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The Private Sector And the Market Structure The Circular Flow=s Private Sector

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The Private Sector And the Market Structure The Circular Flow=s Private Sector The US Labor Force The Household How do US wages today compare ? – PowerPoint PPT presentation

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Title: The Private Sector And the Market Structure The Circular Flow=s Private Sector


1
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2
The Private Sector And the Market Structure The
Circular Flows Private Sector
The Household ltAs income receivers ltAs
spenders The Business
Factors Market Resource Market
3
The US Labor Force
Wages salaries what You need to know.
1. As income receivers, where do households get
their income? 2. What is the economic pie? How
is it growing? 3. How is the economic pie divided
among income receivers? 4. How can real wages
continue to increase? 5. What are real wages?
How can they continue to increase? 6. Why do some
jobs pay more? 7. How has the labor force changed
to meet the changing demands? How hasn't it? 8.
What non market forces have affected household
wages and salaries?
4
The Household
An income receiver
  • The Functional Distribution of Income / Where
    does it come from?
  • Wages
  • Proprietors' Income
  • Corporate Profits
  • Rents
  • Interest
  • Transfer payments

5
How do US wages today compare ?
6
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7
How can wages continue to increase?
Bake a bigger pie
  • GDP - measure of all goods and services produces
    ( The Pie)
  • GDP increases " the GDP increased by 4 in 2001"
    ( a bigger Pie)
  • Per capita GDP GDP/ of people (GDP per person)
  • Real GDP inflation adjusted GDP
  • Per capita real GDP GDP per person adjusted for
    inflation
  • Increase in per capita real GDP a bigger slice
    of pie

8
How Wages increase
A bigger slice of pie
  • How can we have a bigger slice?
  • Increase in real GDP. How?
  • increasing labor productivity. How?
  • .Better training
  • Better equipment ( capital)
  • More technology
  • Better management ( entrepreneurial ability)

9
Increase labor productivity
10
The Household
An income receiver
The personal distribution of income / how the
total of society is divided among the
individual households
11
The household
Income distribution by income group
12
Why does he get a bigger slice of pie than me?
  • Supply and demand
  • The demand for highly trained skilled jobs is
    greater than the supply high wages
  • Pro Athletes - the demand for Alex Rodriguez is
    great, the supply is small
  • Demand for unskilled jobs is low, supply is high
    wages low wages.
  • More training, education and skills greater
    wages.

13

14
Changes in the US labor force
  • Labor by sector of our economy
  • Changes and implications
  • Changes in Jobs
  • Demographic changes in workers
  • Changes in regional economies

15
Labor by sector of the economy
Tertiary service
Secondary manufacturing
Primary Agriculture
16
Questions for thought
US Agriculture, a great case study
  1. Why the change in labor force by sector?
  2. Why the large drop in the of people working in
    agriculture?
  3. What has happened to real costs of food products?
  4. What happens if I refuse to move to the

17
US farm productivity
Today 1 US farm worker can feed over 100 people
In 1950 1 US farm worker could feed only 18 people
18
US farm Size
19
US of income of food
20
US Agriculture
An example of increase productivity
  • Today farmers can
  • Produce more food
  • Work more land
  • feed Americans cheaper
  • HOW?
  • INCREASE PRODUCTIVITY!!!

21
Non market force affecting household income
receivers
  1. Unemployment compensation
  2. Job discrimination
  3. Government legislation
  4. Labor movements and Unions

22
The displaced farm worker
  • With farmers producing more, many farm workers
    had to find jobs in another economic sector or
    face unemployment.
  • As the economy changes people must adapt to the
    job demands
  • Is unemployment compensation preventing market
    forces to work?
  • Movement from one sector to another
  • Career changes
  • Geographic movement to the jobs

23
Fastest growing occupations
Where the Josbs are by Occupation
24
Oregon unemployment
Where the jobs are in Oregon by county
25
Job discrimination
  • Cost the business
  • Productivity is low ( most productive not in
    position)
  • Cost society ( lower productivity smaller pie

26
Government legislation
  • In an attempt to protect the people government
    put into place non market force that affect
    household income receivers
  • Minimum wage
  • Overtime pay
  • Child labor

27
The Labor Union
Associations with the goal of higher wages,
better working conditions, increased fringe
benefits.
  • How?
  • Restrict of workers through membership
    requirements ( reduce supply)
  • Collective bargaining - negotiate contract for
    all
  • Use threat of strike or work stoppage in achieve
    goals

28
Union Membership
US Union Membership 1955-1995
29
Household as income receivers
Review discuss
  1. As income receivers, where do households get
    their income?
  2. What is the economic pie? How is it growing?
  3. How is the economic pie divided among income
    receivers?
  4. How can real wages continue to increase?
  5. What are real wages? How can they continue to
    increase?
  6. Why do some jobs pay more?
  7. How has the labor force changed to meet the
    changing demands? How hasn't it?
  8. What non market forces have affected household
    wages and salaries?

30
The Household
The Personal Distribution of Income
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