.

Step 4. The new equilibrium for low-skill labor, shown as point E_one with price W_i and quantity Q_ane, has a lower wage and quantity hired than the original equilibrium, E₀. The new equilibrium for loftier-skill labor, shown as bespeak Due east_one with price W_i and quantity Q₁, has a higher wage and quantity hired than the original equilibrium (Eastward₀).

Then, the demand and supply model predicts that the new estimator and communications technologies volition raise the pay of loftier-skill workers but reduce the pay of low-skill workers. Indeed, from the 1970s to the mid-2000s, the wage gap widened between high-skill and depression-skill labor. According to the National Center for Education Statistics, in 1980, for example, a college graduate earned about 30% more than than a loftier schoolhouse graduate with comparable task feel, but by 2012, a college graduate earned about 60% more than than an otherwise comparable high school graduate. Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by the new technologies.

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Price Floors in the Labor Market: Living Wages and Minimum Wages

In contrast to goods and services markets, cost ceilings are rare in labor markets, because rules that forbid people from earning income are not politically pop. There is one exception: sometimes limits are proposed on the high incomes of top business executives.

The labor market, however, presents some prominent examples of price floors, which are often used as an attempt to increase the wages of low-paid workers. The U.S. authorities sets a minimum wage, a price floor that makes it illegal for an employer to pay employees less than a certain hourly charge per unit. In mid-2009, the U.South. minimum wage was raised to $7.25 per hour. Local political movements in a number of U.S. cities take pushed for a college minimum wage, which they call a living wage. Promoters of living wage laws maintain that the minimum wage is likewise low to ensure a reasonable standard of living. They base of operations this determination on the calculation that, if you work 40 hours a week at a minimum wage of $seven.25 per hour for 50 weeks a twelvemonth, your almanac income is $14,500, which is less than the official U.South. authorities definition of what it means for a family unit to be in poverty. (A family with two adults earning minimum wage and two young children volition notice it more cost efficient for 1 parent to provide childcare while the other works for income. So the family income would exist $14,500, which is significantly lower than the federal poverty line for a family of four, which was $23,850 in 2014.)

Supporters of the living wage argue that total-time workers should be assured a high enough wage and so that they can beget the essentials of life: food, clothing, shelter, and healthcare. Since Baltimore passed the first living wage law in 1994, several dozen cities enacted like laws in the late 1990s and the 2000s. The living wage ordinances do not utilize to all employers, simply they have specified that all employees of the city or employees of firms that are hired by the city be paid at least a certain wage that is normally a few dollars per hr higher up the U.S. minimum wage.

Figure 3 illustrates the situation of a metropolis because a living wage law. For simplicity, we assume that in that location is no federal minimum wage. The wage appears on the vertical axis, because the wage is the price in the labor market. Before the passage of the living wage law, the equilibrium wage is $10 per hour and the city hires 1,200 workers at this wage. However, a grouping of concerned citizens persuades the urban center council to enact a living wage constabulary requiring employers to pay no less than $12 per 60 minutes. In response to the college wage, i,600 workers look for jobs with the city. At this higher wage, the city, as an employer, is willing to hire only 700 workers. At the toll flooring, the quantity supplied exceeds the quantity demanded, and a surplus of labor exists in this market. For workers who go along to accept a job at a college salary, life has improved. For those who were willing to work at the former wage rate simply lost their jobs with the wage increase, life has not improved. Tabular array 4 shows the differences in supply and demand at different wages.

The graph shows how a price floor results from an excess supply of labor. — **Figure three.** A Living Wage: Case of a Cost Floor The original equilibrium in this labor market is a wage of $10/hour and a quantity of 1,200 workers, shown at point Due east. Imposing a wage floor at $12/hour leads to an excess supply of labor. At that wage, the quantity of labor supplied is 1,600 and the quantity of labor demanded is only 700.

Wage	Quantity Labor Demanded	Quantity Labor Supplied
$8/hr	one,900	500
$ix/hr	1,500	900
$10/60 minutes	1,200	1,200
$11/hr	900	1,400
$12/60 minutes	700	ane,600
$13/60 minutes	500	1,800
$xiv/hr	400	1,900
Tabular array 4. Living Wage: Example of a Price Floor

The Minimum Wage equally an Example of a Price Flooring

The U.S. minimum wage is a cost floor that is set either very shut to the equilibrium wage or even slightly below information technology. Nearly ane% of American workers are actually paid the minimum wage. In other words, the vast majority of the U.South. labor forcefulness has its wages adamant in the labor market place, non equally a effect of the government price floor. Simply for workers with low skills and little experience, like those without a high schoolhouse diploma or teenagers, the minimum wage is quite important. In many cities, the federal minimum wage is apparently below the market price for unskilled labor, considering employers offer more than the minimum wage to checkout clerks and other low-skill workers without any government prodding.

Economists have attempted to estimate how much the minimum wage reduces the quantity demanded of depression-skill labor. A typical result of such studies is that a 10% increase in the minimum wage would decrease the hiring of unskilled workers past ane to two%, which seems a relatively small reduction. In fact, some studies accept even institute no result of a college minimum wage on employment at sure times and places—although these studies are controversial.

Allow's suppose that the minimum wage lies just slightly beneath the equilibrium wage level. Wages could fluctuate according to market place forces to a higher place this price floor, but they would not be allowed to move beneath the floor. In this state of affairs, the price floor minimum wage is said to be nonbinding —that is, the toll floor is not determining the market outcome. Fifty-fifty if the minimum wage moves just a lilliputian college, it will still take no effect on the quantity of employment in the economic system, equally long as information technology remains below the equilibrium wage. Fifty-fifty if the minimum wage is increased by enough then that it rises slightly above the equilibrium wage and becomes binding, in that location will be only a small excess supply gap between the quantity demanded and quantity supplied.

These insights help to explain why U.S. minimum wage laws have historically had only a small affect on employment. Since the minimum wage has typically been gear up close to the equilibrium wage for low-skill labor and sometimes even beneath it, it has not had a big effect in creating an excess supply of labor. However, if the minimum wage were increased dramatically—say, if it were doubled to lucifer the living wages that some U.Southward. cities accept considered—then its impact on reducing the quantity demanded of employment would be far greater. The following Clear It Upward feature describes in greater particular some of the arguments for and against changes to minimum wage.

What's the harm in raising the minimum wage?

Because of the constabulary of demand, a higher required wage volition reduce the amount of depression-skill employment either in terms of employees or in terms of work hours. Although in that location is controversy over the numbers, let'due south say for the sake of the argument that a 10% rise in the minimum wage will reduce the employment of depression-skill workers by two%. Does this upshot mean that raising the minimum wage by 10% is bad public policy? Non necessarily.

If 98% of those receiving the minimum wage have a pay increase of 10%, but 2% of those receiving the minimum wage lose their jobs, are the gains for lodge every bit a whole greater than the losses? The answer is not clear, because job losses, fifty-fifty for a pocket-size group, may cause more pain than modest income gains for others. For one thing, nosotros need to consider which minimum wage workers are losing their jobs. If the two% of minimum wage workers who lose their jobs are struggling to support families, that is one affair. If those who lose their job are loftier school students picking upward spending money over summer holiday, that is something else.

Another complication is that many minimum wage workers practise not work total-time for an entire year. Imagine a minimum wage worker who holds dissimilar role-time jobs for a few months at a fourth dimension, with bouts of unemployment in between. The worker in this situation receives the 10% heighten in the minimum wage when working, but besides ends up working ii% fewer hours during the yr because the higher minimum wage reduces how much employers want people to work. Overall, this worker's income would rise because the 10% pay raise would more than than kickoff the 2% fewer hours worked.

Of form, these arguments exercise not prove that raising the minimum wage is necessarily a adept thought either. In that location may well exist other, better public policy options for helping low-wage workers. (The Poverty and Economic Inequality chapter discusses some possibilities.) The lesson from this maze of minimum wage arguments is that circuitous social problems rarely have simple answers. Fifty-fifty those who agree on how a proposed economical policy affects quantity demanded and quantity supplied may still disagree on whether the policy is a skilful idea.

Key Concepts and Summary

In the labor market place, households are on the supply side of the marketplace and firms are on the need side. In the market place for financial capital letter, households and firms tin be on either side of the marketplace: they are suppliers of financial capital when they relieve or make fiscal investments, and demanders of financial capital when they borrow or receive financial investments.

In the demand and supply analysis of labor markets, the price can be measured by the annual salary or hourly wage received. The quantity of labor can be measured in various ways, like number of workers or the number of hours worked.

Factors that can shift the demand curve for labor include: a change in the quantity demanded of the product that the labor produces; a change in the production process that uses more or less labor; and a change in authorities policy that affects the quantity of labor that firms wish to rent at a given wage. Need tin besides increase or decrease (shift) in response to: workers' level of teaching and training, technology, the number of companies, and availability and price of other inputs.

The main factors that can shift the supply curve for labor are: how desirable a task appears to workers relative to the alternatives, government policy that either restricts or encourages the quantity of workers trained for the chore, the number of workers in the economy, and required teaching.

Cocky-Bank check Questions

In the labor market, what causes a movement along the demand curve? What causes a shift in the demand curve?
In the labor market place, what causes a movement along the supply curve? What causes a shift in the supply curve?
Why is a living wage considered a cost floor? Does imposing a living wage accept the same event as a minimum wage?

Review Questions

What is the "price" commonly chosen in the labor market?
Are households demanders or suppliers in the goods market? Are firms demanders or suppliers in the appurtenances market? What about the labor market place and the fiscal market?
Name some factors that can crusade a shift in the demand curve in labor markets.
Proper name some factors that tin can cause a shift in the supply curve in labor markets.

Critical Thinking Questions

Other than the demand for labor, what would be another case of a "derived need?"
Suppose that a 5% increase in the minimum wage causes a 5% reduction in employment. How would this affect employers and how would it bear upon workers? In your stance, would this be a skilful policy?
What assumption is made for a minimum wage to be a nonbinding price floor? What assumption is fabricated for a living wage toll floor to exist binding?

Problems

Place each of the following every bit involving either demand or supply. Depict a circular period diagram and label the flows A through F. (Some choices can be on both sides of the goods market place.)
1. Households in the labor marketplace
2. Firms in the goods marketplace
3. Firms in the financial market
4. Households in the goods market
5. Firms in the labor marketplace
6. Households in the financial market place
Predict how each of the post-obit events will raise or lower the equilibrium wage and quantity of coal miners in West Virginia. In each example, sketch a demand and supply diagram to illustrate your reply.
1. The price of oil rises.
2. New coal-mining equipment is invented that is inexpensive and requires few workers to run.
3. Several major companies that practise not mine coal open factories in West Virginia, offering a lot of well-paid jobs.
4. Government imposes plush new regulations to make coal-mining a safer job.

References

American Community Survey. 2012. "Schoolhouse Enrollment and Work Status: 2011." Accessed Apr thirteen, 2015. http://world wide web.demography.gov/prod/2013pubs/acsbr11-14.pdf.

National Center for Educational Statistics. "Digest of Education Statistics." (2008 and 2010). Accessed December xi, 2013. nces.ed.gov.

Glossary

minimum wage: a price floor that makes information technology illegal for an employer to pay employees less than a certain hourly rate

Solutions

Answers to Self-Cheque Questions

Changes in the wage rate (the price of labor) cause a movement along the demand curve. A modify in annihilation else that affects demand for labor (e.grand., changes in output, changes in the production process that use more or less labor, authorities regulation) causes a shift in the demand curve.
Changes in the wage rate (the price of labor) cause a movement along the supply bend. A alter in anything else that affects supply of labor (e.g., changes in how desirable the job is perceived to exist, authorities policy to promote grooming in the field) causes a shift in the supply curve.
Since a living wage is a suggested minimum wage, it acts similar a cost floor (bold, of form, that it is followed). If the living wage is binding, it will cause an excess supply of labor at that wage charge per unit.