The American Labor Force Chapter 12 Economics – Fall 2017

Chapter Overview View Only Chapter 12 explains the composition of the American labor force, how supply and demand affect wages, the development of organized labor, and the procedures and purposes of collective bargaining.

Section 1: Job Categories and Wages Section 1 describes the different categories of jobs in the American economy and explains how supply and demand determine the wages for various jobs.

• Everyone—from a factory worker to the president of a corporation– belongs to the productive resource known as labor. • In this section, you’ll learn how workers are categorized, how wages are determined, and why employers need to pay more to get (and keep).

T h e C i v i l i a n L a b o r F o r c e Introduction T h e C i v i l i a n L a b o r F o r c e • The civilian labor force is the total number of people 16 years or older who are employed or seeking work. • People not included in the civilian labor force: - mentally or physically disabled people, - prisoners, - people in the armed forces, and - those not looking for a paying job.

Federal & State Minimum Wage laws, Union power, and How is Minimum Wage Determined? Federal & State Minimum Wage laws, Union power, and Company’s management

Category of Workers 1. White Collar – office workers, sales people, highly trained workers (teacher). 2. Blue Collar - craft workers, manufacturers, and nonfarm laborers (construction wkr). 3. Service workers – any worker who provides a service (taxi driver).

Supply & Demand in the Labor Market Factors that affect wages: -skill, type of job, and location Federal Minimum Wage = $7.25 CA Min. Wage = $10.50 San Francisco Min. Wage 2017 = $14.00 2018 = $15.00

L.A. Minimum Wage Schedule View Only July 1 26+ workers 25 or fewer 2017 $12.00 $10.50 2018 $13.25 2019 $14.25 2020 $15.00

View Only

View Only

View Only

View Only 2012

Section 2: Organized Labor Section 2 describes the rise of organized labor in the United States and how unions are organized.

Introduction In this section, you’ll learn that unions are based on the idea that workers as a group will have more influence on management than will individual workers acting alone. • In discussing labor- management relations, the term management refers to those in charge of a company—the executives and managers.

Purpose of Unions To have some control over the wages they receive as well as over other working conditions, many American workers formed labor unions. • A labor union is an association of workers organized to improve wages and working conditions for its members.

Development of Labor Unions • In the 1800s working conditions were terrible and unions were often illegal. • Strikes often resulted in violence between workers and the police. • The first permanent union, The American Federation of Labor (AFL) was made up of craft unions and led by Samuel Gompers.

Development of Labor Unions • In 1938, the Congress of Industrial Organizations (CIO) was created, and the automobile and steel industries were the first to be organized. • AFL and CIO joined forces in 1955 because they felt greater gains could be made if the craft and industrial unions worked together. Jimmy Hoffa, President of IBT

How Unions are Organized • Local unions have members in a distinct location (one factory, company, or geographical area). • Local union membership and management relationships differ from one shop to another.

How Unions are Organized • Union shops require employees to join the union after a specific period of time. • Agency shops require employees to pay union dues whether or not they join the union. • National unions represent the local unions nationwide; those that include members from Canada and Mexico are known as international unions.

View Only View Only

Copy Diagram

RIGHT TO WORK - Prohibit agreements between trade unions and employers making membership or payment of union dues or "fees" a condition of employment, either before or after hiring.

Exhibit 3 Average Hourly Wage by Occupation in the U. S. View Only 24

Exhibit 4 Age, Education, and Pay View Only For every age group, workers with more education earn more. The premium paid for years of experience increases more for those with more education. 25

Exhibit 6 View Only Median Weekly Earnings Are Higher for Union Than Nonunion Workers Unions are more successful at raising wages in less competitive markets, such as government, transportation, and construction. In more competitive markets, such as retail trade, employers cannot easily pass along higher union wages as higher product prices. Nonunion firms can enter the industry, pay workers market wages, which are below union wages, and attract customers by selling the product for less. 26

Exhibit 8 Unionization Rates by Age and Gender View Only Unionization rates for men, shown by the green bars, are higher than the rates for women, in part because men work more in manufacturing and women work more in the service sector, where union membership is lower. The highest membership rates are for middle-aged men. 27

Section 3: Collective Bargaining Section 3 describes the basic features of collective bargaining and explains how unions have declined in recent years.

Introduction • Collective bargaining is the process by which unions and employers negotiate the conditions of employment. • At the center of the collective bargaining process is compromise. • The company wants to keep wages and benefits low to hold its labor costs down and remain competitive in the market.

Intro., cont. • The union wants to increase wages and benefits for its members as much as possible. • Both sides must be prepared to give and take a little. * Federal employees cannot strike.

Negotiations Labor and management meet to discuss contract issues. • Mediation takes place when labor and management cannot agree or become hostile; instead they find a neutral person to try to help them reach an agreement. • Arbitration takes place when mediation fails; labor and management then ask a third party to make a decision, agreeing to unconditionally accept that decision.

Strikes and Management • Picketing is when workers carry signs in front of the place of business until their needs are satisfactorily met in the contract. Lockouts are when management prevents workers from returning to work until a new contract is signed. Strikebreakers or scabs are people who fill in for striking workers. Injunctions are court orders that limit picketing or prevent a strike from continuing or occurring at all.

Decline of Unions • As working conditions have improved over the years, non-union workers see little benefit to belonging to a union. • More jobs are available in white collar and service sectors; blue-collar jobs are decreasing.

Decline of Unions • Critics of the labor movement claim unions are so large they are not in touch with members’ needs, and increased wages given to union workers are passed onto consumers in price increases. • Employers claim union rules decrease productivity, union make it hard to use new technology that would replace workers, and corruption among labor leaders has damaged union reputation.