ELI5, what exactly does “competitive wages/pay” mean?
In: Economics
Let’s say I’m a worker looking for a job. There are two companies that want to hire me for identical positions. So obviously I’m going to go with the job that pays better. Those companies would then compete with each other by offering better wages/ employment packages. It’s the same thing as supply and demand, just reversed. I’m the product, going to the highest bidder.
The alternative is companies offering a set wage, then just waiting until someone is willing to take it. And that works when there are more people than jobs. But when there are more jobs than people, companies need to try harder to bring them on board. Or just complain about a “worker shortage.”
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