Chapter 8

8-3 Labor and Wages

Categories of Labor A .Unskilled laborers work primarily with their hands because they lack the training and skills required for other tasks -They also make some of the lowest wages B. Semiskilled workers do jobs that require a minimum amount of training C. Skilled workers hold jobs that require experience and training D. Professional workers do jobs that require a high level of knowledge-based education and managerial skills

Review Questions What is human capital? Sum of peoples’ skills, abilities, health, and education How do employers and employees improve their human capital? Education, training, health care, etc…

Individual Question In your opinion, should a higher investment in human capital be rewarded with higher wages? Why or why not?

Noncompeting Labor Grade People must have the ability, the initiative, and the money to obtain additional education and training. Sometimes people are faced with a lack of opportunity for additional training and education Sometimes people lack the initiative they need to get ahead

Wage Determination The traditional theory of wage determination says that supply and demand together will determine the equilibrium wage rate. The theory of negotiated wages uses organized labor’s bargaining strength to help explain wage differentials According to the signal theory, employers are willing to pay more for those people with certain indicators of superior ability

Discussion Question Do you think that it is fair that professional athletes have one of the nation’s highest wage rates? Why or why not?

Regional Wage Differences Wages can vary when demand for certain skilled positions exceed supply Employers tend to offer higher wages in areas where the cost of living is higher than normal People sometimes are willing to accept lower wages if the location of the job is attractive to them.

8-3 Essential Question What are some of the reasons that wages differ? -skills -type of job -location

8-1 The Labor Movement

I. Early Union Development The nations first unions were comprised of skilled workers After the civil war, as industry expanded, the labor force became more unified Two types of Unions developed– the trade union and the industrial union

Differing Opinions…

D. Unions used strikes, pickets and boycotts to help members get better pay, better hours, and job security. E. Employers resisted unions through lockouts, firings, and even setting up company unions F. Historically, the courts have viewed unions with hostility.

Labor Unions during the Great Depression Employment and cut wages marked the decade of the Great Depression and encourages unions and workers to organize. The government began to pass laws protecting unions.

Labor Since WWII After WWII, new laws began to limit union activity The AFL-CIO was created when two powerful unions joined forces Independent unions are those that do not belong to the AFL-CIO

Individual Question Why do you think the government began to protect unions during the Great Depression? -Workers suffered during the great depression and the unions promised some relief

8-1 Essential Question What are labor unions and what purpose do they serve? -Labor unions are organizations that attempt to improve the working conditions of their members through joint action.

8-2 Resolving Union and Management Differences

Kinds of Union Arrangements In a closed shop, the employer agrees to hire only union members In a union shop, most workers belong to a union In a modified union shop, workers cannot be made to join the union In an agency shop, workers must pay union dues, whether or not they are union members

Collective Bargaining When labor and management agree to mediation, a neutral person helps to settle the dispute. With arbitration, labor and management agree to abide by a third party’s decision Disputes can also be resolved through fact-finding, in which a neutral third party presents non-binding recommendations The government also can get involved in labor disputes by issuing injunctions or resorting to seizures.

Individual Question Imagine that you are a union member. Which form of collective bargaining do you think would be the most effective? Why?

8-2 Essential Question What is collective bargaining? -a process that allows union and management to negotiate contract

8-4 Employment Trends and Issues

Decline of Union Influence Union membership has declined because of unfriendly businesses, new workers with little loyalty to organized labor, and cutbacks in production by unionized companies Businesses are using givebacks, bankruptcy claims, and two-tier wage systems to lower union-negotiated wages.

Lower Pay for Women Some higher paying jobs have larger percentage of male workers, while some lower paying jobs have a larger percentage of female workers. The glass ceiling is an example of the discrimination women face in the workplace.

D. The Equal Pay Act and the Civil Rights Acts both work to prevent wage and salary discrimination. E. Some states hope to close the gender income gap by defining jobs of comparable worth (equal pay for equal work). F. Set-aside contracts are contracts that will be made only with a specific group

Part-Time Workers Part-time workers cost less in benefits Critics say part-time low wages and lack of benefits make it difficult for workers to earn a decent living.

Individual Question Read ‘Debate Over the Minimum Wage’ on page 216 in your textbook. Do you support or oppose minimum wage? Justify your answer.

Minimum Wage Opponents claim the minimum wage does not promote economic freedom In current dollars, the minimum wage appears to have risen over time Measurements in real dollars take inflation into account The ratio of minimum wage to manufacturing wage has been steadily decreasing over the past 30 years.

8-4 Essential Question Why is it necessary to consider inflation when examining the minimum wage? - As prices tend to increase over time, purchasing power of fixed minimum wage decreases