1. Chapter 9
Labor

2. Section 1
Labor Market Trends

3. Labor Force
Labor Force (def.): all non-military people (employed or unemployed)
Economists consider people employed if they are:
16 years of age or older
Worked at least one hour for pay in the past week
Worked at least 15 hours without pay in a family business
Held jobs but did not work due to illnesses, vacations, labor disputes, or bad weather

4. Labor Force
Economists consider people unemployed if they do not meet that criteria and are:
Temporarily without work
Are not working but have looked for work in the past 4 weeks

5. Labor Force To be counted as unemployed:
1) A person must have work lined up for the future OR
2) Must be actively searching for a new job.
Examples of people NOT part of the labor force are:
full time students,
stay at home parents, and
retirees.

6.   Labor Force
Bureau of Labor Statistics (BLS) tracks developments in the job market information, wages, occupational outlook, summaries, incidence of injuries, etc. ***Includes how many people are in the labor force AND how many people are employed and unemployed.

7. Occupational Trends Early nation: farming
1800s: machinery, textile mills, factories
Late 1800s – 1900: manufacturing, corporate empires
Mid 1900s: electronics
1970s: Computer Age

8. Occupational Trends Late 1900s – 2000: Information Age
Fewer goods, more services
Factory and manufacturing jobs are being done outside of the US where labor costs are lower.
Lower skilled workers are demanded less
Skilled workers are demanded more

9. Change in the Labor Force
In the 1950’s you needed a high school diploma to secure a forty hour/week job. Most of the time you would stay there until retirement at 65 years old.
Now you need a college degree and you will have 4 or 5 jobs before you retire.

10. Change in the Labor Force
Learning Effect: The theory that education increases productivity and results in higher wages.
A college graduate earns more than person with a high school diploma.
A person with a professional degree (doctor, lawyer) will earn more than a person with a Bachelor’s degree.
Screening Effect: A theory which suggests that the completion of a college degree indicates to an employer that a job applicant is intelligent and hard working.

11. Another Trend… Contingent Employment: Temporary or part time job.
Five reasons companies rely more and more on temporary workers:
Flexible work schedule (seasonal business)
Firing temporary workers is easier than permanent employees
Temporary workers usually get paid less
Some workers actually prefer flexible schedules
Firms do not pay for benefits

12. Trends in Wages and Benefits
Wages for college graduates have increased.
Wages for non- college graduates have decreased.
Many companies are doing away with paid health insurance due to the high costs.
Companies might provide medical coverage but at a high cost to the employee.

13. Section two
Labor & Wages

14. Labor & Wages Productivity - the value of output
Workers are paid according to the value of what they produce.
Productivity - the value of output
Workers are worth a portion of their productivity. This varies from business to business.

15. What determines our wages???
ANSWER: Supply and Demand
Wages are high for professions where supply is low and demand is high.
Wages are low for low skilled jobs because the supply of unskilled workers is high and demand is low with cheaper labor overseas.

16. Labor & Wages
Supply and demand graphs can be used to find the equilibrium wage.
Equilibrium Wage: The wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market.

17. Wages & Skill Levels
Wages vary according to workers’ skill level and education as well as according to supply and demand.

18. Wages & Skill Levels
Jobs are often categorized into FOUR skill levels:
1) Unskilled Labor
No specialized skills, education or training
Examples: factory/farm workers
2) Semi- skilled Labor
Minimal specialized skills and education
Hourly wages
Examples: lifeguard, word processors, short order cook

19. Wages & Skill Levels 3) Skilled Labor 4) Professional Labor
Requires specialized abilities and training
Usually hourly wages
Examples: mechanics, plumbers, bank tellers, chefs, firefighters, carpenters
4) Professional Labor
Demands advanced skills and education
Usually white collar workers who receive salaries
Examples: managers, teachers, bankers, doctors, lawyers

20. Wages & Skill Levels
Another factor which causes earnings to vary is differences in working conditions.
These conditions affect the number of workers willing to do a certain job.
Level of danger
Physical/emotional stress
Location
weather conditions

21. Wage Discrimination
Women and minorities historically got paid less than white men for the same job.
In the 1960’s Congress passed anti- discrimination laws that prevent companies from paying lower wages to employees based on gender or race.

22. Wage Discrimination
The Equal Pay Act of 1963: Required male and female employees in the same workplace performing the same job to receive the same pay.
Title VII of the Civil Rights Act of 1964: Prohibited job discrimination on the basis of race, sex, color, religion, or nationality. (religious institutions and small businesses are exempt from the law)
The Civil Rights Act also created the Equal Employment Opportunity Commission (EEOC) to enforce the laws.

23. Wage Discrimination
There is still a gap between men and women’s earnings although it is decreasing.
WHY????
Women are encouraged to do “women’s work”
Teaching, nursing
Human capital
Although changing, women have had less advanced training and experience in certain high- paying jobs.
Employers assume female employees are not interested in career advancements and will leave for child rearing.

24. Wage Discrimination
Women often find it difficult to receive top level promotions.
There is said to be a barrier called a glass ceiling.
Glass ceiling: An unofficial, invisible barrier that prevents women and minorities from advancing in businesses dominated by white men.
Minorities tend to earn lower wages than whites. This is true because historically whites have had access to more education and work experience.

25. Other Factors Affecting Wages
1938: Fair Labor Standards Act
First law which created nationwide mandatory rules for labor
Set minimum wage
Required employers to pay overtime for work beyond 40 hrs/wk
Safety Laws
If work is safer, more workers are willing to take the job – decreasing pay
Unions
Organization of workers that tries to improve working conditions, wages and benefits for its members.

26. Section three
Organized Labor

27. Brief History of Unions
Early to Mid 1800s: Industrial Revolution brought about the factory worker.
12 – 16 hours/ day
7 days a week
Low wages
Poor working conditions
Child labor

28. Brief History of Unions
Worker discontent grew into organized protests.
1886: Samuel Gompers founded the American Federation of Labor (AFL)
Unions used strikes to try to get what they wanted.
Strike: An organized work stoppage intended to force an employer to address union demands.

29. Brief History of Unions
Unions grew in number and in membership.
Membership peaked in the 1940’s at 35%.
It started to decline, however, because of corruption and abuse of power.
By 2009, 12.3% of the workforce was unionized.

30. 2009 Statistics
More public workers than private workers even though there are less public jobs
38.1% were teachers/librarians
More African Americans than any other race
NY had the highest rate 25%
California the least 3.1%

31. Reasons for the Decline
Taft- Harley Act (1947)
Right to Work Laws: banned mandatory union membership
Less blue collar workers: someone who works in an industrial job and receives wages
More white collar workers: someone in a professional or clerical job usually earning a salary.
Foreign competition
Companies moving overseas
More women in the workforce
Women are less likely to join a union

32. Labor & Management
A union gains the right to represent workers at a company when a majority of workers vote to accept the union. After that, the company is required by law to bargain with the union.

33. Labor & Management
Collective Bargaining: The process in which the union and the company representatives meet to negotiate a new labor contract.
Main Goals of the Union:
Better wages and benefits
Better working conditions
Job security
If a member is discharged for reasons the union feels violates the contract, the union will fight for the worker.

34. Labor & Management
When a contract is about to expire the company and union bargain.
If no agreement can be reached, a mediator is brought in.
Mediation: A settlement technique in which a neutral third party (mediator) meets with each side to try to find a solution that both sides will accept.
Not legally binding

35. Labor & Management
If mediation does not work, talks will go into ARBITRATION.
Arbitration is a settlement technique in which a third party (arbitrator ) reviews the case and imposes a decision that is legally binding on both sides.