2. Ch. 9 - Labor Sect. 1 - Labor Market Trends Labor Force - Bureau of Labor Statistics (BLS) compiles information on the labor force - All people who are employed or unemployed (not all people) Employed - 16 yrs. or older who: worked at least one hour for pay in the past week worked in a family business are employed but did not work due to illness, vacation, etc.

3. 2 Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work

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5. 4 Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work - Full time students

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7. 6 Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work - Full time students - Stay-at-home parents

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9. 8 Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work - Full time students - Stay-at-home parents - Retirees

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11. 10 Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work - Full time students - Stay-at-home parents - Retirees - Military personnel

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13. Unemployed - Temporarily out of work or actively seeking work Outside Labor Force - Not counted in unemployment statistics: - Have given up looking for work - Full time students - Stay-at-home parents - Retirees - Military personnel Occupational Trends - Job Market changes as the economy grows New technologies and industries change what we produce.

14. 13 Changing Economy - Early Americans were mostly farmers - 1800s industrial revolution changed to manufacturing - by 1900s huge businesses employed 1000s - By late 1900s computer age changed how most jobs are performed Fewer Goods More Services - In past 100 years US has shifted from manufacturing economy to service economy - today 5 service workers to every 1 manufacturing worker

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16. 15 Changing Economy - Early Americans were mostly farmers - 1800s industrial revolution changed to manufacturing - by 1900s huge businesses employed 1000s - By late 1900s computer age changed how most jobs are performed Fewer Goods More Services - In past 100 years US has shifted from manufacturing economy to service economy - today 5 service workers to every 1 manufacturing worker

17. 16 Employment Video

18. 17 International Competition - Many US jobs have been lost to: Outsourcing - contracting another company to do some of your work - often to companies overseas

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20. 19 International Competition - Many US jobs have been lost to: Outsourcing - contracting another company to do some of your work - often to companies overseas Offshoring - moving some operations to another country where labor is cheaper

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22. 21 International Competition - Many US jobs have been lost to: Outsourcing - contracting another company to do some of your work - often to companies overseas Offshoring - moving some operations to another country where labor is cheaper

23. International Competition - Many US jobs have been lost to: Outsourcing - contracting another company to do some of your work - often to companies overseas Offshoring - moving some operations to another country where labor is cheaper Changing Labor Force - Until mid 1900s average worker was male high school grad. working same job until retirement - Today women, minorities, highly educated, working several different jobs over lifetime

24. College Graduates - More high tech jobs and competition require higher education for success - investment in human capital learning effect - theory that education increases efficiency of production and thus results in higher wages screening effect - theory that completion of college tells employers that applicant is intelligent and hard-working

26. College Graduates - More high tech jobs and competition require higher education for success - investment in human capital learning effect - theory that education increases efficiency of production and thus results in higher wages screening effect - theory that completion of college tells employers that applicant is intelligent and hard-working Women Workers - 1960s - 38% of women in the work force Today - 63% of women in the work force - Women encouraged to pursue higher education - Increase in service jobs no longer require physical labor

27. 26 Women Video

28. 27 Temporary Workers - Contingent workers - hired for a specific task for a limited time - often highly skilled - Firms can control costs more efficiently - Workers like flexible hours Foreign Born Workers - Nearly 15% of all workers in U.S. - Some are “guest workers” - Many illegal workers - How does this effect equilibrium for labor?

29. 28 Wages & Benefits - In past 20 yrs. “real wages” have actually fallen slightly if we account for inflation - Decreased demand for workers - from foreign competition, outsourcing, offshoring, temporary workers, decline in labor unions - Cost of benefits like health insurance, retirement funds

30. 29 Sect. 2 - Labor and Wages Labor Demand - Demand for labor comes from firms that hire workers Derived demand - comes from the demand for another good or service Productivity of labor - the quantity of output produced by a unit of labor - workers are paid by the value of their production Labor Supply - Comes from people willing to work for wages - The higher the wage the higher the quantity of labor supplied

31. 0 Quantity of Workers Wage $ 10 20 304050 $7.00 $9.00 $11.00 $13.00 $5.00 Demand for Labor Supply of Labor Wages

32. 31 Labor Supply / Demand

33. 32 Sect. 2 - Labor and Wages Labor Demand - Demand for labor comes from firms that hire workers Derived demand - comes from the demand for another good or service Productivity of labor - the quantity of output produced by a unit of labor - workers are paid by the value of their production Labor Supply - Comes from people willing to work for wages - The higher the wage the higher the quantity of labor supplied

34. 33 Equilibrium Wage - The wage, or price of labor, that is set when the supply of workers meets the demand for workers

35. 0 Quantity of Workers Wage $ 10 20 304050 $7.00 $9.00 $11.00 $13.00 $5.00 Demand for Labor Supply of Labor Wages

36. 35 Equilibrium Wage

37. 36 Equilibrium Wage - The wage, or price of labor, that is set when the supply of workers meets the demand for workers Skill Levels - Wages vary according to a workers skill level and education in addition to supply and demand Unskilled - Work that requires no specialized skills, education, or training - usually earn a low hourly wage

39. 38 Equilibrium Wage - The wage, or price of labor, that is set when the supply of workers meets the demand for workers Skill Levels - Wages vary according to a workers skill level and education in addition to supply and demand Unskilled - Work that requires no specialized skills, education, or training - usually earn a low hourly wage Semi Skilled - Requires minimal specialized skills and education, - such as the operation of certain types of equipment Ex. - word processors, cooks, construction workers

40. Skilled - Requires specialized abilities and training to do tasks such as operating complicated equipment Ex. - computer technicians, electricians, carpenters. Professional - Demands advanced skills and education - usually white-collar workers Ex. - lawyers, bankers, doctors, pro athletes

42. Skilled - Requires specialized abilities and training to do tasks such as operating complicated equipment Ex. - computer technicians, electricians, carpenters. Professional - Demands advanced skills and education - usually white-collar workers Ex. - lawyers, teachers, bankers, doctors

43. 42 Wage Discrimination - Racial and gender discrimination were common in labor The Equal Pay Act of 1963 - requires equal pay regardless of gender Civil Rights Act of 1964 - prohibited job discrimination on the basis of race, sex, color, religion, or nationality Glass Ceiling - An unofficial barrier that prevents women and minorities from advancing to the top ranks of firms

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45. 44 Wage Discrimination - Racial and gender discrimination were common in labor The Equal Pay Act of 1963 - requires equal pay regardless of gender Civil Rights Act of 1964 - prohibited job discrimination on the basis of race, sex, color, religion, or nationality Glass Ceiling - An unofficial barrier that prevents women and minorities from advancing to the top ranks of firms Minimum Wage - Fair Labor Standards Act - 1938 - Established minimum wage - Usually higher than equilibrium wage

46. 0707 Quantity of Workers Wage $ 10 20 304050 $6.00 $7.00 $8.00 $9.00 $5.00 Demand for Labor Supply of Labor Wages XX

47. 46 Wage Discrimination - Racial and gender discrimination were common in labor The Equal Pay Act of 1963 - requires equal pay regardless of gender Civil Rights Act of 1964 - prohibited job discrimination on the basis of race, sex, color, religion, or nationality Glass Ceiling - An unofficial barrier that prevents women and minorities from advancing to the top ranks of firms Minimum Wage - Fair Labor Standards Act - 1938 - Established minimum wage - Usually higher than equilibrium wage

48. 47 Labor Unions - Organization of workers that tries to improve working conditions, wages, and benefits for its members - average union wage is nearly $5 an hour higher than nonunion

49. 48 Labor Unions - Organization of workers that tries to improve working conditions, wages, and benefits for its members - average union wage is nearly $5 an hour higher than nonunion Section Three - Organized labor The Labor Movement - 1800s “Industrial Revolution” gave rise to Labor Unions in an attempt to improve pay and working conditions - 1896 the American Federation of Labor (AFL) was formed - employers fought back by harassing or firing union organizers

50. 49 Congressional Protection - During Great Depression Wagner Act (1935) was passed to protect workers rights - union membership and strength grew - By 1940s & 50s unions became a dominant force in industry Decline of Organized Labor - Taft - Hartley Act (1947) limited union and workers rights - In recent years a shift from manufacturing to service economy has reduced union membership - Issues that unions were formed to address no longer an issue

51. 50 Labor Unions

52. 51 Congressional Protection - During Great Depression Wagner Act (1935) was passed to protect workers rights - union membership and strength grew - By 1940s & 50s unions became a dominant force in industry Decline of Organized Labor - Taft - Hartley Act (1947) limited union and workers rights - In recent years a shift from manufacturing to service economy has reduced union membership - Issues that unions were formed to address no longer an issue

53. 52 Collective Bargaining - The union and the company meet to negotiate a new labor contract - the union negotiates on behalf of all union members for wages, working conditions, etc. - if agreement can’t be reached both sides can agree to mediation - a third party helps arbitration - a third party decides

54. 53 Collective Bargaining

55. 54 Collective Bargaining - The union and the company meet to negotiate a new labor contract - the union negotiates on behalf of all union members for wages, working conditions, etc. - if agreement can’t be reached both sides can agree to mediation - a third party helps arbitration - a third party decides Strike - If agreement cannot be reached, union members can vote to strike (stop work) to force the company to agree to union demands - strike hurts company and workers financially - who can hold out longer?

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61. 60 Collective Bargaining - The union and the company meet to negotiate a new labor contract - the union negotiates on behalf of all union members for wages, working conditions, etc. - if agreement can’t be reached both sides can agree to mediation - a third party helps arbitration - a third party decides Strike - If agreement cannot be reached, union members can vote to strike (stop work) to force the company to agree to union demands - strike hurts company and workers financially - who can hold out longer?

62. 61 Personal Finance Handbook Understanding Your Paycheck - Attached to your pay check is the “pay stub” or earnings statement - contains information for the current pay period and year to date Salary and Wages - Salary refers to monthly or yearly pay - wages are hourly pay Gross pay is total earnings for the current pay period = hours worked x hourly wage

63. 62 Withholding - Pay stub shows all deductions subtracted from gross pay - most are federal, state, & local taxes - what is left is your net pay or take-home pay Social Security and Medicare - Payroll Taxes - Social Security shown as FICA on pay stub provides retirement, disability, and survivor benefits Medicare funds medical insurance for the retired

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65. 64 Withholding - Pay stub shows all deductions subtracted from gross pay - most are federal, state, & local taxes - what is left is your net pay or take-home pay Social Security and Medicare - Payroll Taxes - Social Security shown as FICA on pay stub provides retirement, disability, and survivor benefits Medicare funds medical insurance for the retired

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68. 67 Withholding - Pay stub shows all deductions subtracted from gross pay - most are federal, state, & local taxes - what is left is your net pay or take-home pay Social Security and Medicare - Payroll Taxes - Social Security shown as FICA on pay stub provides retirement, disability, and survivor benefits Medicare funds medical insurance for the retired W4 - Form filled out when you start a job that determines how much federal and state tax will be deducted based on exemptions

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70. Taxes - Income tax (16 th Amendment) is the largest source of govt. revenue - We pay a % of our Taxable Income - income minus deductions & exemptions

71. 70 Amendment XVI (1913) The Congress shall have power to lay and collect taxes on incomes, from whatever source derived…

72. Taxes - Income tax (16 th Amendment) is the largest source of govt. revenue - We pay a % of our Taxable Income - income minus deductions & exemptions IRS - The Internal Revenue Service is the federal agency responsible for collecting income tax - will impose significant penalties for not paying required taxes W2 - Tax form that shows all income and taxes paid for entire year - a copy must be attached to tax form

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74. Taxes - Income tax (16 th Amendment) is the largest source of govt. revenue - We pay a % of our Taxable Income - income minus deductions & exemptions IRS - The Internal Revenue Service is the federal agency responsible for collecting income tax - will impose significant penalties for not paying required taxes W2 - Tax form that shows all income and taxes paid for entire year - a copy must be attached to tax form

75. 1040 / 1040EZ - Tax form used to complete your annual tax return - determine if you owe the IRS more money or will receive a refund - can use the shorter EZ form if you meet certain requirements - Make less than 100,000 - claim no dependents - do not itemize 1099 - If you have income from bank account or other interest income you will receive 1099 form and must claim that income

76. 75 The End