Employment, Labor and Wages

“Labor” refers to people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur.

A labor market is a market like any other, consisting of buyers and sellers and governed by the laws of supply and demand.

Labor Unions are organizations that work for its members’ interests concerning pay, working hours, health coverage, fringe benefits and other job related matters.

Small, unsuccessful labor unions existed during colonial times.

The Knights of Labor, founded in 1869 was the first successful labor union. It was a union of railroad workers and eventually failed.

The American Federation of Labor (AFL) was founded by cigar maker Samuel Gompers in 1881. It was a union of skilled workers.

The Congress of Industrial Organizations (CIO) was founded by John L. Lewis in 1938 for semi-skilled and unskilled workers.

The AFL and CIO merged in 1955, creating the organization known today as the AFL-CIO.

Business and government have historically been opposed to unions.

Today, approximately 14% of American workers belong to unions.

Collective Bargaining fact findingmediation arbitration

StrikePicketingBoycottSlowdownSick-out

Lockout InjunctionStrikebreakers, “Scabs”Political ActivityPublic Relations

Clayton Antitrust Act (1914): exempts unions from antitrust suits and gives labor the right to strike, picket, and organize a boycott.

Norris-La Guardia Act (1932): guarantees the right of a worker to join a union and engage in normal union activities; outlaws contracts prohibiting employees from joining unions.

Wagner Act/National Labor Relations Act (1935): guarantees workers the right to form unions and bargain collectively; established the National Labor Relations Board (NLRB.)

Fair Labor Standards Act (1938): established minimum wage, maximum workweek and restricts child labor.

Taft-Hartley Act/ Labor Management Relations Act (1947): reversed some earlier union gains by prohibiting closed shops; allows states to enact right-to-work laws.

Landrum-Griffin Act (1959): passed in an effort to prevent corrupt union practices.

Decline in Union membership due to an increase in white collar workers

A decrease in blue collar jobsStrikesLayoffsCorruptionPolitical Activity

The Traditional Theory of Wages states that the supply and demand for a worker’s skills and services determines the wage or salary.

The Theory of Negotiated Wages states that organized labor’s bargaining strength is a factor that helps determine wages.

The Signaling Theory states that employers are willing to pay more for people with certificates, diplomas, degrees and other indicators, or “signals” of superior ability.

Minimum wage and regional wage differences also affect how much people earn.

There is a clear relationship between education and earnings.