# data[].attributes.body
In this section you will see three distinct colour gradients varying from green yellow and red. Green indicates an easy to follow format followed with yellow being a more bite for the brain to analyze while red is a bit of a read and needing to analyze, identify, and understand the information being presented. Happy learning :)

# data[].attributes.headline
A one minute guide to "The Law of Demand"

# data[].attributes.subject
A one minute guide to "The Law of Demand"

# data[].attributes.body
Have you ever wanted bananas but see that all the stores you go to don't sell them, well that's called demand! in this short video, you'll see just how important understanding demand can either benefit you or leave you hungry.

I chose this video because it gives a quick and easy snapshot of what demand is.

# data[].attributes.attachment_link.title
Supply and Demand Explained in One Minute

# data[].attributes.headline
Welcome: Introduction to the Law of Demand

# data[].attributes.subject
Welcome: Introduction to the Law of Demand

# data[].attributes.body
Welcome to the interactive journey into understanding the Law of Demand! This crucial concept in economics explains how the quantity of a good demanded by consumers changes as its price changes. Your are about to embark on a discovery of multiple resources that covers all angles of this topic - from in-depth videos and insightful websites to real-life Canadian demand statistics and images! Get ready to dive in!

# data[].attributes.headline
A Brief Introduction to "The Law of Demand"

# data[].attributes.subject
A Brief Introduction to "The Law of Demand"

# data[].attributes.body
This video shows graphically the "law of Demand" with candy! Depending on the price of the good and the demand of the product or service the individual can see its complexity in a simple to understand graph and in this video we show you how its done.

I chose this video specifically because the presenter displays their information clearly and explains key points displayed in lecture so to me it is bringing the information taught come full circle in a sense.

# data[].attributes.headline
The Demand Curve...not as scary as you would think

# data[].attributes.subject
The Demand Curve...not as scary as you would think

# data[].attributes.body
In this video we go deeper into the information from the prior video but with a bit more varying examples and showcase real world examples of consumer trends.

I chose this video as the same statement prior but this one adds a bit of humor and energy, economics can be slightly dry so this is refreshing to me :)

# data[].attributes.headline
A Deep Dive on Elasticity of Demand and how they both play a key role with each other.

# data[].attributes.subject
A Deep Dive on Elasticity of Demand and how they both play a key role with each other.

# data[].attributes.body
This comprehensive video deep dives on the calculation deriving the demand with something called the Elasticity of Demand, which is very useful in understanding how an item can be elastic or inelastic.

Being an engineering student I like number crunching so this got me brain cells going. so I thought others may be interested in it too.

# data[].attributes.attachment_link.keywords[]
price elasticity of demand (literature subject)

# data[].attributes.attachment_link.description
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In this video, we go over specific terminology and notation, including how to use the midpoint formula. We apply elasticity of demand to the war on drugs, and more broadly to the prohibition of a good when it has an elastic demand.

# data[].attributes.headline
Khan Academy beautifully explaining "Law of Demand"

# data[].attributes.subject
Khan Academy beautifully explaining "Law of Demand"

# data[].attributes.body
Khan Academy being a bountiful resource as it delivers an easy to read understanding of how to see trends in the demand of goods with an introduction to the demand curve.

I chose Khan Academy simply because of how useful their resources are! I have used the platform many times and will always reference them when I can.

# data[].attributes.attachment_link.description
If the price of something goes up, people are going to buy less of it.

# data[].attributes.body
In this Stats Canada report showing the trends of products and goods that the average Canadian consumer purchases can give insight to the demands of the every day Canadian consumer.

I chose the Government of Canada sites such as this and the others follow simply because they are (almost) flawless resources for gathering data on the demand, CPI, and other economical needs for evaluating what will happen in future based on trends.

# data[].attributes.attachment_link.readable_text
Note: This report includes forecasting data that is based on baseline historical data.

Executive summary

Canada's population at an estimate of 38.9 million in 2023, has historically increased by a compound annual growth rate (CAGR) of 1.2% over the last decade (2013 to 2023), and is expected to slow in growth by 0.7% over the forecast period (2023 to 2033) - despite a high increase in immigrants welcomed to the country until 2025. The country's urban population at 32.4 million in 2023, which has increased by a CAGR of 1.3% (2018 to 2023) is forecast to remain relatively stable over the next 10 years (+0.9%); reaching a total of 35.8 million, accounting for 83.4% of the country's total population in 2033.

The top 10 largest urban cities in Canada accounted for just shy of half of the population (48.1%) in 2023. Toronto is the biggest city at approximately 6.0 million people, followed by Montréal (4.0 million) and Vancouver (2.6 million) over the year.

Canada was the 10th largest global exporter of processed or value-added packaged agri-food and seafood products at exports of Can$48.0 billion, representing a trade surplus of Can$14.0 billion with imports from the world at Can$34.0 billion in 2022. The top five exported commodities in 2022, were bread and bakery products, low erucic acid canola oil (excluding crude), and fresh or chilled bovine meat (boneless) with total exports of value-added agri-food and seafood growing by a CAGR of 10.4% (2018 to 2022).

In 2023, retail sales of packaged food in Canada totaled Can$77.6 billion in current prices. Top categories with the highest sales included dairy (Can$16.6 billion), baked goods (Can$11.2 billion), and meals and soups (Can$9.1 billion). Common trends within all packaged food categories are focused around products that target the 'healthy-consciousness' consumer that consist of natural, fortified or functional ingredients. Plant-based or high in protein products are becoming high in demand, as well.

Price-sensitivity is of utmost importance, as food inflation in the country reached an all-time high in early 2023, and of which is expected to remain high for the unforeseeable future. Convenience, intriguing or culturally-inspired offerings are key factors to help maintain high demand and interest in the food or drink industry. E-commerce platforms have played a vital role in supporting retailers during lockdown periods, which have continued to gain a much higher retailer market share amongst all distribution channels in recent years.

Consumer profile

In 2022, Canada's population reached 38.9 million and has grew at a slow rate by a CAGR of 1.2% over the last decade (2013-2023). This population consisted of approximately 7.3 million of children under the age of 17, 14.2 million of young and middle youth adults (aged 18-44), 10.1 million of mid-lifers (aged 45-64), and 7.3 million of later lifers and seniors (aged 65+) in 2022. Canada's urban population accounted for 81.7% with the remainder 18.3% of the population residing in rural regions over last year.

Toronto has the largest urban population at 5.9 million people, accounting for 15.2% of the total population throughout Canada, followed by Montreal (10.1%), Vancouver (6.7%), Calgary (3.5%), and Edmonton (3.1%) in 2022. Out of the ten most populated urban regions in Canada, the National capital region (Ottawa - Gatineau) accounting for 2.7% of the total population in 2022, and is expected to increase at one of the highest CAGR by 1.0% (2022-2032) - along with a higher population growth in London - Ontario (1.2%) and Vancouver (1.0%).

Canada's population by main urban cities, 2022 to 2032

In 2022, out of approximately 15.3 million households, Canada's average household size was 2.5 persons with an average of 0.5 children per household. Single persons represented the largest demographic by 29.5%, followed by couples without children (25.6%), couples with children (25.1%), other blended families (11.1%), and single-parent families (8.7%). Home owners accounted for 63.9% of the population and 34.6% were renters living in apartments in 2022.

The median age of population was 41.0 in Canada in 2022. In Canada, the average gross income of population (aged 15+) was Can$66,952.1 with an annual median disposable income per household of Can$76,637.2 in 2022. The total Canadian average gross income was the lowest at Can$27,172.9 of population (aged 15-19) and on average peaked at Can$86,972.8 of population (aged 45-49). In Canada, middle class households consisted of 32.1% of the population. Out of a workforce of 84.4% of the total population (32.9 million people) in 2022, Canadians (Social Class C) bringing in a salary between (100-150%) of the average gross income (up to Can$100,428.2) accounted for 21.2% of the population, while 32.1% (Social Class D) made between (50-100% avg. income), and 26.5% (Social Class E) made less than 50% of average salary per year (<Can$33,476.1). On the upper end, 11.3% (Social Class B) of the population made a salary between (150-200% avg. income) and 8.8% of the population (Social Class A) made over 200% of average salary per year (>Can$133,904.2).

Exports

Canada was the 10th largest exporter of value-added processed packaged food and seafood products at a total value of Can$48.0 billion and a global market share of 3.6% in 2022. Canada is a net exporter of processed agri-food and seafood products with 2022 imports from the world at Can$34.0 billion, representing a trade surplus of Can$14.0 billion.

Canada's processed agri-food and seafood exports increased by a CAGR of 10.4% between 2018 and 2022. The top five exported commodities in 2022 at a total of Can$16.1 billion (33.4%) were bread and bakery products at Can$4.4 billion (9.1%), low erucic acid canola oil, excluding crude at Can$4.3 billion (8.9%), fresh or chilled bovine meat, boneless at Can$2.8 billion (5.9%), canola meal at Can$2.5 billion (5.2%), and Frozen French fries at Can$2.1 billion (4.3%). Key exporter countries over last year were the United States (Can$37.4 billion), China (Can$2.4 billion), Japan (Can$2.1 billion), Mexico (Can$1.4 billion), and the European Union (Can$931.6 million).

Retail sales - packaged food

In 2023, retail sales of packaged food products in Canada totalled Can$77.6 billion. Top categories with the highest sales included dairy (Can$16.6 billion), baked goods (Can$11.2 billion), meals and soups (Can$9.1 billion), and within the snacks category was savoury snacks (Can$6.6 billion). Albeit, categories that registered the highest 5-year compound annual growth rates (2018-2023) were plant-based dairy (9.4%) and edible oils (9.0%).

All packaged food categories, overall managed to recover during the post-COVID-19 period and registered moderate positive CAGRs between 2018 and 2023. Nevertheless, all categories are expected to slow down in growth mostly contributable to fluctuations in price hikes - at the exception of the baby food category, predicted to rebound once both manufacturers and the government works collaboratively together to address previous global supply chain challenges. Additionally, as Canadians return physically back to work and socialize in public more, snacks such as ice cream (CAGR: 6.3%), confectionery (5.5%), and sweet biscuits, snack bars and fruit snacks (4.3%) are forecast to grow (2023-2028) over historic values.

In 2023, leading retail companies (and top brands) in the packaged food category in Canada included Saputo Inc. (Dairyland, Neilson, Saputo) at a value of Can$3.6 billion and a 4.6% value share, PepsiCo Inc. (Tostitos, Quaker, Harvest Crunch) at Can$3.3 billion (4.3%), and the Kraft Heinz Company (Kraft, Heinz, Classico) at Can$3.2 billion (4.2%). Private labelled brands accounted for 13.0% at sales of Can$10.1 billion, with artisanal companies accounting for 5.0% (Can$3.8 billion) in 2023.

Dairy products and alternatives

Retail sales

In 2023, dairy in Canada totalled Can$16.6 billion or 92.2% of the dairy products and alternatives category, growing by a CAGR of 5.1% between 2018 and 2023. Cheese was the largest subsector within the dairy category increasing to Can$6.8 billion (41.2%), followed by drinking milk products dropping to Can$3.2 billion (19.2%), yoghurt and sour milk products increasing to Can$2.7 billion (16.0%), and butter and spreads increasing to Can$2.0 billion (12.0%) in 2023.

Competitive landscape - dairy

In 2023, leading retail companies (top brands) in the Canadian dairy category included Saputo Inc. (Dairyland, Neilson, Saputo) at a value of Can$3.6 billion (21.7%), The Lactalis Groupe (Lactantia, Beatrice, Black Diamond) at Can$3.2 billion (19.3%), and Agropur Co-operative Agro-Alimentaire (L'Extra, Natrel, Quebon) at Can$2.6 billion (15.5%). Private labelled dairy brands accounted for Can$1.3 billion (15.5%) of sales in 2023.

Retail distribution channels - dairy products and alternatives

In 2023, store-based retailing distribution of dairy products and alternatives totalled a market share of 94.8% mainly consisting of grocery retailers such as supermarkets (54.8%), hypermarkets (18.7%), small local grocers (9.2%), and discounters (6.8%). Non-store e-commerce retailing for dairy products and alternatives held a 5.2% market share, which has increased by a high CAGR of 79.2% from sales of Can$51.3 million in 2018 to Can$947.2 million in 2023.

Staple foods - baked goods

Retail sales

In 2023, baked goods were the 2nd largest packaged food segment at a total retail sales value of Can$11.2 billion in Canada, growing historically by a CAGR of 7.0% between 2018 and 2023. Bread was the largest subsector within the baked goods category to reach sales of Can$6.7 billion (59.5%), followed by pastries at Can$2.1 billion (12.2%), cakes at Can$1.2 billion (11.1%), dessert pies and tarts at Can$726.0 million (7.0%), frozen baked goods at Can$388.6 million (5.5%), and dessert mixes at Can$113.7 million (3.3%) in 2023.

Competitive landscape - Baked goods

In 2023, leading retail companies (and top brands) in the baked goods category in Canada included Grupo Bimbo SAB de CV (Dempster's, Vachon, Stonemill) at sales of Can$1.7 billion (15.0%), George Weston Ltd. (Wonder Bread, Country Harvest, D'Italiano) at Can$980.0 million (8.8%), and FGF Brands Inc. (Casa Mendosa) at Can$181.6 million (1.6%). Artisanal bakers, however, brought in the highest share of sales value at Can$3.8 billion (34%), followed by private label baked good products that totalled Can$2.3 billion (20.2%) in 2023.

Retail distribution channels - staple foods

In 2023, store-based retailing distribution of staple foods like baked good products totalled a market share of 95.5% mainly consisting of grocery retailers such as supermarkets (46.5%), hypermarkets (20.9%), small local grocers (9.9%), discounters (7.9%), and food/drink tobacco specialists (6.0%). Non-store e-commerce retailing for staple food products held a 4.5% market share, which has increased by a high CAGR of 94.2% from sales of Can$42.6 million in 2018 to Can$1.2 billion in 2023.

Cooking ingredients - meals and soups

In 2023, the meals and soups category was the 3rd largest packaged food segment at a total retail sales value of Can$9.1 billion in Canada, growing historically by a CAGR of 7.1% between 2018 and 2023. Ready meals was the largest subsector within this category that reached sales of Can$4.4 billion (48%), followed by prepared salads at Can$1.5 billion (15.9%), food kits at Can$1.3 billion (14%), packaged pizzas at Can$1.2 million (12.7%), and soup at Can$861.8 million (9.4%) in 2023.

Competitive landscape - meals and soups

In 2023, leading retail companies (and brands) in the meals and soups category in Canada included Nestlé SA (Stouffer's, Delissio, Marketplace Cuisine) at Can$1.2 billion (13.5%), HelloFresh SE (Chef's Plate, HelloFresh) at Can$577.8 million (6.3%), and the Campbell Soup Company (Campbell's, Habitant) at Can$521.5 million (5.7%). Private label meals and soups products held highest sales at a total market value of Can$1.5 million (16.1%) in 2023.

As people have started to return to work, the increasingly hectic lifestyles of consumers are anticipated to drive heightened demand for meal kits, which have led to sales growth in companies like Hello Fresh, Good Food, and several other new start-ups, such as Halalmeals and Inspired Go in Canada.

Retail distribution channels - cooking ingredients and meals

In 2023, store-based retailing distribution of cooking ingredients and meals totalled a market share of 90.9% mainly consisting of grocery retailers such as supermarkets (53.7%), hypermarkets (17.4%), small local grocers (12.1%), and discounters (5.4%). Non-store e-commerce retailing for cooking ingredients and meal products held a 9.1% market share, which has increased by a high CAGR of 40.2% from sales of Can$262.2 million in 2018 to Can$1.4 billion in 2023.

Snacks - savoury

In 2023, savoury snack products in Canada was the largest segment in the overall snack category at a total retail sales value of Can$6.6 billion, growing historically by a CAGR of 6.8% between 2018 and 2023. Salty snacks had the highest sales in the savoury snack category at a value of Can$3.6 billion (54.1%), followed by nuts, seeds and trail mixes at Can$1.1 billion (16.2%), savoury biscuits at Can$913.2 million (13.8%), meat snacks at Can$541.3 million (8.2%), popcorn at Can$286.5 million (4.3%), pretzels at Can$89.8 million (1.4%), and seafood snacks at Can$12.3 million (1.(%) in 2023.

Competitive landscape - savoury snacks

In 2023, leading retail companies (and brands) in the savoury snack category in Canada included PepsiCo Inc. (Lay's, Doritos, Ruffles) at Can$2.5 billion (37.6%), Mondelez International Inc. (Ritz, Premium, Christie) at Can$466.8 million (7.1%), and Old Dutch Foods Inc. (Old Dutch, Restaurante Style, Humpty Dumpty) at Can$360.3 million (5.4%). Private label savoury snack brands held a high total market value of Can$968.4 million (14.6%) in 2023.

Retail distribution channels - snacks category

In 2023, store-based retailing distribution of snack products totalled a market share of 94.5%. While grocery retailers such as supermarkets (28.9%) and hypermarkets (11.4%) have maintained their growth in the snack category, discounters (13.1%), small local grocers (12.9%), and convenience and forecourt retailers (11.4%) have at the same time steadily gained a higher market share, sometimes at the expense of traditional retailers.

Non-store e-commerce retailing for snack products held a 5.5% market share, which has increased by a high CAGR of 51% from sales of Can$124.6 million in 2018 to Can$978.0 billion in 2023. Meanwhile, vending and direct selling of snacks have remained low or have drastically declined over the period, with CAGRs of 1.6% and −12.9% respectively (2018-2023).

Product launch and trend analysis

Mintel indicated that there were 37,278 packaged food products launched (including new variety/range extension, packaging, formulation or relaunched) in Canada's supermarkets between the period of January 2018 and December 7th, 2023. During this period, these food products consisted mainly of categories such as new sauces and seasonings (16.8%), snacks (14%), processed fish, meat and egg products (12.1%), bakery (11.4%), dairy (8.1%), side dishes (6.5%), fruit and vegetables (5.5%), chocolate confectionery (5.4%), meals and meal centers (4.3%), and sweet spreads (3.4%).

Number of top packaged food product launches by selected category in Canada, N=37,278 (January 2018 to December 7, 2023)

Description of above image

Product

2018

2019

2020

2021

2022

2023 (January to December 7)

Total

Source: Mintel, 2023

Top parent companies launching the most new package food products in Canada over the last year [Q4-2022 to Q4-2023] were Metro (282), George Weston (279), Pattison Food Group (279), Walmart (194), Sobey's (134), and Avril Supermarché Santé (106). New packaged food brands launched recently for the first time within the last six months in the Canadian market (2023) include Chef Pasquale (Rosata sauce), Flavorgod (gingerbread cookie flavoured seasoning), We Bio! (no sugar added organic apple mango purée), and Grenade (milk chocolate protein spread).

In Canada, the fastest growing flavours in these packaged food products were tahini (+600%), pesto (+600%), and Mexican, sundried tomato, peri/piri and Turkish delight growing by +400% each [Q4-2021 to Q4-2023]. New or popular ingredients included sour cream and onion flavour, sea trout, cilantro, golden linseed flour, calcium potassium phosphate citrate, Kennebec potato, vegan fish stock, packaging gases, and Coral lentil.

Leading claims used on these packaged food products within the last three months were Kosher (37.5%), low/no/reduced allergen (33.2%), gluten free (28.5%), no additives/preservatives (23.1%), environmentally friendly packaging (17.7%), vegan/no animal ingredients (15.8%), environmentally friendly product (15.1%), and free from added/artificial flavourings (14.1%). Other health and functional claims on packaging included organic (18%), plant-based (9.2%), premium (7.3%), dairy free (5.9%), wholegrain (4.3%), high/added fibre (3.8%), all natural (3.4%), no added sugar (3.4%), and high/added protein (3.2%). Amongst these products, top growing claims included functional - eye health (+600%), functional - brain and nervous system (+300%), female (+200%), functional - digestive (133.3%), and carbon neutral (+116.7%); while declining claims at −100% included male, breath-freshening, seasonal, diabetic, no/no/reduced glycemic [Q3-2022 compared to Q3-2023].

In the Canadian market, the highest growing categories included sweet spreads (+62.5%), fruit and vegetables (+57.1%), sauces and seasonings (+23.2%), soup (+39.5%), and side dishes (+10.1%); while top declining categories included chocolate confectionery (−71.8%), dairy (−34.2%), meals and meal centers (−28.1%), bakery (−16%), snacks (−11.6%), and processed fish, meat and egg products (−9.6%) [Q4-2022 vs Q4-2023].

New product launches of packaged food products in Canada January 2018 to December 7, 2023

Product examples

For more information
The Canadian Trade Commissioner Service:
International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.
More agri-food market intelligence:
International agri-food market intelligence
Discover global agriculture and food opportunities, the complete library of Global Analysis reports, market trends and forecasts, and information on Canada's free trade agreements.

Agri-food market intelligence service
Canadian agri-food and seafood businesses can take advantage of a customized service of reports and analysis, and join our email subscription service to have the latest reports delivered directly to their inbox.
More on Canada's agriculture and agri-food sectors:
Canada's agriculture sectors
Information on the agriculture industry by sector. Data on international markets. Initiatives to support awareness of the industry in Canada. How the department engages with the industry.

Resources

Euromonitor International database, 2023

Euromonitor International | June 2023. Country Report: Snacks in Canada

Euromonitor International | November 2023. Country Report: Baked Goods in Canada

Euromonitor International | November 2023. Country Report: Meals and Soups in Canada

Euromonitor International | September 2023. Country Report: Dairy Products and Alternatives in Canada

Global Trade Tracker, 2023

Mintel Global New Products Database, 2023

Sector Trend Analysis - Packaged food trends in Canada
Global Analysis Report

Prepared by: Erin-Ann Chauvin, Senior Market Analyst

© His Majesty the King in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2024).

Photo credits
All photographs reproduced in this publication are used by permission of the rights holders.
All images, unless otherwise noted, are copyright His Majesty the King in Right of Canada.

To join our distribution list or to suggest additional report topics or markets, please contact:

Agriculture and Agri-Food Canada, Global Analysis
1341 Baseline Rd, Tower 5, 3rd floor
Ottawa ON K1A 0C5
Canada
Email: aafc.mas-sam.aac@agr.gc.ca

The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada (AAFC) assumes no liability for any actions taken based on the information contained herein.

Reproduction or redistribution of this document, in whole or in part, must include acknowledgement of agriculture and agri-food Canada as the owner of the copyright in the document, through a reference citing AAFC, the title of the document and the year. Where the reproduction or redistribution includes data from this document, it must also include an acknowledgement of the specific data source(s), as noted in this document.

Agriculture and Agri-Food Canada provides this document and other report services to agriculture and food industry clients free of charge.

# data[].attributes.attachment_link.title
Sector Trend Analysis - Packaged food trends in Canada

# data[].attributes.attachment_link.description
Note: This report includes forecasting data that is based on baseline historical data. Canada's population at an estimate of 38.9 million in 2023, has historically increased by a compound annual growth rate (CAGR) of 1.2% over the last decade (2013 to 2023), and is expected to slow in growth by 0.7% over the forecast period (2023 to 2033) - despite a high increase in immigrants welcomed to the country until 2025.

# data[].attributes.headline
Government of Canada 2023 analysis on the supply chain 

# data[].attributes.subject
Government of Canada 2023 analysis on the supply chain 

# data[].attributes.body
A look at the 2023 economic strife with the pandemic almost bringing most industries to a halt and the conflict in Ukraine ever worsening. This report shows the reader a vast amount of data regarding the demand and supply chain of consumer goods.

as mentioned prior stats Can is a great resource for gathering data focusing on (almost) accurate consumer information to make informed decision making.

# data[].attributes.attachment_link.readable_text
Release date: March 9, 2023

Skip to text

On this page

Text begins

Canadian businesses have been experiencing supply chain challenges since the beginning of the COVID-19 pandemic in early 2020 and exacerbated by the 2022 conflict in Ukraine. While these challenges have been significant, they have been abating throughout 2022. The proportion of businesses experiencing worsening supply chain conditions declined over the year, shining a spotlight on the strength, resilience, and optimism of Canadian supply chains. Nonetheless, the status of supply chains and the impact they have on the economy remain of great interest.

In 2022, widespread global supply constraints combined with pent-up consumer demand and the economic consequences of the conflict in Ukraine resulted in inflationary pressures for much of the year. While annual inflation was 0.7% in 2020 and 3.4% in 2021Note , it picked up speed in 2022. The Consumer Price Index (CPI) reached peak levels in June 2022 with an 8.1% increase, the largest annual change since January 1983.Note However, inflation gradually decreased to 5.9% year over year in January. On a monthly basis, the CPI rose 0.5% in January 2023 following a 0.6% decline in December. On a seasonally adjusted monthly basis, the CPI rose 0.3%.Note The relative easing in inflationary pressures toward the end of 2022 coincided with a decline in the proportion of businesses that experienced or expected to experience worsened supply chain challenges.

From the beginning of January to early February 2023, Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the current environment within which businesses in Canada are operating and their expectations moving forward. Based on the results of the survey, fewer businesses expected supply chain challenges than the previous quarter. Businesses experiencing supply chain challenges were less likely to report these challenges as worsening. Additionally, fewer businesses expected worsening supply chain challenges in the short term, compared to the previous quarter. However, the leading factors that contributed to worsened supply chain challenges over the last three months remained the same fromthe previous quarter. This article provides insights on the topic of supply chain challenges and the impacts of these issues on businesses in Canada.

Fewer businesses expected supply chain challenges

One in ten (10.0%) businesses expected maintaining inventory levels to be an obstacle over the next three months.Note This number has decreased from the previous quarter, when over one-tenth (12.8%) of businesses expected maintaining inventory levels to be an obstacle. However, this remains a significant obstacle in some industries. Nearly one quarter of businesses in retail trade (24.9%) and wholesale trade (24.7%) expect maintaining inventory levels to be a challenge over the next three months. These businesses planned to respond to these difficulties in various ways, with close to half (49.1%) planning to raise selling prices for goods and services offered, and over three-tenths planning to: find alternate inputs (35.8%); hold higher-than-usual level of inventories as a precaution against future shortages (33.6%); and improve inventory tracking to plan timing of purchases (32.0%).

Among businesses that expected maintaining inventory levels to be a challenge over the next three months, over two-fifths (45.5%) expected these difficulties to continue for six months or more, a significant decrease from the previous quarter (56.3%). Businesses in administrative and support, waste management and remediation services (65.1%) and manufacturing (58.2%) were most likely to expect maintaining inventory levels to be a challenge for 6 months or more. Conversely, over one-third (34.9%) of businesses expecting maintaining inventory levels to be an obstacle over the next three months were uncertain how long these challenges will persist.

One-fifth (20.7%) of businesses expected difficulty acquiring inputs, products or supplies domestically over the next three months. This proportion has decreased from the previous quarter, when close to one-quarter (23.5%) of businesses anticipated challenges in this regard. Furthermore, this decline has been observed since the first quarter of 2022. Businesses in construction (36.7%) and manufacturing (32.3%) were most likely to expect this obstacle.

Data table for Chart 1
﻿

Supply chain obstacle faced by businesses

2022Q1

2022Q2

2022Q3

2022Q4

2023Q1

percent

Among businesses expecting difficulty acquiring inputs, products or supplies domestically, close to half (48.6%) expected these challenges to continue for six months or more, down from the previous quarter (56.0%). Meanwhile, nearly two-fifths (39.2%) of businesses are uncertain how long these challenges will persist, an increase from the previous quarter (30.8%).
﻿

Q42022

Q12023

% of businesses

Maintaining inventory levels

56.3

45.5

Difficulty acquiring inputs, products or supplies domestically

56.0

48.6

Difficulty acquiring inputs, products or supplies from abroad

61.3

56.2

Less than one-tenth (9.4%) of businesses expected difficulty acquiring inputs, products or supplies from abroad over the next three months, a decrease from 12.3% of businesses in the previous quarter. Over one-fifth of businesses in wholesale trade (23.7%) and manufacturing (20.1%) expected to experience this challenge. Of businesses expecting these difficulties over the next three months,over half (56.2%) expected these challenges to continue for six months or more, down from the previous quarter (61.3%). At the same time, over three-tenths (31.3%) are uncertain how long these challenges will persist.

Expectations related to supply chain challenges continued to improve

Among businesses that expected supply chain challenges over the next three months, close to two-fifths (39.6%) reported these challenges had worsened over the last three months.Note This figure has significantly decreased from the previous quarter (52.0%), the fourth straight quarter of decline since the first quarter of 2022.

Businesses in other services (except public administration) (56.4%), accommodation and food services (56.0%), and information and cultural industries (52.2%) were the most likely to report that supply chain challenges have worsened over the last three months.

Data table for Chart 2
﻿

Change experienced in supply chain challenges

2022Q1

2022Q2

2022Q3

2022Q4

2023Q1

percent

For these businesses, the leading factors that contributed to worsened supply chain challenges over the last three months were increased prices of inputs, products or supplies (81.7%); increased delays in deliveries of inputs, products or supplies (78.7%), and supply shortages resulting in fewer inputs, products or supplies being available (72.9%). These were also the leading factors in the previous quarter (79.7%, 80.4%, and 75.0% respectively).

Under half (48.0%) of businesses that expected supply chain challenges over the next three months reported that these challenges have remained about the same over the last three months, an increase from the previous quarter (41.1%). Over one in ten (12.4%) businesses said that supply chain challenges have improved over the last three months, compared to 6.9% inthe previous quarter. For the fourth straight quarter,among businesses that expected to experience supply chain challenges, there was a decline in the proportion of businesses that expected these to worsen over the next three months, from 43.4% in the first quarter of 2022 to 20.3% in the current quarter.The proportion of businesses that expected these challenges to improve over the next three months was relatively unchanged from the previous quarter (12.4%) to this quarter (12.8%).

Planned adjustments to supply chains

In the first quarter of 2023, among businesses that expected to experience supply chain challenges, close to one-third planned to partner with new suppliers (32.1%), while close to three-tenths planned to substitute inputs, products or supplies with alternate inputs, products or supplies (29.1%) and work with suppliers to improve timeliness (28.4%).

Additionally, over one-fifth (23.5%) of businesses were uncertain of plans to adjust their supply chain, and one-fifth (20.2%) had no plans to adjust their supply chain over the next 12 months.

Methodology

From January 3 to February 6, 2023, representatives from businesses across Canada were invited to take part in an online questionnaire about business conditions and business expectations moving forward. The Canadian Survey on Business Conditions uses a stratified random sample of business establishments with employees classified by geography, industry sector, and size. An estimation of proportions is done using calibrated weights to calculate the population totals in the domains of interest. The total sample size for this iteration of the survey is 30,554 and results are based on responses from a total of 15,963 businesses or organizations.

References

Statistics Canada. 2023. Canadian Survey on Business Conditions, first quarter of 2023.

Notes

Note 1.

Statistics Canada. 2021. Consumer Price Index: Annual review, 2021.
Return to note 1 referrer

Note 2.

Statistics Canada. 2022. The Daily - Consumer Price Index, June 2022.
Return to note 2 referrer

Note 3.

Statistics Canada. 2023. The Daily - Consumer Price Index, January 2023.
Return to note 3 referrer

Note 4.

The results in this article are based on the survey that was in collection from January 3 to February 6, 2023, and respondents were asked what their expectations would be over the next three-month period. As a result, those three months could range from January 3 to May 6, 2023, depending on when the business responded.
Return to note 4 referrer

Note 5.

Businesses that expect to experience supply chain challenges are those that reported expecting at least one of the following obstacles: difficulty acquiring inputs, products or supplies domestically; difficulty acquiring inputs, products or supplies abroad; maintaining inventory levels
Return to note 5 referrer

# data[].attributes.attachment_link.title
Analysis on supply chain challenges and conditions in Canada, first quarter of 2023

# data[].attributes.attachment_link.description
Many businesses have not yet fully recovered from the prior tightening and closing of borders, restrictions on the movement of people and goods, and lockdowns. As a result, the status of supply chains and the impact they have on their respective economies are of great interest. This article provides insights on the topic of supply chain challenges and the impacts of these issues on businesses in Canada. It involves an examination of the data produced by the Canadian Survey on Business Conditions.

# data[].attributes.body
In this deep dive article the premise is looking into the labour markets supply and demand, its equilibrium, its shifts in the demand, and other tid-bits of information.

I chose this website since we keep hearing that we are in a recession, and that no one wants to work... I thought I might want to look into it somewhat.

# data[].attributes.attachment_link.readable_text
Markets for labour have demand and supply curves, just like markets for goods. The law of demand applies in labour markets this way: A higher salary or wage -that is, a higher price in the labour market-leads to a decrease in the quantity of labour demanded by employers, while a lower salary or wage leads to an increase in the quantity of labour demanded. The law of supply functions in labour markets, too: A higher price for labour leads to a higher quantity of labour supplied; a lower price leads to a lower quantity supplied.

Equilibrium in the Labour Market

In 2015, about 35,000 registered nurses worked in the Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin metropolitan area, according to the BLS. They worked for a variety of employers: hospitals, doctors' offices, schools, health clinics, and nursing homes.
Figure 4.10a illustrates how demand and supply determine equilibrium in this labour market. The demand and supply schedules in Table 4.10a list the quantity supplied and quantity demanded of nurses at different salaries.

The horizontal axis shows the quantity of nurses hired. In this example we measure labour by number of workers, but another common way to measure the quantity of labour is by the number of hours worked. The vertical axis shows the price for nurses' labour-that is, how much they are paid. In the real world, this "price" would be total labour compensation: salary plus benefits. It is not obvious, but benefits are a significant part (as high as 30 percent) of labour compensation. In this example we measure the price of labour by salary on an annual basis, although in other cases we could measure the price of labour by monthly or weekly pay, or even the wage paid per hour. As the salary for nurses rises, the quantity demanded will fall. Some hospitals and nursing homes may reduce the number of nurses they hire, 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 by investing in physical equipment, like computer monitoring and diagnostic systems to monitor patients, or by using lower-paid health care aides to reduce the number of nurses they need.

As the salary for nurses rises, the quantity supplied will rise. 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 will be willing to train as nurses, and those currently trained as nurses will be more likely to pursue nursing as a full-time job. In other words, there will be more nurses looking for jobs in the area.

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 salary can find a job. In Figure 4.10a, the supply curve (S) and demand curve (D) intersect at the equilibrium point (E). The equilibrium quantity of nurses in the Minneapolis-St. Paul-Bloomington area is 34,000, and the equilibrium salary is $70,000 per year. This example simplifies the nursing market by focusing on the "average" nurse. In reality, of course, the market for nurses actually comprises many smaller markets, like markets for nurses with varying degrees of experience and credentials. Many markets contain 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 different price. Even in such cases, discussing the average price of gasoline, like the average salary for nurses, can still be useful because it reflects what is happening in most of the submarkets.

When the price of labour is not at the equilibrium, economic incentives tend to move salaries toward the equilibrium. For example, if salaries for nurses in Minneapolis-St. Paul-Bloomington were above the equilibrium at $75,000 per year, then 38,000 people want to work as nurses, but employers want to hire only 33,000 nurses. At that above-equilibrium salary, excess supply or a surplus results. In a situation of excess supply in the labour market, with many applicants for every job opening, employers will have an incentive to offer lower wages than they otherwise would have. Nurses' salary will move down toward equilibrium.

In contrast, if the salary is below the equilibrium at, say, $60,000 per year, then a situation of excess demand or a shortage arises. In this case, employers encouraged by the relatively lower wage want to hire 40,000 nurses, but only 27,000 individuals want to work as nurses at that salary in Minneapolis-St. Paul-Bloomington. In response to the shortage, some employers will offer higher pay to attract the nurses. Other employers will have 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. Again, price and quantity in the labour market will move toward equilibrium.

Shifts in Labour Demand

The demand curve for labour shows the quantity of labour employers wish to hire at any given salary or wage rate, under the ceteris paribus assumption. A change in the wage or salary will result in a change in the quantity demanded of labour. If the wage rate increases, employers will want to hire fewer employees. The quantity of labour demanded will decrease, and there will be a movement upward along the demand curve. If the wages and salaries decrease, employers are more likely to hire a greater number of workers. The quantity of labour demanded will increase, resulting in a downward movement along the demand curve.

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

The demand for chefs is dependent on the demand for restaurant meals.

The demand for pharmacists is dependent on the demand for prescription drugs.

The demand for attorneys is dependent on the demand for legal services.

As the demand for the goods and services increases, the demand for labour will increase, or shift to the right, to meet employers' production requirements. As the demand for the goods and services decreases, the demand for labour will decrease, or shift to the left. Table 4.10b shows that in addition to the derived demand for labour, demand can also increase or decrease (shift) in response to several factors.

Demand for Output

When the demand for the good produced (output) increases, both the output price and profitability increase. As a result, producers demand more labour to ramp up production.

Education and Training

A well-trained and educated workforce causes an increase in the demand for that labour by employers. Increased levels of productivity within the workforce will cause the demand for labour to shift to the right. If the workforce is not well-trained or educated, employers will not hire from within that labour pool, since they will need to spend a significant amount of time and money training that workforce. Demand for such will shift to the left.

Technology

Technology changes can act as either substitutes for or complements to labour. When technology acts as a substitute, it replaces the need for the number of workers an employer needs to hire. For example, 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 increase the demand for labour. Technology that acts as a complement to labour will increase the demand for certain types of labour, resulting in a rightward shift of the demand curve. For example, the increased use of word processing and other software has increased the demand for information technology professionals who can resolve software and hardware issues related to a firm's network. More and better technology will increase demand for skilled workers who know how to use technology to enhance workplace productivity. Those workers who do not adapt to changes in technology will experience a decrease in demand.

Number of Companies

An increase in the number of companies producing a given product will increase the demand for labour resulting in a shift to the right. A decrease in the number of companies producing a given product will decrease the demand for labour resulting in a shift to the left.

Government Regulations

Complying with government regulations can increase or decrease the demand for labour at any given wage. In the healthcare industry, government rules may require that nurses be hired to carry out certain medical procedures. This will increase 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

Labour is not the only input into the production process. For example, a salesperson at a call center needs a telephone and a computer terminal to enter data and record sales. If prices of other inputs fall, production will become more profitable and suppliers will demand more labour to increase production. This will cause a rightward shift in the demand curve for labour. The opposite is also true. Higher prices for other inputs lower demand for labour.

Link It Up

To learn more Georgian College students can access the article Trends and Challenges for Work in the 21st Century [New Tab].

Shifts in Labour Supply

The supply of labour is upward-sloping and adheres to the law of supply: The higher the price, the greater the quantity supplied and the lower the price, the less quantity supplied. The supply curve models the tradeoff between supplying labour into the market or using time in leisure activities at every given price level. The higher the wage, the more labour is willing to work and forego leisure activities. Table 4.10c lists some of the factors that will cause the supply to increase or decrease.

Number of Workers

An increased number of workers will cause the supply curve to shift to the right. An increased number of workers can be due to several factors, such as immigration, increasing population, an aging population, and changing demographics. Policies that encourage immigration will increase the supply of labour, and vice versa. Population grows when birth rates exceed death rates. This eventually increases supply of labour when the former reach working age. An aging and therefore retiring population will decrease the supply of labour. Another example of changing demographics is more women working outside of the home, which increases the supply of labour.

Required Education

The more required education, 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 also affect the supply of labour for jobs. Alternatively, the government may support rules that set high qualifications for certain jobs: academic training, certificates or licenses, or experience. 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 offer 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 labour supply. These include unemployment benefits, maternity leave, child care benefits, and welfare policy. For example, child care benefits may increase the labour supply of working mothers. Long term unemployment benefits may discourage job searching for unemployed workers. All these policies must therefore be carefully designed to minimize any negative labour supply effects.

Technology and Wage Inequality: The Four-Step Process

Economic events can change the equilibrium salary (or wage) and quantity of labour. Consider how the wave of new information technologies, like computer and telecommunications networks, has affected low-skill and high-skill workers in the U.S. economy. From the perspective of employers who demand labour, these new technologies are often a substitute for low-skill labourers like file clerks who used to keep file cabinets full of paper records of transactions. However, the same new technologies are a complement to high-skill workers like managers, who benefit from the technological advances by having the ability to monitor more information, communicate more easily, and juggle a wider array of responsibilities. How will the new technologies affect the wages of high-skill and low-skill workers? For this question, the four-step process of analyzing how shifts in supply or demand affect a market (introduced in Demand and Supply) works in this way:

Step 1. What did the markets for low-skill labour and high-skill labour look like before the arrival of the new technologies? In Figure 4.10b (a) and Figure 4.10b (b), S ₀ is the original supply curve for labour and D ₀ is the original demand curve for labour in each market. In each graph, the original point of equilibrium, E ₀, occurs at the price W ₀ and the quantity Q ₀.

Figure 4.10b Technology and Wages: Applying Demand and Supply (Text Version)

Contains two graphs: Graph A - Technological change and low-skill labour, Graph B - Technological change and high-skill labour.

Graph A: The graph has the vertical axis Wages (W) and Quantity of Low-Skill Labour (Q). The original supply curve (S ₀) slopes upward from left to right. The original demand Curve (D ₀) slopes downward from left to right. S ₀ and D 0 intersect at the original equilibrium (E ₀) at price W ₀ and quantity Q ₀ . D ₀ shifts to the left and now intersects S 0 at a new equilibrium (E ₁) at price W ₁ and quantity Q ₁.

Graph B: The graph has the vertical axis Wages (W) and Quantity of High-Skill Labour (Q). The original supply curve (S ₀) slopes upward from left to right. The original demand Curve (D ₀) slopes downward from left to right. S ₀ and D 0 intersect at the original equilibrium (E ₀) at price W ₀ and quantity Q ₀ . D ₁ shifts to the right and now intersects S 0 at a new equilibrium (E ₁) at price W ₁ and quantity Q ₁.

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

Step 3. Will the new technology increase or decrease demand? Based on the description earlier, as the substitute for low-skill labour becomes available, demand for low-skill labour will shift to the left, from D ₀ to D ₁. As the technology complement for high-skill labour becomes cheaper, demand for high-skill labour will shift to the right, from D ₀ to D ₁.

Step 4. The new equilibrium for low-skill labour, shown as point E ₁ with price W ₁ and quantity Q ₁, has a lower wage and quantity hired than the original equilibrium, E ₀. The new equilibrium for high-skill labour, shown as point E ₁ with price W ₁ and quantity Q ₁, has a higher wage and quantity hired than the original equilibrium (E ₀).

Thus, the demand and supply model predicts that the new computer and communications technologies will raise the pay of high-skill workers but reduce the pay of low-skill workers. From the 1970s to the mid-2000s, the wage gap widened between high-skill and low-skill labour. According to the National Center for Education Statistics, in 1980, for example, a college graduate earned about 30% more than a high school graduate with comparable job experience, but by 2014, a college graduate earned about 66% more than an otherwise comparable high school graduate. Many economists believe that the trend toward greater wage inequality across the U.S. economy is due to improvements in technology.

Link It Up

Learn more about the ten tech skills [New Tab] that have lost relevance in today's workforce.

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

In contrast to goods and services markets, price ceilings are rare in labour markets, because rules that prevent people from earning income are not politically popular. There is one exception: boards of trustees or stockholders, as an example, propose limits on the high incomes of top business executives.

The labour market, however, presents some prominent examples of price floors, which are an attempt to increase the wages of low-paid workers. The U.S. government sets a minimum wage, a price floor that makes it illegal for an employer to pay employees less than a certain hourly rate. In mid-2009, the U.S. minimum wage was raised to $7.25 per hour. Local political movements in a number of U.S. cities have pushed for a higher minimum wage, which they call a living wage. Promoters of living wage laws maintain that the minimum wage is too low to ensure a reasonable standard of living. They base this conclusion on the calculation that, if you work 40 hours a week at a minimum wage of $7.25 per hour for 50 weeks a year, your annual income is $14,500, which is less than the official U.S. government definition of what it means for a family to be in poverty. (A family with two adults earning minimum wage and two young children will find it more cost efficient for one parent to provide childcare while the other works for income. Thus the family income would be $14,500, which is significantly lower than the federal poverty line for a family of four, which was $24,250 in 2015.)

Supporters of the living wage argue that full-time workers should be assured a high enough wage so that they can afford the essentials of life: food, clothing, shelter, and healthcare. Since Baltimore passed the first living wage law in 1994, several dozen cities enacted similar laws in the late 1990s and the 2000s. The living wage ordinances do not apply to all employers, but they have specified that all employees of the city or employees of firms that the city hires be paid at least a certain wage that is usually a few dollars per hour above the U.S. minimum wage.

Figure 4.10b illustrates the situation of a city considering a living wage law. For simplicity, we assume that there is no federal minimum wage. The wage appears on the vertical axis, because the wage is the price in the labour 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 group of concerned citizens persuades the city council to enact a living wage law requiring employers to pay no less than $12 per hour. In response to the higher wage, 1,600 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 price floor, the quantity supplied exceeds the quantity demanded, and a surplus of labour exists in this market. For workers who continue to have a job at a higher salary, life has improved. For those who were willing to work at the old wage rate but lost their jobs with the wage increase, life has not improved. Table 4.10b shows the differences in supply and demand at different wages.

Figure 4.10b A Living Wage: Example of a Price Floor (Text Version)

The graph shows how a price floor results from an excess supply of labour. The vertical axis is Wage ($ per hour) and horizontal axis Quantity of Labour (number of workers). The supply curve (S) slopes upward from left to right and the demand curve (D) slopes downward left to right. S and D intersect at the equilibrium shown at Point E (1,200 workers, $10 per hour). Imposing a wage floor at $12/hour leads to an excess supply of labour. At that wage, the quantity of labour supplied is 1,600 and the quantity of labour demanded is only 700. Table 4.4 Living Wage: Example of a Price Floor details the plotted data.

The U.S. minimum wage is a price floor that is set either very close to the equilibrium wage or even slightly below it. About 1% of American workers are actually paid the minimum wage. In other words, the vast majority of the U.S. labour force has its wages determined in the labour market, not as a result of the government price floor. However, for workers with low skills and little experience, like those without a high school diploma or teenagers, the minimum wage is quite important. In many cities, the federal minimum wage is apparently below the market price for unskilled labour, because 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 low-skill labour. A typical result of such studies is that a 10% increase in the minimum wage would decrease the hiring of unskilled workers by 1 to 2%, which seems a relatively small reduction. In fact, some studies have even found no effect of a higher minimum wage on employment at certain times and places-although these studies are controversial.

Let's suppose that the minimum wage lies just slightly below the equilibrium wage level. Wages could fluctuate according to market forces above this price floor, but they would not be allowed to move beneath the floor. In this situation, the price floor minimum wage is nonbinding -that is, the price floor is not determining the market outcome. Even if the minimum wage moves just a little higher, it will still have no effect on the quantity of employment in the economy, as long as it remains below the equilibrium wage. Even if the government increases minimum wage by enough so that it rises slightly above the equilibrium wage and becomes binding, there 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 impact on employment. Since the minimum wage has typically been set close to the equilibrium wage for low-skill labour and sometimes even below it, it has not had a large effect in creating an excess supply of labour. However, if the minimum wage increased dramatically-say, if it doubled to match the living wages that some U.S. cities have considered-then its impact on reducing the quantity demanded of employment would be far greater. As of 2017, many U.S. states are set to increase their minimum wage to $15 per hour. We will see what happens. The following Clear It Up feature describes in greater detail some of the arguments for and against changes to minimum wage.

Attribution

Except where otherise noted, this chapter is adapted from " Demand and Supply at Work in Labor Markets" and " Key Concepts and Summary" In Principles of Microeconomics 2e (Open Stax) by Steven A. Greenlaw & David Shapiro licensed under CC BY 4.0./ Adaptations include addition of glossary terms " Key Terms" In Principles of Microeconomics 2e (Open Stax) by Steven A. Greenlaw & David Shapiro, licensed under CC BY 4.0.

Access for free at Principles of Microeconomics 2e

Original Source References

American Community Survey. 2012. "School Enrollment and Work Status: 2011." Accessed April 13, 2015. http://www.census.gov/prod/2013pubs/acsbr11-14.pdf.

National Center for Educational Statistics. "Digest of Education Statistics." (2008 and 2010). Accessed December 11, 2013. nces.ed.gov.

CreditCards.com. 2013. http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php.

definition

# data[].attributes.attachment_link.title
4.10 - Demand and Supply at Work in Labour Markets

# data[].attributes.attachment_link.description
Markets for labour have demand and supply curves, just like markets for goods. The law of demand applies in labour markets this way: A higher salary or wage -that is, a higher price in the labour market-leads to a decrease in the quantity of labour demanded by employers, while a lower salary or wage leads to an increase in the quantity of labour demanded.

# data[].attributes.headline
When demand change so does its price and vice versa

# data[].attributes.subject
When demand change so does its price and vice versa

# data[].attributes.body
In this image we can understand that when the price of a banana is decreased or not present then the demand increases as a result. However, the opposite is for when the price increases.

Ive added this image as its a quick snapshot to supply and demand in its ultra simplified form.

# data[].attributes.body
In this image we can see in the "Y" axis the home price and in the "X" axis the homes on the market. This chart shows that as the price of homes increase the market looses its supply of homes were as if the price of homes and the amount of homes are at an ideal state than everybody wins.

Ive added this image as I am frustrated with the housing market and its inflated prices and it also demonstrates in an economical sense the Supply and Demand graph well.

# data[].attributes.body
Reflecting on this journey, I was most surprised to discover how immediate the effects of price changes could be on consumer demand, often far more rapidly than I anticipated. A real-life example that strikes me is during sales season like Christmas, when prices drop significantly. I've noticed how quickly products fly off the shelves, demonstrating the law of demand in action. Sharing this knowledge, I believe the most crucial insight to pass on is the importance of understanding consumer behavior - it underpins many economic decisions, not just in businesses, but also in our daily purchasing choices.