Prospective employees need food and shelter, and will accept any wage sufficient for that rather than starve.
If this were true, then there would never be any wage higher than subsistence level. Let’s say it costs $2 an hour to feed someone and give them minimal shelter. Then all jobs would pay $2 an hour. But we don’t observe that, implying that employees will not “accept any wage [that keeps them from starving].”
The standard competition model tries to explain this by positing that employees have more than one option. Even if people don’t apply to multiple jobs, in theory they could; employers know that, and so they won’t generally offer employees starvation wages.
There are flaws with this theory; for instance, some workers are really bad at negotiation and get exploited. But generally we strive for simple theories that explain most of the facts before we move on to more complicated theories that can only explain a little more.
If this were true, then there would never be any wage higher than subsistence level. Let’s say it costs $2 an hour to feed someone and give them minimal shelter. Then all jobs would pay $2 an hour. But we don’t observe that, implying that employees will not “accept any wage [that keeps them from starving].”
The standard competition model tries to explain this by positing that employees have more than one option. Even if people don’t apply to multiple jobs, in theory they could; employers know that, and so they won’t generally offer employees starvation wages.
There are flaws with this theory; for instance, some workers are really bad at negotiation and get exploited. But generally we strive for simple theories that explain most of the facts before we move on to more complicated theories that can only explain a little more.