Why do employers value the presence of 'slack' in the labor market?

• A. It allows them to hire workers at lower wages due to increased competition for jobs.
• B. It leads to higher bargaining power for employees.
• C. It ensures that all available workers are fully employed at all times.
• D. It reduces the need for training and development programs.

Answer: (A)

Verified step by step guidance

1. Understand the concept of 'slack' in the labor market: Slack refers to the presence of unemployed or underemployed workers who are available and willing to work but are not currently employed.
2. Recognize how slack affects the supply of labor: When there is slack, the supply of available workers exceeds the demand for labor at the current wage rate, creating competition among workers for jobs.
3. Analyze the impact of increased competition on wages: Because more workers are competing for the same jobs, employers have greater bargaining power and can offer lower wages, knowing that workers are more likely to accept them.
4. Consider the alternative options: Slack does not increase employees' bargaining power (it decreases it), does not guarantee full employment, and does not directly reduce the need for training and development programs.
5. Conclude that employers value slack because it allows them to hire workers at lower wages due to increased competition among job seekers.