Ch. 10 Human Capital

Understanding Human Capital

Activity Take your piece of computer paper and fold it like a hamburger Now open it, and take the bottom fold and fold it to the middle of the crease. Do the same with the top fold. You should now have four rectangular sections. Flip your paper over. From one end of the paper, count down 3 rectangles. On the third rectangle, Choose a superhero name and Write your superhero name. Turn your paper upside down, and repeat step 5. Fold the paper to create your name tent. Raise your hand when finished.

Group 1: Group 3: Group 2: Group 4: Each of you will produce your own name tent while standing and using only one hand (your nondominant hand) to produce the name tent. You must keep your dominant hand behind your back. You may not use the desk, table, or chair. You may not assist one another. Group 3: Each of you will remain seated to produce your own name tent, using only one hand, (your dominant hand) to produce the name tent. You must keep your nondominant hand behind your back. You may not assist one another. Group 2: Each of you will remain seated to produce your own name tent, using only one hand, (your nondominant hand) to produce the name tent. You must keep your dominant hand behind your back. You may not assist one another. Group 4: Each of you will remain seated to produce your own name tent, using both hands. You may not assist one another.

Let’s Discuss!! Who had a hard time making name tents? What difficulties did you encounter when making your name tents? Which groups finished most quickly? Which group took the longest to finish?

What is Human Capital? Human Capital: the knowledge and skills that people obtain from education, job experience, and training. You can increase your human capital by going to school (education), gaining work experience (full or part-time job, volunteer work), and training (applying skills you’ve learned) **When you go about increasing your human capital, you are investing in your human capital**

Connection to the Activity In the group activity, those who had fewer limitations when producing their name tent represented those with higher human capital. This tells us that people with more skills, education, and training tend to be more productive and thus earn a higher wage

What are examples of human capital that you currently possess? Take some time and list as many as you can on your notesheet. Think about your education, what skills you have, what job experience do you have (volunteering counts), your involvement in extracurriculars What are examples of human capital that you currently possess?

Again, take some time and list the ways you have already invested in your human capital and/or will invest in order to maintain your human capital. What investments have you made or will make to develop and maintain your human capital?

What are you plans for after you’ve finished getting your education? Your plans for after college (if you plan on going), or high school (if you are not planning on going, or are unsure if you are going) What’s more important is that you have some sort of plan What are you plans for after you’ve finished getting your education?

Basically, if your plan was to obtain a job in the field you want after high school or college, how would you go about making sure you kept that job and progressed in it? For those plans, what human capital might you need to accomplish your them?

You know you’ll need education, experience, and training You know you’ll need education, experience, and training. So this time be specific: What sort of education would you need? What kind of experience? How would you train (practice) the skills you’ve learned? Once you’ve figured out what human capital you need, what investments would you need to make in your human capital?

Getting to know the Labor Market

The Labor Market and Labor Force Labor Market: The market of employers who are looking for people to do work and employees who are looking to get paid. Labor Force: Made up of people age 16 and older who are employed or who are actively seeking employment. Does not include: volunteers, homemakers, military, or prison inmates

Why do you think the labor market continues to grow? Think-Pair-Share

Growth in the Labor Market Continued growth in the Labor Market More women larger % of minorities in workforce Americans are working longer One area that is not growing: Younger Americans Younger Americans are staying in school longer

Manufacturing vs. Services Industries Manufacturing jobs are down in America More focus on services industry Think-Pair-Share: Why do you think manufacturing jobs are down in America? Reasons for the decrease: better technology More educated people

Groups in the Labor Market

Knowledge Worker Knowledge Worker: work with information or develop/apply information in the workplace Examples: data analysts, financial advisors, computer programmers, researchers, teachers, scientists, lawyers Can you think of any others? Information based jobs are expected to grow because they are important to the economy

Other Groups in the Labor Market Outsourced Workers: Workers contracted by a business to perform jobs once done by company employees. This is a cheaper and more efficient option. Temporary Workers: Workers who are employed for a limited amount of time at different locations doing different jobs. Provides flexibility, experience. Telecommuters: Workers who work from home through phone and/or computer. Common amongst knowledge workers.

Globalization of the Labor Market Globalization: the interconnection of businesses around the world for economic purposes Two Examples of Globalization: Offshoring: relocating jobs/work to places outside the U.S. Do this to reduce costs Examples: Nike, call centers Inshoring: Foreign companies bring jobs/work to the U.S. They take advantage of our high level of human capital. Examples: foreign car companies As globalization continues, will force companies to become more efficient so they can compete worldwide

Wages in the Labor Market

Wages and the Labor Market 4 General Skill Levels of Workers Unskilled: earn low hourly wage. janitors, busboys, seasonal farmworkers Semiskilled: paid hourly cashiers, construction workers, taxi drivers, fast food cooks Skilled: paid hourly police officers, factory workers, bank tellers Professional: salaried workers “white collar” jobs: doctors, teachers, lawyers, airline pilots Many factors influence wage: but skill level and demand for those skills are two biggest ones

Determining Wages Wages are determined by demand and supply Demand is determined by the employers who need workers Supply is determined by job seekers Immigration and leisure desires can influence labor markets Equilibrium Wage: wage rate that occurs when amount of jobs available equals jobs desired. immigration provides workers willing to work for lower wages, when wages are low, people more inclined to not work and pursue leisure activities

Other Factors that Affect Wages Minimum Wage Laws: wages set by local and federal governments. Affects the market by creating a surplus of workers in unskilled jobs Working Conditions: high stress/more dangerous jobs earn more pay. Location and Cost of Living: Pay changes according to where you live and how much it costs to live there. Cost of Fringe Benefits: Health insurance and retirement can bring down wages. Foreign Competition: Competition for jobs outside the U.S. can bring wages down. Employers pay for your health insurance and retirement---increases costs which means lower pay

Wage Problems Faced by U.S. Wage discrimination Workers getting paid less for doing the same job as another Wage gaps - differences between groups in pay Women, minorities, adolescents and elders in the workforce Affirmative Action - hiring practices to try and end discrimination Makes companies give all groups equal chance at the job Labor Unions Created to get better conditions and wages for a group of people Allows a group to “collectively bargain” for better circumstances Not as popular as in the past b/c conditions are much better

Wages Activity---Paper Airplanes You will be making paper airplanes. You will get paid based on your productivity. This activity will have several rounds, with each round being 2 minutes long. Everyone will start off with $10,000. You will be paid a certain amount of “money” for every paper plane you make. The person with the most amount of money at the end of the game wins. Throughout the game you will be allowed to “increase your human capital”, but you will have to pay for it. However increasing your human capital means you can get paid more for each paper plane you make. It is up to you to decide what you want to do. But remember: The goal is to make the most amount of money.