1. Unit 3, Lesson 1

2. Business Organization Company or Firm Sole Proprietorships: business owned and managed by a single individual. Owner gets all the profit Owner shoulders all the debt. 75% of businesses are sole proprietorships, but they generate only 6% of sales.

3. Advantages Ease of start-up – anyone can start one with a small amount of paperwork and legal fees. Authorization: normally need a business license. Site Permit: certificate of occupancy needed if NOT in a home. Name: must register a name

4. Advantages Few Regulations – there are some but the least for any business. Ex: zoning laws Sole receiver of profit – after taxes, a sole proprietor gets to keep all the profit. Full Control – they get to run their business as they see fit.

5. Advantages Easy to discontinue: they can stop whenever they want.

6. Disadvantages Unlimited Personal Liability If a business fails, you may have to sell personal property to cover debts. Limited access of Resources: Banks don’t give loans very often to sole proprietors. May lack skills needed (bookkeeping, etc) Turn down work because you can’t get it all done.

7. Disadvantages Lack of Permanence: If something happens, the business is no more. Hard to find good employees

8. Read p. 190-193 and outline Do questions on p. 193 #5, 6, 7 With a Partner answer #8

10. Just a Review Corporations Stock Corporate Structure Advantages of Incorporation Horizontal Mergers Vertical Mergers Conglomerates Multinational Corporations

12. Business Franchises Semi-independent business that pays fees to a parent company in return for the right to sell a certain product or service in a given area. Best Example: Fast Food Chains…you could own your own Subway. Also: Kindercares, diamond shops, etc. Advantages: built-in reputation and help from parent companies Disadvantages: high fees and little freedom

13. Cooperative Organizations Business owned by a group of individuals. Consumer co-ops: sell merchandise to members at reduced prices. Ex: Costco or farming co-ops Service Co-ops: provide a service Ex: discounted insurance, banking, health care, credit unions. Producer Co-0ps: Agricultural marketing agencies – a co-op allows for the farmer to focus on growing food while they negotiate the best prices.

14. Non-Profit Organizations Business of benefiting society Examples: hospitals, YMCAs, churches, adoption agencies, etc. Also includes professional organizations (National Education Association, American Medical Association, American Bar Association)

15. Non-Profit Organizations Business Associations: promote collective business interests of a city/state/geographical region. Trade Associations: promote particular industries. Example: Salt Institute Labor Unions: We’ll talk about them latter!

18. Labor Force All non-military people who are employed or unemployed. People are employed when: 16 years old Worked at least 1 hour for pay within the last week Worked 15 or more hours w/o pay in a family business Held jobs but did not work due to illness, vacations, labor disputes, or bad weather.

19. Labor Force People are unemployed when: Do not meet the former criteria AND Are temporarily without work Are not working but have looked for jobs in the last 4 weeks. However…what are you if you lost your job but do not look for work? Stay at home parents, full time students, and retirees are not counted as unemployed.

20. Labor Force Bureau of Labor Statistics puts out the unemployment percentage.

21. Occupational Trends Economies change: founding fathers were farmers, changed to factories, now it’s in offices. Fewer Goods, More Services: shift from manufacturing to service. Effects of International Competition: Outsourcing causes unskilled workers to be unemployed or go to school to gain more skills.

22. Changing Labor Force People now need a college degree or higher for most jobs. More women are getting higher degrees and entering the work force as compared to 40 years ago. More temporary and part-time workers and less full- time workers. Why do you think this is?

23. Trends in Wages and Benefits The middle class today has less buying power than they did 10 years ago. The wealthiest Americans have become more wealthy during this economic downturn. Cost of benefits are increasing astronomically (especially healthcare) which causes firms to cut back on benefits or hire part time workers.

25. Supply and Demand for Labor Labor is commodity to be bought. Where supply is low and demand is high – higher wages (ex: surgons) Where supply is high and demand is low – lower wages (ex: teachers) Unemployment depends on how many jobs are available as compared to people wanting work.

26. Labor Demand Derived demand: demand is set for what the worker produces. Productivity: the value of output for a job. Worker-hours per week Hourly Wages

27. Labor Supply The higher the wages, the larger the quantity of labor supplied. Worker-hours per week Hourly Wages

28. Equilibrium Wage Produces no excess supply of workers and no excess demand for workers. Hourly Wages Worker-hours per week

29. Wages and Skill Level Also affects how much you are paid… Unskilled labor: no specialized training, hourly wages. Semi-skilled labor: minimal specialized training, hourly wages. Skilled labor: specialized training needed, hourly wages. Professional labor: demands advanced skills and education, salaried.

30. Wage Discrimination Against women and other minorities. Reflect misogynistic, racist, and prejudiced aspect of society. There are many laws against wage discrimination today like: Equal Pay Act of 1963 Title VII of the Civil Rights Act created Equal Employment Opportunity Commission to enforce Equal Pay Act.

31. But it’s not changing fast… “women’s work”: jobs that are traditional held by women (nurses, teachers, clerical workers, etc), wages are kept artificially low. Women have in the past had less chance to enter fields that were male dominated (still true today…) so they don’t have the experience needed to compete with male counterparts. Women’s career paths: women often are seen as not wanted a higher position, so they are passed over for promotions.

32. Still not changing fast… Minorities still are denied equal education in many (though not all) cases. Due to the inequalities in the access to good schools and training, it is hard for minorities to compete for good paying jobs.

33. Other Factors Affecting Wages Minimum Wage Laws Safety Laws Employers Respond to Wage Levels: Machines vs. People…and Outsourcing. Unions: Organization of workers to improve working conditions, wages, and benefits of its members…we’ll talk about these more on Monday!

34. Labor force Learning effect Screening effect Contingent employment Derived demand Productivity Equilibrium wage Unskilled labor Semi-skilled labor Skilled labor Professional labor Glass ceiling Labor union featherbedding