Labor Markets Chapter 9

The US Labor Force Anyone 16 and over that is actively seeking a job –98% are members of the civilian labor force –2% are members of the military labor force

Things that affect what career you choose: 1. Wages: If the demand for labor is low= lower wages If the supply of labor is low= higher wages 2. Skills: More skills = more jobs you qualify for More skills = more money

Cont’d 3. Working Conditions: More dangerous = more money paid 4. Location: Where is the job located? Big city = higher wages

5. Intrinsic Reward: Non-monetary reasons for working Seeking jobs based on job satisfaction Often will accept lower paying jobs 6. Market Trends: Is the industry growing or expanding?

Why Do Wages Differ? 1.Difference in Training, Education, Age, and Experience. 2.Differences in ability. 3.Differences in risk. 4.Geographic differences. 5.Job discrimination. 6.Union membership.

Effects of the Minimum Wage Law Employers react to the minimum wage in 3 different ways: 1.Employers sometimes substitute part- time jobs for full-time jobs 2.Employers sometimes substitute more- qualified minimum wage workers (high school grads.) for less-qualified workers (high school dropouts)

Cont’d 3.Employers sometimes adjust some non- wage features of the job to reduce employer costs or increase worker productivity.

Changes in US Labor Force 1. Capital-Intensive Economy Traditionally, US economy based on agriculture New tech. encouraged industrialization –More factories = more jobs People left the fields for factory jobs* In late 1800’s we switched from labor-intensive to capital intensive society 1700’s = 80% farm labor 1800’s = 63% farm labor 1900’s = 37% farm labor Today = less than 3%

2. Women in Labor: A. Industrial revolution increased women in the labor force »Textile mills »18% of women worked outside their homes** B. WWI – took jobs to help war effort –Most returned home after wars end

Changes in US Labor Force C. WWII –Same as WWI –Many stayed on at jobs –% of women in labor force continued to increase steadily *By 1995, 59% of the women were working outside of the home continued 

–Effects: Increased family income Decrease in family size

Changes in U.S. Labor Force 3. High Education Levels Labor force is becoming better educated due to more affordable and better education opportunities Mandatory education laws started in the 1900’s

Changes in US Labor Force High School Diplomas 1960’s = 41% high school grad = 82% high school grad. College Degrees 1960 = 8% with degrees 1995 = 23% with degrees

Gov’t & Labor 1. Antidiscrimination Laws Prohibited hiring, firing, promotions, based on race A. Equal Pay Act (1963) –Required equal pay for women

B. Civil Rights Act of 1963 –Prohibited discrimination based on race, sex, religion, or national origin –Created the Equal Employment Opportunity Commission (EEOC) to enforce provisions C. Affirmative Action Laws –Started by LBJ in the 1960 –Laws based on quotas

The Growth of Unions Traditionally, the gov't did nothing to protect workers Workers started to ban together and formed organizations known as labor unions

Development of Unions Industrialization gave owners enormous money and power. Workers began having several issues with their employers: –1. Wages: –Owners made millions = workers made pennies a day –2. Work Day: –1860, the average work week was 6 days a week (60 hours) –Many workers worked 10 – 12 hours a day

3. Child Labor: Many employers turned to child labor Parents allowed children to work to make families ends meet 1890, 20% of kids, ages 10 – 15 worked in factories

4. Working Conditions: Unsafe = 1911, 140 died in a fire at the Triangle Waistshirt Co. -Noisy, Dirty ** Upton Sinclair wrote book called “The Jungle” about working conditions of the meat industry in Chicago.

The 1 st Unions Workers decided best option was to ban together Formed 2 types of early unions: –1. Craft Unions –Composed of skilled workers »Plumbers »Carpenters »Electricians »Bricklayers

–2. Industrial Unions –All workers in industry regardless if they were skilled/unskilled workers

Successful Early Unions 1. Knights of Labor: –Opened to workers of all trade –Combined skilled/unskilled workers –Allowed women/minorities to join

Issues it Supported: –8 hour work day –Ending child labor –Wanted to replace capitalism w/ a cooperative

2. American Federation of Labor (AFL) Formed by an association of craft unions Led by Samuel Gompers Excluded industrial union members Issues it Supported: –Higher wages –Better working conditions

Downfall: –Internal struggles from opponents to Samuel Gompers led to its downfall –Antiunion sentiment of the public –Great Depression

3. Congress of Industrial Organizations (CIO) Evolved from AFL Allowed both skilled/unskilled workers Organized by John L. Lewis Merged with AFL in 1950’s Over 13 million strong today

Challenges to Labor Unions Employer Opposition: –Opposed because it cuts into their profits –Some companies have moved to other countries. Negative Public Opinion: –Public sentiment feels higher wage demands by workers has caused industry to move elsewhere

Union Contract Negotiations 1. Collective Bargaining The process by which union representatives and the employers negotiate wages, employee benefits, and working conditions. 2. Mediation 3. Binding Arbitration- when a neutral 3 rd party listens to both sides of the dispute and issues a ruling that both sides must accept.

When Negotiations Fail ** STRIKE ** Types: 1. Picketing - done to inform public - discourage public support - discourage nonunion workers from working 2. Boycotts - organized effort to stop buying a certain product

How Management Responds 1.Replacement workers 2.Lock-outs 3.Injunctions