Adam Smith

I'm left wondering how is a "per hour" rate arrived at for any job? Finance really eludes me. I don't understand economics well enough. Is salary purely based on supply and demand?

Supply and demand, but affected by other things such as regulatory imperatives and people's behavior, which is not always entirely rational. As mentioned before, the current federally mandated "minimum wage" in the United States is something like $5.65 (or something in that neighborhood). But most McDonald's restaurants pay $7 or $8 an hour to start. Why? Why wouldn't they pay the minimum allowed by law?

Because they would find too few applicants to fill the positions, or applicants whose qualifications were so deficient as to make employing them at the minimum wage not worth the trouble. In this case, market forces took over -- competitors offering employment to people inclined to work for near-minimum raised their wages to attract the best talent. Hence the "effective minimum" went up to the $7 or $8. What stopped the rise? When sufficient applicants turn out to satisfy the open positions, or the financial structure of the enterprise limits offering any more for that particular job.

People, too, enter into this equation. Some people -- I would fall into this camp -- will stay put at a lower wage rather than risk disruption to routine to seek higher wages elsewhere. But there's always a breaking point ... a point where the wage discrepancy is so great even those who tend to be cautious move out and seek higher rent.

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My former neighbor from Virginia told me of the case where his company was coordinating the staffing for a conference. This was during a time when the "unemployment rate" was at about 4% or so. He reported that the quality of the people that they ended up having to employ, just to staff the positions, was so low as to be almost laughable.

Note: And there enters another point about market forces -- the employment was part time and short term. Even had they offered twice the minimum, may already-employed people would not take the offer because of the potential disruption to their present employment.

There is much rhetoric about driving the unemployment rate to 0%. But in practical reality, that's nearly impossible. Not everyone is capable of being employed, due to their unskilled nature or attitude. Also, many simply don't want to be employed, preferring instead getting government assistance and being left alone.

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I almost majored in economics in college. I love the topic. I doubt I would have been very good at is as it's mostly "econometrics" -- vastly complex models of economic behavior that use a lot of calculus. :-)