Labor Markets ch9

Demand and Supply of Resources Derived Demand-Demand for good or service produced by the resource Productivity-output produced by a resource Market Supply of Resources Equilibrium wage

Nonwage Determinants of Labor Demand Demand for final Product Prices of other resources Resource substitutes Resource Complements Technology

Nonwage Determinants of Labor supply Worker Wealth Working Conditions Tastes for Work

Wage Determination: why they differ Differences in: Training Education Age Experience Ability Risk Geographic Job Discrimination (Race, Ethnicity, Gender, Sexual orientation) Union Membership

The Minimum Wage 2007 USA from $5.15 to 7.25 Minimum wage law- establishes a minimum amount an employer can pay a worker for an hour of labor High opportunity cost of school

Labor Unions Workers join forces to improve their pay and working conditions by negotiating a labor contract with their employers 1886 AFL (American Federation of Labor) Clayton Act of 1914- unions not taxed, exempt from anti-trust Right to work law- workers do no have to join union or pay union dues

Labor Unions Collective Bargaining- process which union representatives negotiate with an employer about wages, benefits, and working conditions Strike- Unions attempt to withhold labor from the employer Mediator- listens to both sides comes up with a solution Binding Arbitration-government has third party settle dispute, which must be accepted

Union Wages and Employment Reduce supply of Labor Get employers to hire only union labor Long apprenticeship periods Licensing

Union Wages and Employment Increase Demand for Union Labor Increase Demand for Union Products Restrict Supply of Nonunion-made products Increase productivity of union labor Featherbedding- Unions attempt to ensure that more union labor is hired than the employer would prefer Union Pay is Higher- 15% more than non union

Trend in union Membership Membership by state NY 24.2% AK22.9% HI 21.8% CA 17.5% NC 3.2% LA 4.3% Reasons for Declining Membership Changes in Economy (away from manufacturing) Competition from nonunion firms (imports) Strikes are fewer and less effective (higher permanent replacements)