+ 9.1 Labor Market Trends Labor force – all nonmilitary people who are employed or unemployed They must meet at least one of the following criteria: Be above 16 Worked at least one hour for pay within the last week Worked 15 or more hours without pay in a family business Held jobs but did not work due to illnesses, vacations, labor disputes or bad weather

+ Unemployment and occupational trends To be considered unemployed a person must be looking for a job or waiting for a job down the line Full time parents, retirees, students (and others) are not included in the list of the unemployed Discouraged workers are also not counted The economy is changing During the 20 th century the US had many manufacturing jobs and computer related occupations We have shifted since from a manufacturing economy to a service economy

+ Management jobs have increased during this shift Jobs included in the service economy include: financial services, online services (web design, online adverstising) and health care We have seen many lesser skilled jobs move overseas As a result many low skill workers have seen their wages diminished (too many low skill workers for the amount of jobs available) The demand for skilled labor is rising and so wages for skilled workers is increasing (but is so the number of people going out to obtain the skills necessary for these jobs…..so wages may not stay high for long)

+ Changing labor force In the past many workers could expect to graduate from school and stay in the same industry until they retired at 65 Today – the average worker will have four to five different jobs during their working life and should expect to retire at 62 More jobs require further education than a high school education The learning effect – assumes that education increases productivity and thus results in higher wages Screening effect – completion of college indicates to employers that a job applicant is intelligent and hard working and thus might be better workers Screening effect doesn’t assume productivity will increases, but that college educated might make better employees because of their innate skills

+ Women at work In 1960 women made up 38% of the work force Today they make up more than 60% Women have been encouraged to continue on with higher ed Fewer jobs require physical strength now More jobs require brainpower and personal skills (something were men and women are on equal footing) The presence of women in the workforce is expected to rise

+ Min wage QW Please read the article and mark up text as you go along. Highlight most important facts Save article and half sheet for tomorrow when we complete the assignment List five important facts Write two paragraph opinion – Do you think we should raise the min wage? Explain your thoughts and incorporate facts from article read Be prepared to discuss (unless you want to take more notes )

+ Temp workers Many companies are replacing full time workers with temporary ones Temp and part-time jobs are called contingent employment Many companies are preferring to hire contract workers Typically, these workers are highly skilled and well paid but they can be let go very easily Get paid less than permanent workers Have a flexible work arrangements (hours and job responsibility) No benefits

+ Trends in wages and benefits Americans are well paid in comparison with other countries, but their wages have slowing down over the last 20 years The Labor dept reports that the average American earned $275 a week in 1980 Today they earn $278 (inflation adjusted) (or $523 in real dollars) Many companies are offering flex-time or telecommunicating Retirement funds and stock options are available in some companies

+ Why haven’t wages increased? Greater competition from foreign workers Deregulation of certain industries have allowed industries to cut wages (ex: trucking, air travel) CEO wages have increased dramatically Costs of benefits have risen The average worker will find that 28% of their compensation package will be from benefits Social Security costs are increasing Health care costs have increased Worker comp insurance has risen too

+ 6.2 Labor and Wages Wages are determined mostly by how many people are capable of doing a particular job The higher the price of labor, the smaller the quantity of labor demanded by firms and govt The lower the price of labor, the higher the quantity of labor demanded by firms and govt The equilibrium wage will be set where labor supply and labor demand meet At this wage there isn’t an excess supply of workers nor an excess demand for workers No pressure to raise or lower the price

+ Wages and skill levels Unskilled requires no specialized skills or education Hourly wage given Ex: dishwasher, messenger, janitor, farm workers Semi-skilled workers require some training and they need very little supervision Hourly wage Ex: lifeguards, short-order cooks, some construction jobs

+ Skilled labor – specialized abilities required Complicated equipment may be involved Little supervision is needed Hourly wage still Ex: auto mechanics, bank tellers, plumbers, chefs Professional labor – advanced skills and edcuation White collar jobs Salary jobs Ex: managers, teachers, bankers, doctors, lawyers, professional athletes

+ The eq wage will be different for each class of job Note that the supply of doctors is still relatively low and demand is high and so a high eq wage is produced The supply for construction workers is high relative to the demand for them and so a lower eq wage Workers in occupation that has a high accident or fatality rate are also paid higher wages (compensated for the risks they take)

+ Wage discrimination Involve paying different wages to different people for the same job done Some have defended practice by saying : Men need the money to raise families. Women need the extra spending money. Men stay in jobs. Women leave to have babies.

+ Govt action Many laws addressed employment discrimination in 1960s Equal Pay Act of 1963 – male and females in the same workplace performing the same job will earn the same pay Title VII of CR Act of 1964 – prohibits job discrimination on the basis of race, sex, color, religion or nationality CR Act of 64 created the EEOC EEOC looks into work place discrimination cases

+ Social conditions for women and minorities Many still remain Women’s work – many women are now being encouraged to go into more male dominated professions that have historically paid more More women have college degrees and so their earning power should increase Many employers assume that female employees do not want to advance through the company and this can lead to a “glass ceiling” that many women have to break through Minorities too see a wage gap some is due to discrimination and some due the skill levels of the members

+ Other factors affecting wages Minimum Wage Laws Passed in 1938 In some cases employers have to pay higher wages than the eq wage for unskilled labor Supporters of min wage argue that we are helping the poorest Americans Opponents argue that articifically increasing the price of labor will cause a decrease in the quantity demanded Meaning – individual employees might earn more but each company will hire less people

+ Employers respond to wage levels Cut labor costs by substituting machines for people EX: ATMs, robots on factory lines Build production plans in other nations

+ Unions Union – an organization of workers that try and improve the working conditions, wages and benefits of their members Fewer members today than in the past Make more than nonunionized employees In 2003 – union worker earned $792 and nonunionized was $600 Some evidence suggests that unions depress the wages of nonunion workers (not raise)

+ 1. unions press employers to raise their members wages 2. when wages go up, the quantity of labor demanded goes down. Thus, the number of union jobs decrease 3. as union jobs are cut, more workers are forced to seek nonunion jobs 4. an increase in the supply of available nonunion workers causes the wage rate for nonunion jobs to fall Another criticism of unions is their practice of featherbedding Negotiating labor contracts that keep unneccessary workers on the company payroll

+ Organized labor Many economists argue that there is no need for unions because in a competitive labor market workers will leave an job that is unsafe and pays poorly Union workers disagree 1 in 7 are unionized Unions can strike Strikes were largely illegal until the 1930s Union membership was high in the 1940s – 35% of nation

+ Some unions became corrupt and worked with organized crime bosses Ruined reputation of many Taft Hartley was passed in 1947 and allowed states to pass right to work laws Ban mandatory union membership Mostly in southern states

+ Decline of unions Many reasons 1. Loss of blue collar jobs in US in general 2. Manufacturing jobs moving to the south or to other countries 3. Safety and work place laws making things better at work 4. More women in workforce (less likely to join union) Today we see more public service unionization than ever before

+ Collective bargaining A union has the legal right to represent their members The company is required by law to bargain with the union in good faith Contracts are usually renegotiated every two to five years Looking for … 1. Better wages and benefits 2. Working conditions to improve 3. Job security

+ Strikes and settlements Strikes are an union’s ultimate weapon A long strike can be devastating to company Might have to higher “strikebreakers” and retrain Most firms cannot produce what they need without their usual workers Strikes are hurtful to workers as well – not paid during strike Mediation is an option – neutral third party listen and offer nonbinding advice Arbitration comes next – neutral third party listens and imposes a decision that is legally binding for both sides

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