1. Businesses & Labor Chapter 3

2. Business Organization Company started in order to carry out transactions in a market

3. Types of Businesses Sole Proprietorship Sole Proprietorship Partnership Partnership Corporations Corporations

4. Sole Proprietorship Owned by one person Owned by one person Responsible for all profits & debts Responsible for all profits & debts Most common in United States Most common in United States Can be run from home, internet, store, etc Can be run from home, internet, store, etc Ex: Ex: Local restaurant Local restaurant Specialty Store Specialty Store Shoe repair Shoe repair

5. Sole Proprietorship Advantages Advantages Easy to start Easy to start Capital Capital License from local government License from local government Person runs business Person runs business Complete control Complete control Keep all profits Keep all profits Easy to close if it doesn’t work out Easy to close if it doesn’t work out

6. Sole Proprietorship Disadvantages Disadvantages Unlimited personal liability Unlimited personal liability Responsible for all debt Responsible for all debt Can be sued and have to pay Can be sued and have to pay Business fails, owner comes up with money to pay off debt Business fails, owner comes up with money to pay off debt Difficult to expand Difficult to expand Sometimes hard to raise money Sometimes hard to raise money

7. Partnership Business owned by 2 or more people Business owned by 2 or more people Least common Least common Small Small 2 or 3 owning a business 2 or 3 owning a business Wadahl Wadahl Large Large Many partners Many partners Law firms Law firms

8. Partnership Need legal papers Need legal papers Define roles of owners Define roles of owners List rules for adding new partners List rules for adding new partners Explain how things are divided Explain how things are divided Share debts & profits Share debts & profits Share decision making Share decision making Partners specialize in a specific area Partners specialize in a specific area

9. Partnership Advantages Advantages Easy to start Easy to start Easier to manage Easier to manage One person not responsible for everything One person not responsible for everything Larger than sole proprietors Larger than sole proprietors Easier to get capital Easier to get capital Easier to expand Easier to expand

10. Partnership Disadvantages Disadvantages All partners responsible for business All partners responsible for business One partner makes mistake, all will suffer One partner makes mistake, all will suffer Disagree about things may cause business to fail Disagree about things may cause business to fail

11. Corporation A business that has been divided into shares of stock A business that has been divided into shares of stock Stock Stock Share of ownership in a business Share of ownership in a business Stockholder/shareholder – buy stock in a corporation Stockholder/shareholder – buy stock in a corporation Own part of business & entitled to part of year’s profit Own part of business & entitled to part of year’s profit

12. Corporation Dividend Dividend Profit given to stockholders Profit given to stockholders Board of directors Board of directors People that make important decisions for the corporation People that make important decisions for the corporation Appoints managers Appoints managers Decides what to do with profits Decides what to do with profits

13. Corporation Organization that has all rights of individual Organization that has all rights of individual Can Can Buy & sell property Buy & sell property Enter into legal contracts Enter into legal contracts Ex: Ex: General Motors General Motors Exxon Exxon Wal-Mart Wal-Mart

14. Corporation Not easy to set up Not easy to set up Need Charter Need Charter Official paper giving permission to start a corporation Official paper giving permission to start a corporation Government permission Government permission Lists name, address & purpose Lists name, address & purpose

15. Corporation Advantages Advantages Money is raised through sale of stock Money is raised through sale of stock Stockholders have no risk of losing personal property Stockholders have no risk of losing personal property Easy to raise capital Easy to raise capital Owners can hire professional managers to run company – don’t need to be experts Owners can hire professional managers to run company – don’t need to be experts

16. Corporation Disadvantage Disadvantage Difficult & expensive to get a charter Difficult & expensive to get a charter Owners have little say in how business is run – board of directors make decisions Owners have little say in how business is run – board of directors make decisions Government makes more rules Government makes more rules Profits can be taxed twice Profits can be taxed twice

17. Labor Force All people who work for money All people who work for money Bureau of Labor Statistics Bureau of Labor Statistics Keep track of changes in job market Keep track of changes in job market Department of Labor Department of Labor Number of people in labor force Number of people in labor force Number of employed & unemployed Number of employed & unemployed

18. Labor Force People working and looking for jobs People working and looking for jobs Considered employed if Considered employed if 16 years or older 16 years or older Worked at least one hour for pay in past week Worked at least one hour for pay in past week Past week, worked 15 hours or more without pay – farm Past week, worked 15 hours or more without pay – farm Had jobs in past week but did not work for good reason – sick or vacation Had jobs in past week but did not work for good reason – sick or vacation

19. Labor Force Unemployed Unemployed Temporarily out of work Temporarily out of work Looking for jobs Looking for jobs Not considered unemployed Not considered unemployed Stay at home parents Stay at home parents full-time students full-time students retired people are not retired people are not

20. Human Capital Education, training and experience that makes a person useful in the workplace Education, training and experience that makes a person useful in the workplace More human capital – more money they make More human capital – more money they make

21. Levels of Labor Unskilled Labor Unskilled Labor Semiskilled Labor Semiskilled Labor Skilled Labor Skilled Labor Professional Labor Professional Labor

22. Unskilled Labor Lowest amount of human capital Lowest amount of human capital Paid hourly wages Paid hourly wages No required training or specialized skills No required training or specialized skills Ex. Ex. Factory Factory Farm Farm Cleaning jobs Cleaning jobs

23. Semiskilled Labor Require minimal amount of training Require minimal amount of training Paid hourly wage Paid hourly wage Operate certain types of equipment Operate certain types of equipment Ex. Ex. Cooks Cooks Lifeguards Lifeguards Construction workers Construction workers

24. Skilled Labor Operate complex equipment Operate complex equipment Need little supervision Need little supervision Earn hourly wage Earn hourly wage Ex. Ex. Bank tellers Bank tellers Carpenters Carpenters Computer technicians Computer technicians Chefs Chefs

25. Professional Labor Highest level of education Highest level of education Paid salary Paid salary Get fixed amount no matter number of hours worked Get fixed amount no matter number of hours worked Ex. Ex. Teachers Teachers Managers Managers Doctors Doctors Computer programmers Computer programmers

26. Organized Labor Labor unions Labor unions Group of workers Group of workers Join together to take concerns to company management Join together to take concerns to company management

27. Labor Unions Works for its members Works for its members Fight for Fight for Fair wages Fair wages Fair working conditions Fair working conditions Benefits Benefits hours hours

28. Working Conditions Late 1800’s Late 1800’s Machines were not safe Machines were not safe Long hours Long hours Little pay Little pay Businesses new people needed their jobs to survive Businesses new people needed their jobs to survive

29. Unions People wanted someone to speak for them People wanted someone to speak for them Members of labor force got together Members of labor force got together Created organized groups called unions Created organized groups called unions Unions were created to protect workers interests Unions were created to protect workers interests Union dues – money paid to support the union Union dues – money paid to support the union

30. Labor Unions Knights of Labor Knights of Labor American Federation of Labor American Federation of Labor

31. Strikes Workers refuse to work until company agreed to talk Workers refuse to work until company agreed to talk Protest in front of factories Protest in front of factories Tried to Tried to Get higher pay Get higher pay 8 hour workday 8 hour workday Safer working conditions Safer working conditions

32. Wagner Act Law passed by congress Law passed by congress 1935 1935 Workers had the right to join unions Workers had the right to join unions Workers were able to bargain with employers Workers were able to bargain with employers

33. Collective Bargaining Union leader meet with employers Union leader meet with employers Discussed Discussed Pay Pay Working hours Working hours benefits benefits Only went on strike if collective bargaining did not succeed Only went on strike if collective bargaining did not succeed

34. Today Labor Unions American Federation of labor American Federation of labor American Postal Worker Union American Postal Worker Union American Federation of Teachers American Federation of Teachers

35. Words To Know Fringe benefit Fringe benefit Benefit given to workers other than wages Benefit given to workers other than wages Ex: - vacation pay, sick leave, pensions, insurance Ex: - vacation pay, sick leave, pensions, insurance Collective bargaining Collective bargaining Management & labor reach agreements through negotiation & compromise Management & labor reach agreements through negotiation & compromise

36. Words To Know Strike Strike Work stoppage by labor Work stoppage by labor Used to win an agreement with management Used to win an agreement with management Scab Laborer Scab Laborer Worker who crosses a picket line to do the job of a striking worker Worker who crosses a picket line to do the job of a striking worker

37. Words To Know Boycott Boycott Refusal to buy goods or services until an agreement is reached Refusal to buy goods or services until an agreement is reached Lockout Lockout Closing of a business by management to force workers to accept terms of an agreement Closing of a business by management to force workers to accept terms of an agreement

38. Words to Know Arbitration Arbitration Outside party decides the terms of an agreement Outside party decides the terms of an agreement Has to be accepted by both sides Has to be accepted by both sides Used only when groups can’t come to an agreement Used only when groups can’t come to an agreement