Unit 4 Microeconomics:Business and Labor

Chapters 9.1

EconomicsMr. Biggs

Tracking the Labor ForceEach month, the U.S. Department of Labor surveys households to assemble information on the labor force.Labor force - All non-military people who are employed or unemployed.

EmploymentPeople are considered employed if they:

• Are 16 years or older• Worked at least one hour for pay in the past week• Worked 15 or more hours without pay in a family

business• Held jobs but did not work due to illness,

vacations, etc.

Labor Market Trends

UnemploymentThe unemployed include those who do not meet the criteria listed above and have looked for a job in the last 4 weeks or are temporarily out of work. Individuals who have given up looking for work are considered “discouraged” and are not considered unemployed.

The Bureau of Labor Statistics (BLS)The Bureau of Labor Statistics (BLS) determines how many people are in the labor force.It also determines how many people are employed or unemployed and provides information about historical labor trends.

Occupational TrendsShifts in the job market reflect major shifts in what our economy produces.

A Changing EconomyAmerica was a nation of farmers when it originated. In the early 1900s, heavy manufacturing, such as steel and automobiles, became the power house of the American economy.The 1950s saw the rise of electronics such as TV and radio production. The 1970s were the beginning of the computer revolution and the “Information Age.”Most current jobs require some computer knowledge.Computer engineering jobs are expected to double in the coming years.

Fewer Goods, More ServicesThe United States has shifted from a manufacturing economy to a service economy.

Effects of International CompetitionMany less skilled manufacturing jobs have moved overseas where labor costs are lower.The demand for skilled labor is rising so many workers to go back to school to gain new skills.

The Changing Labor ForceIn the 1950s, a typical American worker was a high school graduate with a secure 40 hours a week job where he would hope to stay until retiring at age 65.Today, a typical American worker can expect to have 4 to 5 different jobs and retire at around age 62.

College GraduatesTo get jobs, people must have human capital like education, training, and experience.Learning effect - The theory that education increases productivity and results in higher wages.Screening effect - The theory that the completion of college indicates to employers that a job applicant is intelligent and hard working.

Women at WorkToday, 61% of women are part of the workforce and that number is expected to rise.Women are more attracted to service sector jobs because they tend to require education and personal skills rather than physical strength.

Temporary WorkersMore and more businesses are replacing permanent, full-time workers with part-time and temporary workers.Contingent employment - A temporary or part-time job.Several reasons have been suggested for this trend:

• Firms can quickly adjust their work force to changing demand

• Discharging temporary workers is much easier than discharging permanent workers

• Temporary workers are usually paid less and receive fewer benefits

• Some workers prefer the flexibility of being a contingent employee

Trends in Wages and BenefitsEconomists study not only who is in and out of the work force, but how they are doing in terms of earnings and benefits.

Earnings Up for Some, Down for OthersAverage earnings adjusted for inflation have slightly deceased since 1980.However, today there are more added benefits such as health insurance, retirement funds, stock options, and bonuses.Overall, the earnings of college graduates have actually increased and workers without college degrees have decreased.

Cost of BenefitsBenefits have become a large part of the compensation package for employees.Benefits now make up 28% of total compensation in the United States.Your employer’s matching contribution into social security is considered a benefit.The use of contingent workers and taking businesses overseas are two ways that firms increase profits lost to paying for expensive benefits.

The End