According to most economics textbooks, our wages are determined just like any other price: by supply and demand. People supply their labor, and companies demand it, creating a market for labor.
In a competitive labor market, the equilibrium wage and employment level are determined where the market demand for labor equals the market supply of labor. Like all equilibrium prices, the market wage rate is determined through the interaction of supply and demand in the labor market.
The purposes of government include maintenance of a social order, providing public services, providing national protection and making national economic decisions.
