Labor Market Trends Chapter 9, section 1

The United States Labor Force Economists define the labor force as all nonmilitary people who are employed or unemployed.

Occupational Trends

A Changing Economy The economy of the United States transformed from a mainly agricultural economy in the 1800s, to an industrial giant in the early 1900s. A boom in electronics in the mid 1900s led to a surge in factory jobs. The personal computer has revolutionized the economy since its introduction in the late 1900s.

Fewer Goods, More Services Overall, the United States is shifting from a manufacturing economy to a service economy. Our production of services is increasing faster than our production of goods. Jobs in the service sector include financial services, online services, health care, consulting and desk top publishing.

The Changing Labor Force

Education and Income Potential earnings increase with increased educational attainment. Education Earnings

College Graduates at Work More and more, to get jobs people must have more than a high school education. The learning effect is the theory that education increases productivity and results in higher wages. The screening effect theory suggests that the completion of college indicates to employers that a job applicant is intelligent and hard-working.

http://www.census.gov/hhes/www/macro/032008/perinc/new03_001.htm

Women at Work The percentage of women participating in the work force has grown from 38% in 1960 to 59.5% in 2008. This increase may be due to: Women encouraged to get a higher education which increased their value in the workplace. More and more jobs are available in the service sector where strength is not as important as brain power.

Temporary Workers Permanent full-time workers are being replaced by part-time and temporary workers (contingent employees). Contingent employment is common even in white-collar, professional occupations such as attorneys and software engineers.

Temporary Workers Companies are relying on temporary employees for these reasons: Allows the firm to easily adjust its work force to changing demands for its output. Laying off temp workers is much easier and cheaper (no severance pay). Temp workers are usually paid less and receive no benefits. Some workers actually prefer the flexibility that temporary employment allows them.

Trends in Wages and Benefits

Earnings Up for Some, Down for Others Although Americans make more than workers in other countries the average weekly earnings when adjusted for inflation have decreased. But when benefits such as health insurance and retirement funds are added in wages have actually increased (college graduates actually are earning more). A reason for the lower average wage has been the increased overseas and domestic competition.

Costs of Benefits Benefits now make up 28% of total compensation which adds up to a large cost for employers. Social Security taxes which have increased over the years are paid by employees and are matched by employers. These rising benefit costs are one reason for contingent employment and outsourcing of jobs to foreign countries.