What actually sets the wage you see on a job posting? It is not just what a company feels like paying, and it is not just what workers dream of earning. Wages and employment levels come from the push and pull of supply and demand meeting in the middle. In this chapter, we bring together everything we know about workers’ choices and firms’ choices to see how a competitive labor market finds its balance — and what happens when the government steps in with taxes, subsidies, or rules about benefits.