Why is the employed measured on the left side of the demand line?

• QUESTION:

Why is the number of employed people in an economy measured from the left of the supply curve for human capital resources (labour)?

• ANSWER:

We can understand the labour resources are supplied by the consumers of an economy and the labour resources are demanded by the producers. So, essentially the roles are reversed.

In a perfect economic system, where there is no government intervention, the level of labour resources supplied and demanded in an economy will fall to the point of equilibrium, this is the point where the supply for labour meets the demand for labour resources.
When this occurs, we can straight away recognize that the level of labour resources used is at EL,' and the number of labour resources in employment is shown by "labour used".

 So what if there was government intervention? Government intervention would bring us to a point of Wmin and shift the economy out of equilibrium because supply would no longer be equal to demand.
We get a condition where supply is greater than demand. So that means that there are heaps of consumers who are willing (or supplying) themselves to work, but only a few businesses willing (or demanding) to hire some people to work for them.

This means that some people will not be able to get employed as there is not enough businesses demand to hire all of the people (supply). This is also called "unemployment". And we know that if you are not unemployed, you must be employed.*

The area to the left of the demand curve must be the area of employment because it is the area of the businesses amount of people that it wishes to hire, and so will be employed. And since there is no shortage of people willing to work, the businesses can fulfill their desire to hire workers.

And so, the level of labour resources which are employed is measured from the left of the demand for labour resources in an economy.


Footnotes;
*unless you are not in the labour force in which case you are neither employed nor unemployed. For example, you are an infant and are not expected to work.