1. Chapter 9: Labor Opener

2. Copyright © Pearson Education, Inc.Slide 2 Chapter 9, Opener Essential Question How can workers best meet the challenges of a changing economy?

3. Copyright © Pearson Education, Inc.Slide 3 Chapter 9, Opener Guiding Questions Section 1: Labor Market Trends –How do economic trends affect workers? Shifts in the economy toward different industries can affect workers. Another trend that can affect workers include new demographics in the work force, like women, foreign-born workers, and temporary workers.

4. Copyright © Pearson Education, Inc.Slide 4 Chapter 9, Opener Guiding Questions Section 2: Labor and Wages –Why do some people earn more than others? What people earn is based on many factors including education, the demand and supply of labor, skill levels, gender, and race.

5. Copyright © Pearson Education, Inc.Slide 5 Chapter 9, Opener Guiding Questions Section 3: Organized Labor –How do labor unions support the interests of workers? Labor unions support the interests of workers with respect to wages, benefits, and working conditions.

6. Chapter 9: Labor Section 1

7. Copyright © Pearson Education, Inc.Slide 7 Chapter 9, Opener Objectives 1.Describe how trends in the labor force are tracked. 2.Analyze past and present occupational trends. 3.Summarize how the U.S. labor force is changing. 4.Explain trends in the wages and benefits paid to U.S. workers.

8. Copyright © Pearson Education, Inc.Slide 8 Chapter 9, Opener Key Terms labor force: all nonmilitary people who are employed or unemployed outsourcing: the practice of contracting with another company to do a specific job that would otherwise be done by a company’s own workers offshoring: the movement of some of a company’s operations to another country

9. Copyright © Pearson Education, Inc.Slide 9 Chapter 9, Opener Key Terms, cont. screening effect: the theory that the completion of college indicates to employers that a job applicant is intelligent and hard-working contingent employment: a temporary and part-time job guest workers: members of the labor force from another country who are allowed to live and work in the United States only temporarily

10. Copyright © Pearson Education, Inc.Slide 10 Chapter 9, Opener Introduction How do economic trends affect workers? –Economic trends affect Employment rates Outsourcing and offshoring The demographics of the work force The level of education of the work force Wages and benefits

11. Copyright © Pearson Education, Inc.Slide 11 Chapter 9, Opener Tracking the Labor Force Each month the Bureau of Labor Statistics (BLS) assembles information on the labor force—all nonmilitary people who are employed or not employed.

12. Copyright © Pearson Education, Inc.Slide 12 Chapter 9, Opener The Labor Force A person is considered employed if they are 16 years or older and meet at least one of the following requirements: –They worked at least one hour for pay in the past week –They worked 15 hours or more without pay in a family business –They held jobs but did not work due to illness, vacations, labor disputes, or bad weather.

13. Copyright © Pearson Education, Inc.Slide 13 Chapter 9, Opener Composition of the U.S. Labor Force People are considered unemployed if they are either temporarily unemployed or if they are not working but are actively looking for jobs. –What are the parts that form the total U.S. population? –How does being unemployed differ from not being a part of the labor force?

14. Copyright © Pearson Education, Inc.Slide 14 Chapter 9, Opener The BLS Checkpoint: What important information can we learn from the Bureau of Labor Statistics (BLS)? –The BLS tells us how many people are in the labor force as well as how many people are employed or unemployed at a given time. –It also provides information on historical trends in the labor force and reports the unemployment rate each month.

15. Copyright © Pearson Education, Inc.Slide 15 Chapter 9, Opener Occupational Trends The job market is constantly changing. –The United States, for example, began as an agricultural society that gave way to heavy industry in the early 1900s. –Electronics came next as a major industry in the 1950s, followed by computers opening new employment opportunities in the 1970s.

16. Copyright © Pearson Education, Inc.Slide 16 Chapter 9, Opener Occupational Trends, cont. In the past decade, the United States has shifted from a manufacturing economy to a service economy. –Many manufacturing jobs have gone overseas through outsourcing and offshoring forcing many Americans to find work in other areas. –How many service- producing employees were added in the period shown?

17. Copyright © Pearson Education, Inc.Slide 17 Chapter 9, Opener The Changing Labor Force Many people in today’s workforce seek better employment opportunities by getting a college degree. People with advanced degrees can make more money than those with lesser degrees and they are viewed by employers as hard-workers.

18. Copyright © Pearson Education, Inc.Slide 18 Chapter 9, Opener Women in the Work Force The number of women in the workforce has drastically changed in the last 50 years. –Women were encouraged to get an education and increase their human capital, which led to more women entering the workforce. –The increase in service sector jobs also added to the increase of women in the workforce. Which decade shows the largest increase in the percentage of women entering the labor force?

19. Copyright © Pearson Education, Inc.Slide 19 Chapter 9, Opener Temporary Workers Another trend in the workforce is the increase in temporary workers, or contingent employment. Reasons for this trend include: –The ability of firms to easily adjust their workforce to changing demand for their output. –Temporary workers are paid less and given fewer benefits. –It’s easier to discharge temporary workers and less costly. –Some workers prefer the flexibility of temporary work

20. Copyright © Pearson Education, Inc.Slide 20 Chapter 9, Opener Foreign-Born Workers Foreign-born workers have also influenced the labor force in recent years. Guest workers are allowed to work for a company that can show they cannot meet their labor needs with native-born workers. –Critics of guest workers say that they hold down the wages of Americans. –Supporters claim immigrant workers do jobs that Americans are unwilling to do because the wages are low and these companies can charge less for their goods as a result.

21. Copyright © Pearson Education, Inc.Slide 21 Chapter 9, Opener Wages Economists also study trends in benefits and wages. Americans earn higher wages than people in many other countries but in recent years the trend has been toward slow growth in earnings, as a result of outsourcing and deregulation. –What is the average salary of a worker who is employed in a retail trade or services job?

22. Copyright © Pearson Education, Inc.Slide 22 Chapter 9, Opener Benefits For many workers, benefits like pensions and health insurance are a significant share of total compensation. –This share rose fairly steadily during the 1900s and early 2000s. –Employers are finding that these rising benefits costs increase the cost of doing business and thus cut into their profits. As such costs continue to rise, companies seek ways to cut benefits, which may prove unpopular with workers.

23. Copyright © Pearson Education, Inc.Slide 23 Chapter 9, Opener Review Now that you have learned about how economic trends affect workers, go back and answer the Chapter Essential Question. –How can workers best meet the challenges of a changing economy?

24. Chapter 9: Labor Section 2

25. Copyright © Pearson Education, Inc.Slide 25 Chapter 9, Opener Objectives 1.Analyze how supply and demand in the labor market affect wage levels. 2.Describe how skill levels and education affect wage levels. 3.Explain how laws against wage discrimination affect wage levels. 4.Identify other factors affecting wage levels, such as minimum wage and workplace safety laws.

26. Copyright © Pearson Education, Inc.Slide 26 Chapter 9, Opener Key Terms derived demand: a type of demand that is set by the demand for another good or service productivity of labor: the quantity of output produced by a unit of labor equilibrium wage: the wage rate that is set when the supply of workers meets the demand for workers in the labor market unskilled labor: work that requires no specialized skills, education, or training semi-skilled labor: work that requires minimal specialized skills and education

27. Copyright © Pearson Education, Inc.Slide 27 Chapter 9, Opener Key Terms, cont. skilled labor: work that requires specialized skills and training professional labor: work that requires advanced skills and education glass ceiling: an unofficial barrier that sometimes prevents some women and minorities from advancing to the top ranks of organizations dominated by white men labor union: an organization of workers that tries to improve working conditions, wages, and benefits for its members featherbedding: the practice of negotiating labor contracts that keep unnecessary workers on a company’s payroll

28. Copyright © Pearson Education, Inc.Slide 28 Chapter 9, Opener Introduction Why do some people earn more than others? –What people earn for what they do is largely a matter of how many people are willing and able to do the job and how much that job is in demand. –Like other goods, labor is a good that is bought and sold.

29. Copyright © Pearson Education, Inc.Slide 29 Chapter 9, Opener Labor Demand The demand for labor comes from private firms and government agencies that hire workers to produce goods and services. –Demand for labor is called derived demand because it is set by the demand for another good or service. –In a competitive labor market, workers are usually paid according to the value of what they produce.

30. Copyright © Pearson Education, Inc.Slide 30 Chapter 9, Opener Supply of Labor The supply of labor comes from people willing to work for wages. The higher the wage for a particular job, the larger the quantity of labor supplied. –According to the demand curve, if each cook works a 40- hour work week, how many cooks will be hired at $12 an hour and $16 an hour?

31. Copyright © Pearson Education, Inc.Slide 31 Chapter 9, Opener Equilibrium Wage Checkpoint: What determines the equilibrium wage of labor? –The equilibrium wage is the wage rate, or price of labor or services, that is set when the supply of workers meets the demand for workers in the labor market. –At equilibrium there is no pressure to raise or lower wages.

32. Copyright © Pearson Education, Inc.Slide 32 Chapter 9, Opener Wage and Skill Levels In addition to varying according to labor supply and demand, wages also vary depending on workers’ skill levels and education. Jobs are often categorized into four skill levels: –Unskilled labor –Semi-skilled labor –Skilled labor –Professional labor

33. Copyright © Pearson Education, Inc.Slide 33 Chapter 9, Opener Wage and Skill Levels, cont. Labor supply and demand can create a significant difference in pay scales for workers with various skills. –Doctors, for example, who have extensive training and experience enjoy a high demand for their services relative to the supply and, therefore, earn higher wages. –High levels of danger or physical or emotional stress can affect the equilibrium wage for a particular job as well.

34. Copyright © Pearson Education, Inc.Slide 34 Chapter 9, Opener Wages for High-Risk, Low-Risk Jobs These graphs show how wages compare for similar jobs with different degrees of risk. –Write a sentence that compares the demand curves for the two graphs. –Write a sentence that compares the two supply curves.

35. Copyright © Pearson Education, Inc.Slide 35 Chapter 9, Opener Wage Discrimination Some people are paid less not because of their skill level but because of the social group they belong to. This practice is known as wage discrimination. –Women and minority groups have both suffered wage discrimination. –Congress has passed several anti-discrimination laws to prevent wage discrimination including: Equal Pay Act of 1963 Civil Rights Act of 1964, which established the Equal Opportunity Commission (EEOC)

36. Copyright © Pearson Education, Inc.Slide 36 Chapter 9, Opener Pay Levels for Women Despite protections, women still earn less than men as a result of three factors: –Women’s work Historically women have been encouraged to seek careers in teaching, nursing, and clerical work, which has led to a high supply of workers. –Human capital Overall, women are less educated than men, making them ineligible for high-paying, male- dominated jobs.

37. Copyright © Pearson Education, Inc.Slide 37 Chapter 9, Opener Pay Levels for Women, cont. Women’s career paths –Women are often perceived by employers as not being interested in advancement.

38. Copyright © Pearson Education, Inc.Slide 38 Chapter 9, Opener Pay Levels Across Society Racial discrimination has led to the wage gap for minorities. Non-discrimination laws are designed to give minorities improved access to education and job opportunities so they can close the wage gap. –Checkpoint: What groups have been hurt by wage discrimination?

39. Copyright © Pearson Education, Inc.Slide 39 Chapter 9, Opener Other Factors Minimum wage laws and safety laws also affect wages. –Minimum wage creates a minimum hourly rate that employers must pay workers. –Workers are willing to work for lower wages when jobs are safer.

40. Copyright © Pearson Education, Inc.Slide 40 Chapter 9, Opener Employer Actions and Labor Unions Employer actions and labor unions also affect wages. –Employer actions A company may try to cut labor costs, which in turn, lowers wages. They often replace human capital with physical capital. –Labor unions Labor unions can affect wages by persuading employers to increase their pay. Unions are a much disputed aspect of the labor force in today’s world.

41. Copyright © Pearson Education, Inc.Slide 41 Chapter 9, Opener Review Now that you have learned why some people earn more than others, go back and answer the Chapter Essential Question. –How can workers best meet the challenges of a changing economy?

42. UnemploymentUnemployment

43. Copyright © Pearson Education, Inc.Slide 43 Chapter 9, Opener Objectives 1.Differentiate between frictional, seasonal, structural, and cyclical unemployment. 2.Describe how full employment is measured. 3.Explain why full employment does not mean that every worker is employed.

44. Copyright © Pearson Education, Inc.Slide 44 Chapter 9, Opener Key Terms frictional unemployment: type of unemployment that occurs when people take time to find a job structural unemployment: type of unemployment that occurs when workers’ skills do not match those needed for the jobs available globalization: the shift from local to global markets as countries seek foreign trade and investment

45. Copyright © Pearson Education, Inc.Slide 45 Chapter 9, Opener Key Terms, cont. seasonal unemployment: type of unemployment that occurs as the result of harvest schedules, vacations, or when industries make seasonal shifts in their production schedules cyclical unemployment: unemployment that rises during economic downturns and falls when the economy improves unemployment rate: the percentage of the nation’s labor force that is unemployed

46. Copyright © Pearson Education, Inc.Slide 46 Chapter 9, Opener Key Terms, cont. full employment: the level of employment reached when there is no cyclical unemployment underemployed: working at a job for which one is overqualified or working part- time when full-time work is desired discouraged worker: someone who wants a job but has given up looking

47. Copyright © Pearson Education, Inc.Slide 47 Chapter 9, Opener Introduction What are the causes of unemployment? –Unemployment is caused by: People being between jobs for one reason or another (Frictional) A company or industry shutting down for a season (Seasonal) Workers skills not matching those needed for the jobs that are available (Structural) Economic downturns (Cyclical)

48. Copyright © Pearson Education, Inc.Slide 48 Chapter 9, Opener Types of Unemployment Unemployment always exists, even in a booming economy. Economists look at four categories of unemployment: frictional, seasonal, structural, and cyclical. –Frictional unemployment occurs when people take time to find a job. –A person who is frictionally unemployed may be: Changing jobs to find more satisfying works Laid off and looking for a new job Just out of school and interviewing for a job Returning to the workforce after a voluntary absence

49. Copyright © Pearson Education, Inc.Slide 49 Chapter 9, Opener Structural Unemployment When the structure of the economy changes, the skills that workers need to succeed also change. –Workers who lack necessary skills lose their jobs. –Structural unemployment occurs when workers’ skills do not match those needed for the jobs that are now available.

50. Copyright © Pearson Education, Inc.Slide 50 Chapter 9, Opener Structural Unemployment, cont. There are five major causes of structural unemployment: –The development of new technology –The discovery of new resources –Changes in consumer demand –Globalization –Lack of education

51. Copyright © Pearson Education, Inc.Slide 51 Chapter 9, Opener Structural Unemployment, cont. In the 1990s and 2000s, policymakers developed training programs to help workers gain new computer skills in light of the fact that computer technology, globalization, and other structural changes threatened the future of many workers. –Retraining takes time, however, and the new skills do not ensure that the trainees will obtain high-wage jobs.

52. Copyright © Pearson Education, Inc.Slide 52 Chapter 9, Opener Seasonal Unemployment Seasonal unemployment occurs when industries slow or shut down for a season or make seasonal shifts in their production schedules. –Seasonal unemployment can also occur as a result of harvest schedules or vacations. –Economists expect to see seasonal unemployment throughout the year. –Government policymakers do not take steps to prevent this kind of unemployment because it is a normal part of a healthy economy.

53. Copyright © Pearson Education, Inc.Slide 53 Chapter 9, Opener Seasonal Unemployment, cont. The lives of seasonally unemployed workers can be very difficult. –Migrant farm workers, for example, face seasonal unemployment once the harvest season is over. Harvest schedules are often unpredictable, making the transition from one crop to another hard to gauge.

54. Copyright © Pearson Education, Inc.Slide 54 Chapter 9, Opener Cyclical Unemployment Unemployment that rises during economic downturns and falls when the economy improves is called cyclical unemployment. –During a recession, many workers lose their jobs. Many of these laid-off employees will be rehired when the recession ends and the business cycle resumes an upward trend. –Today, unemployment insurance provides weekly payments to workers who have lost their jobs. The payments usually provide about half of a worker’s lost wages each week for a limited amount of time.

55. Copyright © Pearson Education, Inc.Slide 55 Chapter 9, Opener Factors Outside the Economy Sometimes, events outside the economy can cause unemployment. –Many jobs in travel and tourism were lost following the 9/11 attacks. –In 2005, the destruction by Hurricane Katrina caused thousands of people to lose their jobs.

56. Copyright © Pearson Education, Inc.Slide 56 Chapter 9, Opener Measuring Unemployment Checkpoint: How is the unemployment rate calculated? –The government keeps track of how many people are unemployed and why. –The Bureau of Labor Statistics (BLS) computes the unemployment rate from a monthly household survey of 60,000 families who represent a cross- section of the United States.

57. Copyright © Pearson Education, Inc.Slide 57 Chapter 9, Opener Measuring Unemployment, cont. The unemployment rate is adjusted for seasonal unemployment. –Taking this step allows economists to more accurately compare unemployment rate from month to month. This comparison helps them better detect changing economic conditions. –The unemployment rate is only an average for the nation. It does not reflect regional differences.

58. Copyright © Pearson Education, Inc.Slide 58 Chapter 9, Opener Full Employment Economists generally agree that in an economy that is working properly, an unemployment rate of around 4 to 6 percent is normal. –Full employment is achieved when no cyclical unemployment exists. –Why does a high unemployment rate correspond with a recession?

59. Copyright © Pearson Education, Inc.Slide 59 Chapter 9, Opener Full Employment, cont. Full employment means that nearly everyone who wants a job has a job. –However, some people remain underemployed, which means they are working at a job for which they are overqualified, or working part-time when they desire full-time work. –Other people simply give up hope of finding work. These discouraged workers have stopped searching for employment. Although they are without work, discouraged workers do not appear in the unemployment rate determined by the BLD because they are not actively looking for work.

60. Copyright © Pearson Education, Inc.Slide 60 Chapter 9, Opener Review Now that you have learned about the causes of unemployment, go back and answer the Chapter Essential Question. –How much can we reduce unemployment, inflation, and poverty?

61. Chapter 9: Labor Section 3

62. Copyright © Pearson Education, Inc.Slide 62 Chapter 9, Opener Objectives 1.Describe why American workers have formed labor unions. 2.Summarize the history of the labor movement in the United States. 3.Analyze reasons for the decline of the labor movement. 4.Explain how labor and management negotiate contracts.

63. Copyright © Pearson Education, Inc.Slide 63 Chapter 9, Opener Key Terms strike: an organized work stoppage intended to force an employer to address union demands right-to-work law: a measure that bans mandatory union membership blue-collar worker: someone who performs manual labor, often in a manufacturing job, and who earns an hourly wage white-collar worker: someone who works in a professional or clerical job and who usually earns a weekly salary

64. Copyright © Pearson Education, Inc.Slide 64 Chapter 9, Opener Key Terms, cont. collective bargaining: the process in which union and company management meet to negotiate a new labor contract mediation: a settlement technique in which a neutral person, the mediator, meets with each side to try to find a solution that both sides will accept arbitration: a settlement technique in which a neutral third party listens to both sides and then imposes a decision that is legally binding for both the company and the union

65. Copyright © Pearson Education, Inc.Slide 65 Chapter 9, Opener Introduction How do labor unions support the interests of workers? –Labor unions support the interests of workers with respect to wages, benefits, and working conditions. –They provide workers with the power of collective bargaining.

66. Copyright © Pearson Education, Inc.Slide 66 Chapter 9, Opener Labor Unions What can employees do who feel that they are paid too little, work too many hours, or work in unsafe conditions? –Many workers choose to join labor unions to deal with such issues. –In the United States today, one out of every eight workers belongs to a labor union. –In the past, though, unions had a stronger influence on the nation’s economy.

67. Copyright © Pearson Education, Inc.Slide 67 Chapter 9, Opener The Labor Movement Labor unions arose largely in response to changes in working conditions brought about by the Industrial Revolution in the early to mid-1800s. –Working conditions in factories were poor and very dangerous. –Skilled workers began to form unions to protect their interests but many were fired for joining. –In 1886, Samuel Gompers founded the American Federation of Labor (AFL), which ignited the U.S. labor movement.

68. Copyright © Pearson Education, Inc.Slide 68 Chapter 9, Opener The Labor Movement, cont. Many employers did not respond well to unions and forced workers to sign yellow- dog contracts, promising not to join unions. –In the 1930s, Congress passed measures that protected unions. Union strength grew, peaking in the 1940s at about 35 percent of the nation’s non-farm workforce being members. –Checkpoint: Why did union membership rise in the 1930s?

69. Copyright © Pearson Education, Inc.Slide 69 Chapter 9, Opener The Labor Movement, cont. Unions became the dominant force in many industries, making money in member dues and controlling the day-to- day operations of many industries. As they grew, some unions began to abuse their power. As a result, companies in need of improved efficiency in order to stay competitive found unions to be an obstacle.

70. Copyright © Pearson Education, Inc.Slide 70 Chapter 9, Opener The Movement Declines Checkpoint: What are three explanations for the decline in union membership? –In 1947, Congress passed right-to-work laws, banning mandatory union membership. –Other reasons for decline include: The decline of manufacturing in the United States, where unions were the strongest Rise of women in the workforce Movement of industries to the South, which historically has been less friendly to unions

71. Copyright © Pearson Education, Inc.Slide 71 Chapter 9, Opener The Movement Declines, cont. Another theory for union decline is that other institutions now provide many of the services that had been won in the past by unions. –What was the peak of union membership?

72. Copyright © Pearson Education, Inc.Slide 72 Chapter 9, Opener Change in Union Membership

73. Copyright © Pearson Education, Inc.Slide 73 Chapter 9, Opener Labor and Management A union gains the right to represent workers at a company when a majority of workers in a particular work unit vote to accept the union. Once this happens, the company is required to bargain with the union to negotiate an employment contract. –Contracts get negotiated through collective bargaining.

74. Copyright © Pearson Education, Inc.Slide 74 Chapter 9, Opener Collective Bargaining The union brings the following goals to the collective bargaining table: –Wages and benefits The union negotiates for wage rates, overtime rates, planned raises, and benefits. –Working conditions Safety, comfort, worker responsibilities, and other workplace issues are written into the final contract. –Job security The contract spells out the conditions under which a worker may be fired.

75. Copyright © Pearson Education, Inc.Slide 75 Chapter 9, Opener Strikes Sometimes agreements cannot be reached between the union and management. –In these instances, unions may ask its members to vote to approve a strike, which can cripple a company. –A long strike can also be hard on workers, since they are not getting paid.

76. Copyright © Pearson Education, Inc.Slide 76 Chapter 9, Opener Outside Help If a strike continues for a long time, the two sides can call in a third party to help settle the dispute. –In mediation, a neutral person meets with each side to try to find a solution that both sides will accept. This decision, though, is nonbinding. –In arbitration, a neutral third party listens to both sides and imposes a decision, which is legally binding.

77. Copyright © Pearson Education, Inc.Slide 77 Chapter 9, Opener Review Now that you have learned how labor unions support the interests of workers, go back and answer the Chapter Essential Question. –How can workers best meet the challenges of a changing economy?