6# ceque
Yes, you are right. the labor supply is enough. However, it is "more than enough" Imagine that in the "natural situation" you work 8 hours per day. Now suppose that there is an economic boom exogenously,since the business now is more profitable, your boss wants to produce more products and thereby comes to tell you that you have to work 11 hours per day. All else equal, what is your response? One normal response seems to ask your boss to pay you a higher wage, right? This is why the wage is increasing when encountering an overheated economy, in which the unemployment rate is lower than the natural rate.