ECONOMY: THE WORLD OF WORK Chapter 9 (Book 16) ECONOMY: THE WORLD OF WORK

Economy: The World of Work Learning Objectives LO 9.1 Summarize historical changes to the economy. LO 9.2 Assess the operation of capitalist and socialist economies. LO 9.3 Analyze patterns of employment and unemployment in the United States. LO 9.4 Discuss the importance of corporations to the U.S. economy.

The Power of Society Will the jobs you take throughout your life reflect choices you make based on your personal abilities and interests?

Which business sells products made by more than 100,000 companies? A Quick Quiz: Which U.S. business do more than 200 million people around the world visit each week? Which business sells products made by more than 100,000 companies? Which U.S. company, on average, opens three new stores somewhere in the world every day? Which U.S. company buys more than $25 billion worth of goods each year from China, making it a larger trading partner for China than the United Kingdom? Which U.S. company employs 2.2 million people around the world, including approximately 1.4 million in the United States?

The Economy: What Is…? Economy Social institution that organizes a society's production, distribution, and consumption of goods and services

The Economy: What Is…? Goods Commodities ranging from necessities to luxury items Services Activities that benefit others The Economy: What Is…?

Historical Overview Overview The economy operates in a predictable manner. Goods and services ensure survival, make life easier, and contribute to social identity. Economies of modern high-income nations are the result of centuries of social change.

Agricultural Revolution The earliest societies Hunters and gatherers with no distinct economy. With surplus, the economy was a distinct social institution Agricultural technology Job specialization Permanent settlements Trade LO 9.1 Summarize historical changes to the economy.

Industrial Revolution Industrialization created economic change in five ways. New sources of energies Centralization of work in factories Manufacturing and mass production Specialization Wage labor

Information Revolution and Postindustrial Society Postindustrial economy Productive system of service work and high technology Information revolution altered fundamental character of work in three ways From tangible products to intangible ideas From mechanical skills to literacy skills From factories to almost anywhere

The Size of Economic Sectors, Income Level of Country As countries become richer, the primary sector becomes a smaller part of the economy and the tertiary or service sector becomes larger. Source: Estimates based on World Bank (2012).

The Global Economy Global economy Expanding economic activity that crosses national borders

Sectors of the Economy Primary sector Generates raw materials from environment Secondary sector Transforms raw materials into manufactured goods Tertiary sector Generates services rather than goods

The Global Economy Development Development of a global economy has five major consequences Global division of labor More products pass through many nations National governments no longer control the economic activity within their borders Small number of businesses control a vast share of the world's wealth Concerns raised about the rights and opportunities of workers

Capitalism “Justice” in a capitalist system amounts to marketplace freedom. Features Private ownership of property Pursuit of personal profit Competition and consumer choice Capitalism still thrives in Hong Kong (above), evident in streets choked with advertising and shoppers. LO 9.2 Assess the operation of capitalist and socialist economies.

Socialism “Justice” in a socialist context is meeting everyone's needs in roughly equal manner. Features Collective ownership of property Pursuit of collective goals Government control of the economy Socialism is more the rule in China's capital, Beijing (above), a city dominated by government buildings rather than a downtown business district.

Socialism and Communism: What Is…? Economic system in which natural resources and means of producing goods and services are collectively owned Communism Hypothetical economic and political system; all members of a society are socially equal

Alternative Systems: What Is…? Welfare capitalism Economic and political system that combines market-based economy and social welfare programs State capitalism Economic and political system in which companies are privately owned but cooperate closely with government

Capitalism and Socialism Directly comparing the economic performance of capitalism socialism is difficult because nations differ in many ways. But a satellite image of socialist North Korea and capitalist dramatically different electrical output of the two nations, one indication of economic activity. North Korea South Korea

Relative Advantages Capitalism Socialism Economic productivity GDP is $13,500 Economic equality More income disparity Personal freedom Emphasizes freedom to pursue personal self-interest Economic productivity GDP is $5,000 Economic equality Less income disparity Personal freedom Emphasizes freedom from basic want

Work in the Postindustrial Economy Decline of agriculture work In 1900, roughly 40% of U.S. workers were farmers. In 2011, just 1.6% were in agriculture Family farm replaced by corporate agribusinesses

The Changing Pattern of Work in the United States, 1900–2011 Compared to a century ago, when the economy involved a larger share of factory and farm work, making a living in the United States now involves mostly white-collar service jobs. Source: Estimates based on U.S. Department of Labor (2012).

Work in the Postindustrial Economy Shift from factory work to service work By 2011, more than 80% of labor force worked in service sector. Only modest standard of living earned Lowest salaries earned by women and other minorities

Work in the Postindustrial Economy: Dual Labor Market Categories of today's economy Primary labor market: Jobs that provide extensive benefits to workers Secondary labor market: Jobs that provide minimal benefits to workers LO 9.3 Analyze patterns of employment and unemployment in the United States.

Work in the Postindustrial Economy Labor unions Organizations of workers that seek to improve wages and conditions through various strategies Decline of unions Shrinking industrial sector Service jobs are unlikely to be unionized

Professions: What Is…? Profession Prestigious white-collar occupation that requires extensive formal education

Basic Characteristics of Professions Theoretical knowledge Self-regulated practice Authority over clients Orientation to community rather than self-interest

Self-Employment, Unemployment, and Underemployment Earning a living without being on the payroll of a large organization Unemployment Jobs disappear as occupations become obsolete, businesses change operational plans, and companies downsize or close

Although college graduates have a low risk of unemployment, race is related to unemployment for all categories of people. Source: U.S. Department of Labor (2013)

Self-Employment, Unemployment, and Underemployment Lower salaries, fewer benefits, and reduced/no pensions Many workers agree to cuts in pay and/or benefits

The “Jobless Recovery” Slower recovery in jobs Computer technology Increased workload for existing workers More temporary workers More jobs abroad Slower rate of growth in U.S. economy Cost of U.S. workers or lack of high level skills in global terms

The Underground Economy Segments Occasional participation in small ways Criminal activity Failure to report legally earned income on tax returns

Race and Gender in the Workplace Do these matter? In the past, white men have been the mainstay of the US labor force In the future, more workers will be women and minorities Development of programs/policies to meet needs of socially diverse workforce needed

Diversity 2020: Changes Coming to the Workplace Strategies for dealing with increase in U.S. minority workers Recruiting diverse, talented workers Developing effective ways to deal with socially motivated tensions in the workplace Rethinking current promotion practices

New Information Technology and Work AAMOI Computers are de-skilling labor. Computers are making work more abstract. Computers limit workplace interaction. Computers increase employers' control of workers. Computers allow companies to relocate work.

Corporations: Are They Competitive? Few large corporations dominate economy. Economic concentration has created the conglomerate. Federal law forbids monopoly, but allows oligopoly.

Corporations and Global Economy In the world Corporations account for most of the world's economic output. Biggest corporations are based in the U.S., Japan, and Western Europe, but their marketplace is the entire world. Low-income countries contain most of world's population, natural resources, and cheap labor.

The Economy: Looking Ahead Economic future of the U.S. and other nations will occur in a global arena. Related issues of global inequality and population increase must be addressed.

GLOSSARY Corporation Commodity Range Manner Surplus Wage Alter Fundamental Literacy Tertiary Investment Marketplace Amount to Property Thrive Choke Roughly Hypothetical Disparity Corporate Agribusiness Modest Enact Shrink Legislatures Payroll Obsolute Pension Mainstay Recruit De-skilling Conglomente Oligopoly Output