Good graph. I had an awesome micro economics teacher who I totally did not appreciate at the time. Everyone should do best at the market clearing rate (x in the center) where sane supply of labor (S1) intersects the blue labor demand line. Blue line: as labor is cheaper firms will buy more. Grey line: as wages increase more workers will be interested. A rational market (hah!) will maximize the area of the rectangle with a point at PQ. You may think of this as best wages and fewest people needed to do the job. Everybody wins. Now you add millions of job seekers to the population which shifts labor supply right because - more people need a job and bid wages down - more of these people have non-wage earnings such as food, health care, and shelter support meaning they need less to be satisfied. That is the black line (S2). Firms optimize to the new labor condition of more low skill people who demand less. The new equilibrium is high employment at low wages. The work place is full of people who do not care about or are unable to satisfy the customer. Hooray!