Question

You are the owner of a small pizzeria store in Jersey City and are working on the pay structure of your company. You recognize the economic influences on pay by:
1) Identifying what Product Market factors would be relevant (3 points)
2) Identifying what Labor Market factors would be relevant (3 points)

Answer 1

1. Three product-market factors :
   
   The nature and scope of the target market - The nature and scope of the target market implies the type of market that we're dealing with and the extent to which our products and / or services and be sold or provided can be defined as the scope of the market.
   
   The product’s cultural associations - A critical factor influencing brand structure is the extent to which the product is associated with a particular culture, that is, the extent to which there are strong and deeply ingrained local preferences for specific products or product variants. The stronger the cultural association, the less likely it is that global product brands will thrive; instead, local branding may be called for.
   
   The competitive market structure -  The Relative strength of local (national) versus global competitors in a given product market. If markets are fully integrated and the same competitors compete in these markets worldwide, as in aerospace, the use of global brands helps provide competitive differentiation on a global basis. If strong local, national, or regional competitors, as well as global competitors, are present in a given national or regional market.
   
2. Labor Market Factors :

   Some factors can influence labor supply and demand. For example, an increase in immigration to a country can grow the labor supply and potentially depress wages, particularly if newly arrived workers are willing to accept lower pay. An aging population can deplete the supply of labor and potentially drive up wages.

   These factors don't always have such straightforward consequences, though. A country with an aging population will see demand for many goods and services decline, while demand for healthcare increases. Not every worker who loses his job can simply move into healthcare work, particularly if the jobs in demand are highly skilled and specialized, such as doctors. For this reason, demand can exceed supply in certain sectors, even if supply exceeds demand in the labor market as a whole.
   
   Factors influencing contemporary labor markets, and the U.S. labor market in particular, include: the threat of automation as computer programs gain the ability to do more complex tasks; the effects of globalization as enhanced communication and better transport links allow work to be moved across borders; the price, quality and availability of education; and a whole array of policies such as the minimum wage.