chapter 9 lecture notes
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Labor Market TrendsChapter 9 Section 1
The Labor Force
• Economics define the labor force as all nonmilitary people who are employed or unemployed.
Employed• 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– They worked 15 or more
hours without pay in a family business
– The held jobs but did not work due to:• Illness• Vacations• Labor disputes• Bad weather.
Unemployed
• Are 16 years or older and meet the following criteria:– They do not have a job– They have actively
looked for work in the prior 4 weeks
– They are currently available for work
Temporary Employment• Contingent employment
– Temporary or part-time employment.
– Flexible work arrangements.
– Easy discharge due to the lack of severance pay for temporary workers.
– Temporary workers are often paid less and receive fewer benefits than their full-time counterparts.
– Some employees prefer temporary arrangements.
How does being unemployed differ from not being part of the labor force?
Occupational Trends• 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.
Occupational Trends• Overall, the United States
is shifting from a manufacturing economy to a service economy.
• 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.
Describe the changes in the U.S. economy during the period shown on the graph.
Women in the Workforce• 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 1995.
• More women are:– Getting a college education– Not getting married– Not having children– Working in “Male” jobs
By what percent will the number of women in the workforce have changed
between 1960 and 2006?
Trends in Wages and Benefits• Earnings for college graduates
have increased– Earnings for workers without
college degrees have decreased.
• Benefits now make up about 28 percent of total compensation in the economy
• For employers– Rising benefits costs raise the
cost of doing business– Decrease profits. – Turns them to contingent
employment to curb benefits costs.
Why might wages for workers in retail be much lower than those for workers
in construction?
College Education• Getting a college degree
greatly is now more of a necessity rather than a luxury
• The learning effect – Education increases
productivity and results in higher wages.
• The screening effect– The completion of college
indicates to employers that a job applicant is intelligent and hard-working
Education and Income• Potential earnings increase with increased
educational attainment.
Disturbing Trends in College Education
• High School graduation rate is about 86%
• Only 68% of high school students attend college– 6 out of 10 enter a 4
year university– The rest go to a two year
community college
Disturbing Trends in College Education
• Only 60 percent of students who start at college finish
• Bachelors Degree (4 Years)– 25% of the overall
population• Masters Degree (6 Years)
– 7% of the overall population
• Doctorate or professional degree– 2% of the overall
population
“Outside The Lines”: Florida State
• Describe the type of “college athlete” FSU is recruiting?
• What “extra” help are these athletes getting?
• What were Dr. Brenda Monk’s responsibilities?
• How would you describe Paul Griffin?– Was he selected by an NFL team?– What is his profession after he
graduates?
Labor and WagesChapter 9 Section 2
Supply and Demand in the Labor Market
Labor Demand• The higher the wage rate, the smaller the quantity of labor demanded
by firms and government.Labor Supply• As wages increase, the quantity of labor supplied also increases.Equilibrium Wage• The wage rate that produces neither an excess supply of workers nor
an excess demand for workers in the labor market is called the equilibrium wage.
Explain how the outcome of this scenario affects (a) the cooks, (b) the restaurants.
Explain why a stable wage means stable restaurant prices.
Wages and Skill Levels
• Wages vary according to workers’ skill levels and education. Jobs are often categorized into the following four groups:– Unskilled– Semi-skilled– Skilled – Professional
Unskilled Labor
• Unskilled labor requires:– No specialized skills– Education– Training.
• Examples: – Waiters– Messengers– Janitors
Semi-skilled Labor
• Semi-skilled labor requires:– Minimal specialized skills
and education.
• Example: – Fork-lift operator
Skilled Labor
• Skilled labor requires:– Specialized skills and
training.
• Examples: – Auto mechanics– Plumbers
Professional Labor
• Professional labor demands:– Advanced skills and
education.
• Examples: – Lawyers– Doctors– Teachers
Give reasons to explain why the supply of doctors is low and the supply of
construction workers is high?
Wage Discrimination• The Equal Pay Act of 1963
– Declared that male and female employees in the same workplace performing the same job had to receive the same pay.
• Title VII of the Civil Rights Act of 1964– Forbids job discrimination on the
basis of: • Race• Sex• Color• Religion• nationality.
• Pay Levels for Minorities• As the figure to the right shows,
racial minorities tend to earn lower pay than white men.
Pay for Women
• Despite these protections– American women today
earn about 75 percent of what men earn.
• Reasons women don’t get hired include:– Pregnancy– Working part-time– Distracting to men– Lack of cultural respect
• Racial ethnicity
2006 Basketball PlayersNBA vs. WNBA
Shaq$20 Million
Sue Bird$87,000
2006 Golf PlayersPGA vs. LPGA
Tiger Woods$11.9 Million
Annika Sorenstam$2.5 Million
2006 Tennis PlayersATP vs. WTA
Roger Federer$8.3 Million
Maria Sharapova$3.8 Million
2006 Football PlayersNFL vs. WPFL
Michael Vick$23.1 Million
Stacy Agee$100 Per Game
According to the graph, which group has the lowest earnings?
Organized LaborChapter 9 Section 3
Occupational Trends
• A labor union is an organization of workers that tries to improve:– working conditions– Wages– benefits for its members
• Less than 14 percent of U.S. workers belong to a labor union.– This number keeps
dropping
Why Unions Grew• The union movement
took shape over the course of more than a century.
• The 1935 National Labor Relations Act, also known as the Wagner Act:– Gave workers the right to
organize– Required companies to
bargain in good faith with unions.
What is the trend in union membership today?
Why Unions are Declining
• Several factors have led to declines in union membership since the 1950s:– “Right to Work” Laws– Economic Trends– Fulfillment of Union
Goals
“Right to Work” Laws
• The Taft-Harlety Act (1947) allowed states to pass right-to-work laws.
• These laws ban mandatory union membership at the workplace.
Economic Activity as Percent of GNP, 1956 and 1998
Employment in Key Union Industries, 1960-2000
Gender Makeup of the U.S. Labor Force, 1970 and 1999
Economic Trends
• Unions have traditionally been strongest in the manufacturing sector– Blue-collar workers
• Blue-collar jobs have been declining in number– The American economy
becomes more service-oriented.
– Globalization– More women in the
workforce
Fulfillment of Union Goals
• Union membership has decreased simply because their goals have been fulfilled by other organizations.
• The government has set standards for workplace safety– More benefits being
provided by both private and government sources
Unions and Negotiations
• Collective bargaining is the process in which union and company representatives meet to negotiate a new labor contract.– Wages and Benefits– Working Conditions– Job Security
Wages and Benefits
• The Union negotiates on behalf of all members for– Wage rate– Overtime rates– Planned raises– Benefits
Working Conditions
• Working conditions include– Safety– Comfort– Worker responsibilities– Other workplace issues
• These are all negotiated and written into the final contract
Job Security
• One of the union’s primary goals is to secure its members’ jobs.
• The contract spells out the conditions under which a worker may be fired.
Labor Strike• If no agreement is met
between the union and the company– The union may ask its
members to vote on a strike.
• A strike– An organized work
stoppage intended to force an employer to address union demands.
– Strikes can be harmful to both the union and the firm.
Labor Mediation
• To avoid the economic losses of a strike, a third party is sometimes called in to settle the dispute.
• Mediation – A settlement technique in
which a neutral mediator meets with each side to try and find an acceptable solution that both sides will accept.
Labor Arbitration
• If mediation fails, talks may go into arbitration
• Arbitration– A settlement technique
in which a third party reviews the case and imposes a decision that is legally binding for both sides.