The labor market is similar to other markets in the sense that the laws or supply and demand determine the price. In the case of labor, price means the wages that workers receive. The difference of the labor market from the others is that in this market, the firms make up the demand while the individual workers comprise the supply of labor.
Labor is an important element in the production of goods and services. This is the reason why firms need labor supplied by the workers. However, firms will only hire workers if the additional revenue that it will get from it will cover the additional costs that come with hiring the workers.
Different professions are paid differently. Some professions receive higher wages than others. This is due to the amount of productivity that they can give. More productive workers receive higher wages. Productivity can be increased by higher education and experience. For instance, registered nurses receive higher wages than hotel clerks. This is because nurses are more productive as they tend to be better educated.
Furthermore, professions or jobs that require higher productivity tend to have higher demand. However, these jobs also require harder training or longer schooling. Thus, there are less people wanting to undergo such. This results to lower supply. With a high demand and a low supply, the prices of labor for these professions tend to be high. This is one of the basic principles of the law of supply and demand.
Basically, the differences in wages of various professions are due to the differences in education and training that workers in such professions need to enter it. The higher the education or the more difficult the training, the tendency is for the wages to be higher.