Labor

1
Labor

• Chapter 9

2
Labor Market Trends

• RG45

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The United States Labor Force
1 Economics define the labor force as all
nonmilitary people who are employed or unemployed.

• Employment
• People are considered employed if they are 16
  years or older and meet at least one of the
  following requirements
• They worked a least one hour for pay within the
  last week or
• They worked 15 or more hours without pay in a
  family business or
• The held jobs but did not work due to illness,
  vacations, labor disputes, or bad weather.

• 2 Unemployment
• People are considered unemployed if they are 16
  years or older and meet the following criteria
• They do not have a job and
• They have actively looked for work in the prior 4
  weeks and
• They are currently available for work.

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Occupational Trends

• A Changing Economy
• The economy of the United States has transformed
  from a mainly agricultural economy in the 1800s,
  to an industrial giant in the 1900s.
• The computer chip has revolutionized the economy
  since its introduction in the late 1900s.
• 3 How has electronics changed the workforce?
• Computers taking the jobs of humans.

• Fewer Goods, More Services
• Overall, the United States is shifting from a
  manufacturing economy to a service economy.
• 4 As service jobs increase, the nation is losing
  manufacturing jobs.
• Demand for skilled labor is rising, and the
  supply of skilled workers is increasing to meet
  the demand.

5
If you werent planning on continuing your
education somehow after high school

• youd better think again.
• Heres why

6
7
Education Level Achieved Unemployment Rate Sept. 2011
Less than high school 14.0
High School GradNo college 9.7
Some college 8.4
Bachelors Degree or Higher 4.2
Unemployment Rate Some HS, HS Grad, Some
College, Bachelor's or Higher
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The Changing Labor Force

• College Graduates at Work
• 9 The learning effect is the theory that
  education increases productivity and results in
  higher wages.
• 10 The screening effect theory suggests that the
  completion of college indicates to employers that
  a job applicant is intelligent and hard-working.

8
The Changing Labor Force

• Women at Work
• Overall, the number of women in the work force
  has increased from about 38 percent of all women
  in 1960 to about 58 percent of all women in 2009.
• 6 Why are there more women in the workforce?
• Womens liberation.
• Now takes two full-time workers to make the same
  (actual dollars) salary as in previous decades.

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The GLASS CEILING.

• 16
• Invisible barrier against promoting women,
  minorities, and the undereducated to higher job
  positions.

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8 Competition has driven down wages in most
cases.

• Many companies are now outsourcing for 2 main
  reasons
• Cheaper labor costs.
• Higher educated/skilled workforce.
• Lots of jobs are being outsourced to China and
  India.
• Will you be able to compete in a GLOBAL ECONOMY?

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Temporary Employment
11 Contingent employment is temporary or
part-time employment.

• Temporary employees offer firms some of the
  following benefits
• 1. Flexible work arrangements.
• 2. Easy discharge due to the lack of severance
  pay for temporary workers.
• 3. Temporary workers are often paid less and
  receive fewer benefits than their full-time
  counterparts.
• 4. Some employees prefer temporary arrangements.

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Labor Wages

• RG46

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Theres more you should look for than just salary.

• Benefits can save you A LOT of money!

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Types of Benefits

• Health Insurance
• Dental Insurance
• Cafeteria Plan (pre-tax deductions)
• Nice company cafeterias
• Number of vacation days
• Number of paid sick days
• 401K matching plan
• Pension Plan

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More Benefits

• Stock options
• Profit Sharing
• Productivity Payments
• Performance Rewards
• Cash Bonuses
• Company vehicle
• Expense Account

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New benefits

• On-site daycare
• On-site gym
• Covered parking
• Massages
• Nap rooms
• Allowing dogs at work

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1929
Benefits 1.4
Cash 98.6
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2006
Benefits 16.3
Cash 83.7
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Add this information to RG46

• What determines your wage?

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What determines your wage?

• Supply Demand

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What determines your wage?

• Skill Level Education

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What determines your wage?

• Working Conditions

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What determines your wage?

• Location

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What Determines Your Wage?

• Psychic Rewards

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You need to be realistic about what kind of money
youll make.

• 2007 survey showed
• Teenaged boys expected to make an average of
  174,000 annually.
• Teenaged girls expected to earn 144,200
  annually.
• Reality Check
• Median earnings of men who worked full time, was
  41,386.
• Median earnings of women who worked full time,
  was 31,858.

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Middle-class workers are worried. Why?

• In the 1970s, a family had a 7 chance of its
  income dropping by half or more.
• Today, its a 20 chance!
• Workers with fewer years of education feel it
  most, as earnings of college educated have about
  doubled compared with high school graduates.

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Is the middle-class shrinking?

• In 2010, the average income of those in the
  bottom 90 of the economy dropped from the year
  before.
• Many groups in the bottom 90 have no college
  education, are single parents, and/or minorities.
• The richest 1 have gained the most, with pretax
  earnings at 250 compared to just 32 in 1980.

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Middle-class workers are worried. Why?
Oct. 26, 2011
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Thats why a lot of these people are protesting.

• Occupy Wall Street Protests happening across the
  country.

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Why is this happening?

• Rising healthcare, energy, and food costs.
• Disappearance of fixed-benefit plans at their
  jobs.
• Outsourcing by companies.
• Loss of low skill jobs.
• Fiscal policy in the last 20 years has not
  helpedthe govt has been taking more from the
  middle class in taxes than it has given back in
  benefits.
• Policies have favored the very rich since the
  1980s.

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What can be done to help the middle class?

• Help workers change jobs.
• Make it easier to transfer health and pension
  plans.
• New Affordable Care Act passed in 2009 helps with
  healthcare.
• Boost our national investment in education
  training
• Invest more in K-12 education.
• Make college more affordable.
• Make taxation fairer (the big debate)
• Make it more progressive, taxing those at the top
  more, and get rid of the huge tax breaks for the
  rich and corporations. (Democrats)
• Move to a flat tax (Republicans)

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Would a flat tax help the middle class?

• Many economists say that a flat income tax would
  favor the rich.

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1. Employment in a labor market depends on how
closely the demand for workers meets

• SUPPLY.

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2. The price of labor (earnings) depends on

• Conditions in the labor market.

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3. Professional labor requires

• Advanced skills and education.

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4. In a competitive market, workers are usually
paid according to

• how much revenue they produce.

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5. Higher labor prices decrease the

• amount of labor demanded.

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6. Firms can respond to higher wages by replacing

• human capital with physical capital.

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7. Higher wages increase the

• Quantity of labor supplied.

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8. Jobs in the skilled labor category require

• Specialized skills and training.

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9. A high equilibrium wage is the result of

• Low supply high demand in a given field of
  labor.

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10. The Equal Pay Act of 1963 provided that

• Males and females in the same type of job at a
  workplace, be paid the same.

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11. Title VII of the 1964 CRA forbids job
discrimination on the basis of

• Race, gender, religion, or nationality.

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12. Lack of human capital and possible
discrimination contribute to low wages for

• Women and racial minorities.

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Equal Pay???
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In 2007, the Supreme Court decided the case

• Lilly Ledbetter v. Goodyear Tire Rubber Co.
• The Court ruled 5-4 that she had waited too long
  to file for pay discrimination.

• They said that she had to file within 18 months
  of getting the first check that paid her
  different.
• She was not aware of the pay difference until
  years later.
• In response, Congress passed the Lilly Ledbetter
  Fair Pay Act.
• It was the first bill that President Obama signed
  after taking office.

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Lilly Ledbetter Fair Pay Act of 2009
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13. Negative effects on nonunion wages can be
reduced when unions

• Pressure firms to avoid job cuts as wages are
  forced up.

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Reviewing Key Terms

• You do 14-17.

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Add to rg46

• Minimum Wage

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Minimum Wage

• The lowest wage that employers can legally pay a
  worker for a job.

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Minimum Hourly Wage Rate1938-2011

• 1938 0.25 (first year)
• 1950 0.75
• 1957 1.00
• 1961 1.15
• 1963 1.25
• 1967 1.40
• 1969 1.60
• 1974 2.10
• 1976 2.30
• 1978 2.65
• 1979 2.90

• 1980 3.10
• 1981 3.35
• 1990 3.80
• 1991 4.25
• 1996 4.75
• 1997 5.15
• 2007 5.85
• 2008 6.55
• 2009 7.25 (current rate)

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Real Value of the Minimum Wage
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Raise the Minimum Wage?

• FOR
• Ensures a basic salary for all covered workers.
• Current 5.15 is not enough to pay for basic
  necessities. Needs to be around 7.20.
• Last 3 times it has been raised, it had no
  adverse affect on the economy.

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Raise the Minimum Wage?

• AGAINST
• It raises the cost of production for employers
  and the government, making it too expensive to
  hire additional workers.
• Has a upward spiraling effect. If you raise the
  wages of the lowest paid workers, higher paid
  workers will want a raise too.

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In 2007, Cg. did raise it!

• The Fair Minimum Wage Act of 2007 included phased
  increases to the federal minimum wage.
• For work performed prior to July 24, 2007, the
  federal minimum wage is 5.15 per hour.
• For work performed from July 24, 2007 to July 23,
  2008, the federal minimum wage is 5.85 per hour.
  
• For work performed from July 24, 2008 to July 23,
  2009, the federal minimum wage is 6.55 per hour.
  
• For work performed on or after July 24, 2009, the
  federal minimum wage is 7.25 per hour.

www.dol.gov
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Some states have minimum wages too.

• Texas is the same as the federal rate.
• Californias is 8.00 per hour
• But it costs a lot more to live there.

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Tipped employees

• An employer is required to pay only 2.13 an hour
  in direct wages if that amount plus tips received
  equals at least the federal minimum wage, the
  employee retains all tips and the employee
  customarily and regularly receives more than 30
  a month in tips.

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Organized Labor

• RG47

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Major U.S. Labor organizations formed between
1869 and 1955

• 1. (1869) Knights of Labor
• 2. (1886) American Federation of Labor
• 3. (1938) Congress of Industrial Organizations
• 4. (1955) AFL-CIO

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Anti-union strategies used by U.S. employers
before the 1930s

• 5. Identified and fired union organizers.
• 6. Forced workers to sign yellow-dog contracts.
• 7. Asked for injunctions to end strikes.
• 8. Hired their own militias to harass union
  organizers.

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Economic changes that have affected unions

• 9. Reduction in manufacturing
• 10. Manufacturing job locations.
• 11. Reduction in employment for key union
  industries.

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Ways in which unions have declined in traditional
strongholds

• 12. Decline in blue-collar manufacturing jobs.
• 13. Foreign competition causing worker layoffs.
• 14. Rising proportion of women in labor force.
• 15. Industries relocating to the South, which is
  generally unfriendly to unions.

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Major issues covered under a union contract

• 16. Wages and benefits
• 17. Working conditions
• 18. Job security

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Reviewing Key Terms

• On your own 19-24.

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Union Shops

• Require you to join a union within a specific
  amount of time.
• If you dont join the union, you dont have a job.

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Pro-Union Arguments

• Serves humanitarian ends
• Better working conditions for health, welfare,
  safety, and personal dignity. Provides for a
  grievance system and advocates.
• Helps achieve a descent standard of living and
  unions balance the inequities that exist between
  employers and workers.
• Makes employers justify their actions
  particularly with promoting and firing practices.

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Pro-Union Arguments

• Benefits ALL workers by supporting a living wage.
• Unions are responsible for many laws passed that
  benefit workers. (strength in numbers)
• Child labor laws
• 40 hr. work week
• Overtime Pay

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Anti-Union Arguments

• Unions restrict individual freedom and right to
  work.
• Can lead to cost-push inflation
• Many people blame unions for U.S. companies
  closing factories here and moving to other
  countries were labor is cheaper and they dont
  have to pay benefits.

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Right-to-Work Laws
ADD to RG46

• Secures the right of employees to decide for
  themselves whether or not to join or financially
  support a union.
• Employees who work in the railway or airline
  industries or on a federal enclave may not be
  protected by a RTW law.

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Right-to-Work States
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Anti-RTW Arguments

• Takes away strength in numbers factor.
• Takes away management adhering to collective
  bargaining.
• Problem of freeloaders.
• Takes away the right to strike for public
  employees such as police, firefighters, teachers.
• Employers start to take advantage of workers
  knowing they are limited in what they can do to
  fight back because unions are weak.

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States are going after union rights.

• Big battles in Wisconsin and Ohio in early 2011
  that took away collective bargaining.

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State governments argue that union contracts
(created in collective bargaining) cost the state
too much in this tight economy.
Wisconsin Governor Scott Walker
Ohio Governor John Kasich
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As a result

• Wisconsin union workers are planning to petition
  this January to