How labor markets differ from consumer markets

(From chapter 1)

For a number of reasons, the exchange of labor is quite different from the exchanges that individuals engage in as consumers, and therefore the take-it-or-leave-it approach to labor markets is unsatisfactory as a model of how workplace transactions ought to be conducted. First, unlike transactions involving consumer goods and services, exchanges involving labor services cannot be disembodied from the individuals supplying them. The sellers of labor services must deliver these services themselves. This means that workers care not only about how much they are paid but also about many nonmonetary aspects of their jobs: Who will they work with? How hard are they expected to work? What things may they refuse to do? Who will be their supervisors? The answers to these questions profoundly affect the value of the job to a worker.

Second, the labor market is distinguished from the consumer market by the different dimensions to the exchange of labor services. Workers supply not only their time but also their effort, their cooperation, and a subset of their liberties to management. The typical supervisor has the authority to direct a worker to a number of different tasks, activities that are almost never specified in advance. In most cases, the specification of the labor contract – precisely what duties the worker is supposed to undertake, with what diligence, and for what duration – is difficult to outline. Hence it is left vague and is incomplete.