Chapter 10 The US Labor Force

Activity Activity: Perry’s Ice Cream In your notebook, list five ways that Perry’s could increase productivity.

Productivity Innovations, inventions, and technical knowledge enable companies to produce more per hour of work. Capital resources such as tools, equipment, and modern buildings also increase productivity.

Productivity Investments that society, businesses, and individuals make in inquiring skills and expanding knowledge also add to productivity. What encourages businesses to invest capital resources to produce more goods?

Increase Production Increasing production increases employees wages and decreases the unemployment rate. In the United States, the income rate has always increased. Copy line graphs 10.1and 10.2 on page 100 into your notebook.

Baking a Bigger Pie Economists have much better information about wages and productivity since 1960. Rising labor productivity means that businesses can pay workers higher real hourly wages without increasing production costs. Why do you think real wages have steadily increased in the United States?

Baking a Bigger Pie Generally, everybody earns a bigger slice of the economic pie as years go by. Workers are paid more, consumers benefit from lower prices and better products, and business owners earn more profit.

Market Forces and How Wages are Determined Market forces, or changes in supply and demand determine what wages people earn. If production rises, demand for labor rises and wages rise. If production lowers, demand for labor lowers and wages lower.

Market Forces and How Wages are Determined If the supply of labor is scarce, wages increase. If the supply of labor is plentiful, wages decrease.

Changes in the U.S. Labor Force Labor Force: All people currently 16 years of age or older who are currently employed or looking for work. What is the biggest change in the U.S. labor force over the last 100 years? The biggest change in the U.S. labor force over the past 100 years is from a move from an agricultural to industries producing goods and services.

Fastest Growing Occupations in the United States Turn to page 103 to discuss chart 10.8.

The Labor Shift Like the past shift of work from farmers to factories, the present shift of employment to services produces much discomfort. Workers must learn new skills, may need additional education, and they and their families may have to relocate to be near sources of employment.

The Labor Shift The transition to services promises to make workers more productive and our nation more prosperous. The number of women in the labor force has also increased. In 1960, 29 percent of the labor force was made up by women. Today, more than 46 percent of the labor force is made up of women.

Labor Supply and Demand Because of supply and demand, it should be no surprise that wages and salaries for different jobs are not similar.

Why do Workers Earn Different Amounts? Differences in Ability: All of us have different skills. Differences in effort and jobs: Some people work harder and longer hours than others. This likely leads to higher wages.

Why do Workers Earn Different Amounts? Experience: Workers with more experience tend to earn more doing similar work. Education and Training: Workers with more education and/or special training tend to earn more.

Nonmarket Forces People like to stay where they are. Wages differ from one part of the country to the other. Therefore, you may accept less of a wage to live in a certain area. See chart 10-9 on page 104.

Nonmarket Forces Job discrimination can also favor one person over another for reasons that have nothing to do with ability to perform the job. Differences in race and gender can lead to discrimination. Refer to Chart 10.11 on page 105.

Nonmarket Forces According to some economists, a market economy may penalize businesses that discriminate because discrimination can raise production costs. This occurs because it reduces the total supply of labor by blocking the employment of equally or more productive workers.

Nonmarket Forces Government legislation has led to minimum wage laws, overtime pay, hours of work, and child labor have a direct effect on labor costs. Labor unions, association of workers that promote their members’ interests, often are determined through collective bargaining. Collective bargaining: A process of negotiation.

Labor Unions Unions have various methods of altering the labor market. They can restrict the supply of labor through membership requirements or lengthy apprenticeship programs. This can increases wages. Collective bargaining can push members’ wages above market levels.

The Rise of the AFL and the CIO In 1886, a new labor organization that represented labor unions, the American Federation of Labor (AFL), was formed. Concentrated on gaining higher wages and better working conditions.

The AFL/CIO By the 1930s, many AFL members wanted to include unskilled workers. In 1938, the United Mine Workers Union broke away from the AFL and formed a rival organization.

AFL/CIO The rival organization was called the Congress of Industrial Organization (CIO). The union included steel, automobile, rubber, textile, and meat packing workers.

The Great Depression The 1930s and the Great Depression brought many changes to American life. Congress passed many laws during this time. Some still impact us today.

Important Labor Laws The Norris-LaGuardia Act of 1932 – Limited the ability of the courts to use injunctions-orders issued by a judge- in labor disputes. Injunctions were used to stop workers from striking.

Important Labor Laws The National Labor Relations Act of 1935 – Also known as the Wagner Act, it guaranteed the right of workers to join unions and engage in collective bargaining.

Important Labor Laws The Fair Labor Standards Act of 1938 – This law provided a minimum wage of 25 cents per hour and time-and-a-half for overtime beyond 40 hours of work per week.

Important Labor Laws The Labor-Management Relations (Taft-Hartley) Act of 1947 – This prevented labor unions from engaging in “unfair labor practices.” It also outlawed the closed shop, one in which a worker had to belong to a union to get hired.

Important Labor Laws The Taft-Hartley Act did not outlaw union shops – allowing non-union workers to be hired on condition they must then join the union. Currently, 21 states have open shop laws on the books, making it illegal to require a worker to join a union.

Important Labor Laws The Labor-Management Reporting and Disclosure Act of 1959 – Law sought to improve democratic procedures and reduce corruption within unions.

Union Management Grievances – formal complaints made by unions or employees if they feel that they have been treated inappropriately under the terms of the collective bargaining agreement.

Union Management Conciliation – when a third party attempts to bring labor and management together to work out their disagreements on their own, without third-party help.

Union Management Mediation – requires greater involvement by the third party, who will listen to both sides of the dispute and make suggestions for settling it. The suggestion are not binding.

Union Management Arbitration – A third party (arbitrator) will listen to both sides and hand down a decision that is final and binding.

Recent Labor-Mgt. Developments Flextime – Some employers are providing flexible work schedules to meet employee needs. Peer Review Panels – Consist of management and employees that listen to grievances and rule on them.

Recent Labor-Mgt. Developments Employee Involvement Programs – Teams of employees that meet to identify job-related problems and suggest solution.