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Published byJulie Owen Modified over 8 years ago
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How do we determine pay? Equilibrium: where labor demanded (companies) = labor supplied (people)
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Why do some people earn more than others? Demand: –secure a job that lots of people want the good or service provided Supply: –pick a job not many people can do –Be productive Innate ability Invest in yourself: develop a skill or get educated
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How skilled are you? (How unique) Unskilled –No specialized training, education –Hourly wages Semi-skilled –Minimal skills and education, operate equipment –Hourly wage Skilled –Specialized sills and training, complicated equipment –Hourly wages Professional –Advanced skills and education –Salary, “white collar”
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Labor
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Which one would you choose? Imagine you have been offered three jobs: –Hometown at $30,000/yr –2000 miles from home at $50,000/yr –Most beautiful location at $25,000/yr –What other information would you need to know to decide? –How much do other things besides money play into your decision?
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Benefits Co-workers Location Health care Vacation Hours Job tasks
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How do you decide? Benefits in job= money + nonmoney benefits –Nonmoney should make up for smaller salary if you go that way
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Minimum Wage Congress sets wage rate above equilibrium Effect: people make more money Unintended effect: less people hired because businesses cannot afford them
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Wages Money wages: how much someone makes (ex. $35,000/year) Real Wages: how much someone’s money can buy them –Real wage= money wage/consumer price index CPI: average price levels, computed yearly by gov., use a variety of goods to determine
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Government Regulation Benefits –Helps environment –Protects workers –Provides minimum standards to make products safer Costs –Increase cost to taxpayers –May rise product price –Some workers may lose jobs
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Unions a worker association that bargains with employers for wages and working conditions Two views –Obstacle to reasonable work standards, make companies less competitive –Valuable collective voice, make employees more confident
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