Wednesday, May 25, 2022

How Supply and Demand Explain Higher Wages for Teen Babysitters

See Teen Babysitters Are Charging $30 an Hour Now, Because They Can: Sitter shortage has parents treating teenagers like VIPs; ‘order anything you want for dinner’ by Rachel Wolfe of The WSJ. Excerpts:

"Before the pandemic, Dani Gantcher earned about $15 an hour babysitting in her hometown of Scarsdale, N.Y. Parents sometimes asked her to wash dishes or stay late.

Now, the 18-year-old is raking in $25 to $30 an hour."

"After two years of hunkering down at home with their children, parents are returning to their office jobs and social lives and are competing for part-time sitters at the same time [this represents an increase in demand or shift to the right in demand which raises price if supply is constant]. Teens are getting better snacks, doing fewer mundane chores and are commanding top dollar.

In Easton, Mass., 19-year-old Emma Sharkansky is making up to $30 an hour—up from $12 a few years ago."

"Child-care marketplace Care.com says babysitters on its site charged an average of $18.05 an hour in April. In 2020, that number was $14.72." [that is a 22.6% increase while the Consumer Price Index increased 12.8% from April 2020 to April 2022]

A tight labor market is creating one of the best summer-job markets for teens in years. Businesses facing a pandemic hiring crunch are scouring teen job fairs and offering bonuses and flexible schedules to young people. A daycare worker shortage is leaving parents scrambling to make alternative arrangements. Unemployment among teenagers is at its lowest level in decades.

Moms and dads are in no position to bargain or throw out lowball offers, Kidsit.com, an online babysitting resource, warned parents in a 2020 post: “It’s best to play it safe and offer your sitter a competitive rate up front. That way you minimize the chances of them getting poached from you.”"

I don't think there is a shortage of workers or sitters. If there was, it was temporary. It was eliminated by the higher pay the article sites. When price is below equilibrium, it will get forced up.

A shortage means that price is below equilibrium and quantity supplied is less than quantity demanded. This is shown in the next graph.

Now maybe there was a shortage temporarily. But sellers (sitters) would have quickly realized that demand must have gone up given since there were so many more people wanting their services. Then they could raise their price. Maybe there was a shortage but it did not last long.

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Introduction to Microeconomics by Luís Cabral

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