Chapter 8 – The Labor Force in Our Economy Lesson 1 – Labor Force Characteristics Lesson 2 – How Wages Are Determined

Lesson 1 – Labor Force Characteristics: Key Terms Automation Blue-collar worker Career Educational attainment Labor force Median retirement age paralegal Rate of population growth Service worker Technological revolution White-collar worker

Lesson 1 Major Concepts In recent years jobs in white-collar occupations have become more numerous than blue-collar jobs Since 1950, the % of farm workers in the labor force has steadily declined, while the % of women who work has increased dramatically.

Lesson 1 Major Concepts cont… In the post-WW II period, consumer demand for new goods and services has changed the demands of employers for personnel. In response to this derived demand, the labor force is changing from manufacturing to service occupations. The employment rate of a group is often related to the group’s educational attainment.

Lesson Opener A recession is when your neighbor is out of work. A depression is when you’re out of work. Harry S. Truman

Lesson Opener #2

Overview Composition of the Labor Force – pg. 212-213 The number and variety of jobs in our economy is staggering How many occupations can you name? The labor force is far larger in numbers and more complex in range of occupations than most people imagine. Occupational Outlook Handbook

Labor Force Trends Labor force also called workforce is made up of all persons 16 years of age or older who are either working or looking for work. Today – 155 million, half the population The labor force changes as the country’s population changes and as the kinds of work people do change

The Labor Force by Occupation As the labor force has grown, occupations have changed. White-collar workers – professional, technical, clerical, sales, and managerial categories Blue-collar workers – those who have a craft, operative, and laboring jobs. Service workers – government employees, fire fighters, hospital employees, building maintenance workers, workers in restaurants, beauticians etc. Farmworkers – farmers, farm operators, and farm laborers.

Wages and Skill Levels Unskilled Semi-skilled Skilled Professional Dishwashers, messengers, etc etc Hourly wage, low Semi-skilled Lifeguards, short-order cooks Hourly wage, low to medium Skilled Auto mechanics, bank tellers Hourly wage, medium to high Professional Doctors, teachers Salary for pay

Lesson 1 Occupational Outlook Handbook Find 2 jobs you want as a career Why you want that job The median pay The minimum education needed What kind of on the job training The percent growth Explain the overall job outlook Do on a Google Doc and share with me

The U.S. Population in Growing As the country’s population grows, so does the labor force. Rate of population growth – has been slowing in recent decades 1979-1992 the labor force increased 21% 1992-2005 estimated at 19% Despite a slowdown in the rate of growth, the labor force will continue to grow More people will want more things Demand for workers is directly related to consumer demand for goods and services.

The Population is Getting Older The % of our population that is age 65 and older is expected to increase. The % of our population that is 17 years or younger is expected to remain the same. Average age of the labor force in 1992 – 37, 2005 – 41

Earlier Retirement Age Americans are living longer, retired people are getting younger. Median Retirement Age – men 66.9 years of age, women 67.7 in 1950 62.7 for men, 62.9 for women in 1994. 61.7 for men, 61.2 for women in 2005. The Golden Handshake and early retirement Early retirement means job opportunity for younger (you!) workers Those 85 years and older will increase 4x as fast as the general population, creating demand in the healthcare industry What kinds of jobs are in demand in the A.V?

The Population is Becoming More Varied 1979 – women made up 42% of the labor force 2000 – 50% of the labor force Pg. 215 – figure 9.4 Have grabbed a big % of jobs, once considered “men’s work” Nonwhite workers are also becoming a larger part of the labor force. Pg. 217 – figure 9.11

Most New Jobs Are in the Service Industries Jobs have been shifting from goods-producing industries (manufacturing, construction, and ag) to the service industries (transportation, trade, finance and government) Service workers category is the fastest growing White-collar workers represent half of the labor force Fewer farmers have been needed over the years 4 of 5 workers in 2005 are in the service industry

The Role of Technology Technological Revolution – the rapid changes in ways of producing goods and services What new technologies have you seen in the last 10 years? Use of robots, automated machinery, satellites, fiber optic wires etc…

Losses of Jobs Many workers lose jobs because of automation Automation – the use of machines to operate other machines Bottling plants, automobile plants, oil refineries, and other factories are examples of where automation has been used 1991-1995 the 400 largest U.S. corporations reduced employment by 4 million GM in the 1980s – 369,000 workers at 130 facilities to make 4.5 million vehicles/year After downsizing in the early 1990s – 250,000 people at 120 facilities to produce roughly 4.5 million vehicles/year

Gains in Jobs Though the largest 400 corps. From 1991-1995 cut 4 million jobs, nationwide jobs went up 6 million in the same period. Many of these in new industries Demand for highly specialized workers that some employers have difficulty filling jobs.

The Emphasis on Education Will Continue Educational attainment – years of schooling In 1975 – 67% of workers between ages of 25 and 64 had completed only 4 years or less of high school 1990 – the number dropped to 53% 1975 - 1990 - % of workers with four or more years of a college education increased from 18% to 26%

It Pays to Stay in School As of 1993: Elementary school: $13,920 – average salary 13% - unemployment rate High School $28,700 – average salary 7.3% - unemployment rate College $56,116 – average salary 3.2% - unemployment rate Page 214 figure 9.3

Lesson 2 – How Wages Are Determined Key Terms Derived demand Discrimination Job outlook Marginal productivity On-the-job training Worker mobility

Lesson 2 Major Concepts The size of a worker’s paycheck (in the form of a wage or salary) is directly related to the demand for that kind of worker The demand for a worker is directly related to consumer demand for the product or service that the worker helps produce In practice, other factors, such as discrimination also enter into the determination of wages

Why do Some Jobs Pay More Than Others? All people and jobs are not alike, therefore wages are different for different jobs Athletes in the US vs. rest of the world 4 major sports vs. volleyball, water polo, or badminton The difference between wages comes down to market forces of supply and demand, and nonmarket forces

Median Weekly Earnings, 1996 Secretaries 406 Janitors 301 Gas stations emp. 275 Waiters 271 Apparel sales 265 Cashiers 247 Child-care 198 Physicians $1,199 Lawyers 1,149 Aerospace 1,097 Comp. Analyst 891 Electricians 811 Rail workers 740 Aircraft mechanics 720 HS Teachers 697

Median, Mean, Mode Median – the medium or middle point; half of the given scores of numbers (test scores, wages, batting averages) are higher than the median point, while the other half are lower Mean – the average, obtained by adding up a column of numbers and dividing the entries. Mode – the number in a series that is reached more often than any other number (if 11 students score 82 on a test, while 8 score 78 and 3 score 67, the mode is 82

Market Forces in Action: How Supply and Demand Affect Wages Millions of fans watch sports Only a handful of athletes are able to compete on that high stage This creates a market situation that pays athletes high wages Salespeople v. Plumbers Supply of salespeople greater than plumbers Try finding a plumber in an emergency! Because of the demand for plumbers, they get paid a higher hourly wage than salespeople

What Factors Affect the Demand for Labor? the demand for the firm's products and services The productivity of each additional worker in the firm

Demand for Goods and Services If consumers buy less of a good or service, the demand for workers in that industry will decline Change from US electronics to Japanese electronics If consumers buy more of a good service, the demand for workers in that industry will increase Increase in a sport would increase that sports athletes pay The number of workers that a firm hires, or fires, depends upon a firms expected sales and output

Productivity Productivity of each additional worker hired is the 2nd factor affecting demand A workers wage includes taxes, insurance, and other expenses Marginal productivity – the value of the output of the last worker hired by a company The demand for labor varies inversely (opposite) with wages if employers reduce wages, employers can afford to hire more workers

Factors Affecting the Supply of Labor Supply of Labor – number of workers available to perform a job at a wage The number of workers will increase when wages increase

Other Factors: Attractiveness of the Job Some jobs carry more prestige or are more appealing than other jobs paying similar wages

Other Factors: Skill Required Only a limited number of people have the skill or talent required for certain jobs. If you cant sing or hit a 95 mph fastball, your not going to be a singer or ballplayer

Other Factors: Required Training Some jobs have long training periods Doctors (8-10 years) Lawyers (4-6 years) teachers (1-2 years) Can you afford the extra time and money now, for more salary later

Other Factors: Worker Mobility Mobility – willingness of workers to move where the jobs are

Choosing Your Career Read page 187-188 What is most important thing to you in choosing your career? What is the first thing you should consider when choosing your career? What are some options to help you decide what career to pick? Once your done with high school, what are your next options?

Statistical Abstract – 2006 Census Bureau

Nonmarket Forces in Determining Wages Labor Unions – the strength of the union or management will determine wages, not supply and demand Government Legislation – minimum wage is not affected by supply and demand; overtime rates, banning employing children; workers must receive equal pay for equal work

Weekly Earnings of Full-time workers, 1994 Discrimination – Favoring one group over another for wages, job promotions, etc… White Males   $547 White Females $408 African-American males $400 African-American females 346 Hispanic-American males $343 Hispanic-American females 305

Average Annual Pay of Workers, by State, 1994 - Geography Connecticut $33,811 2 New York 33,439 3 New Jersey 4 Alaska 32,657 5 Massachusetts 31,024   46 Arkansas 20,898 47 Mississippi 20,380 48 Montana 20,218 49 North Dakota 19,893 50 South Dakota 19,255

Educational Attainment MALES 1970 1980 1995 Elementary School $5,400 $8,900 $11,723 High school 8,800 14,600 23,365 4 yrs. College 12,100 22,200 39,040 5+ yrs. College 13,400 26,900 49,076 FEMALES $1,800 $4,200 $7,096 3,400 6,100 12,046 5,400 11,700 24,065 7,900 15,100 33,509

Lesson 2 Bookwork Page 236-237 Key Terms 2,4,6 Using Graphic Organizers 8 Reviewing Main Ideas 10,12,14,16