Types of Business The American Labor Force Business in Our Economy Chap 22: Business and Labor

TYPES OF BUSINESSES IN THE U.S. ECONOMY Sole Proprietorships Partnerships Corporations Cooperatives Non-Profits

SOLE PROPRIETORSHIPS: This business is operated by a single owner ADVANTAGESDISADVANTAGES Full pride of owning a business Receives all profits Makes all decisions without having to consult a boss Pay no corporate income tax Unlimited liability Complete legal responsibility to repay debt and/or damages If not repaid, property (house, car, jewelry) may be taken to pay the debt

Examples of Sole Proprietorships Baby Sitter

PARTNERSHIPS: A business that is owned and operated by more than one person. ADVANTAGESDISADVANTAGES Two heads are better than one Raise more money Each owner brings unique qualities/talents Larger size = more efficient operation Pay no corporate income tax Profit must be split between partners. Partners can argue Complicated legal structure; each time a member leaves/added, a new agreement needs to be written up Unlimited liability

Types of Partnerships GeneralLimited Most common All partners are responsible for the management and financial obligations At least one partner is not active in the daily routine of running the business but they have contributed the funds to help run the business

EXAMPLES OF PARTNERSHIPS

CORPORATIONS: An organized business that by law has many of the same rights as an individual. ADVANTAGESDISADVANTAGES Can easily raise huge sums of money through the sale of stock Easy to borrow large sums of money Produces 80 percent of all goods and services, yet only makes up 20% of all businesses in the U.S. Has the ability to grow into large companies Complicated & expensive to start up Business owners have little say in the management of the company Subject to double taxation Profits and stockholders earnings Much regulation by the government Release detailed reports on a regular basis to keep potential/current shareholders informed

EXAMPLES OF CORPORATIONS

NON-PROFITS: A business that invests 100 percent of its profits back into the business. ADVANTAGESDISADVANTAGES Non-profits help those in need Provides needs the government can’t provide Do not pay stockholders or investors 100% of the profits go back to the business

COOPERATIVES: A voluntary association of people designed to carry on an economic activity that benefits its members. ADVANTAGES ADVANTAGES Members receive benefits at low cost Members often have to put their own time in to help

LABOR VERSUS MANAGEMENT LABOR UNIONS: Groups of workers who band together to fight for better working conditions and pay. RIGHT-TO-WORK-LAWS: Laws which prevent mandatory union membership. BOYCOTT: A refusal to buy a company’s goods or ervices. STRIKE: A Work Stoppage PICKET LINE: A line that consists of striking workers and is dangerous to cross.

Types of Unions LocalNational Members of a union in a factory, company, or geographic location Above the local unions Represent the local unions on a nationwide level Example: American Federation of Labor- Congress of Industrial Organizations (AFL-CIO) Public Employee Unions Members work for the local, state, or federal government Example: American Federation of Government Employees (AFGE)

Union Arrangements Closed shop: Became illegal in 1947; workers had to join a union before being hired Union shop: Right-to-work laws (22 states, including NC) prevent mandatory union membership. Modified, does not require membership to be hired or keep the job. Agency shop: Workers must pay a fee to the union for representing them regardless if they do not belong to the union. * Unions cannot be brought into a workplace unless a majority of the employees vote for it.

HOW DO LABOR AND MANAGEMENT WORK THINGS OUT? Negotiations Through Outside Help: COLLECTIVE BARGAINING: Face to face talks that involve direct negotiations between labor and management. MEDIATION: Talks have broken down and both sides use a neutral third party to talk to each other. ARBITRATION: Both sides refuse to talk to each other and give a third party the power to make a decision for both sides.

Labor-Management Conflict: Techniques used to pressure the other side to accept their position Labor Tools: Strike Picketing boycott Management Tools: Lockout: Building is closed off until terms are accepted Injunctions: Legal order of a court to prevent strike or limit picketing Seizure: Extreme case when the government takes over the operation and the government negotiates with the union

Roles of Business Provide jobs Act as consumers/boost the economy (Buy goods/services from other businesses) Produce items to meet an individuals basic needs (food, clothing, shelter) as well as their wants/desires/pleasures (movies, cars, jewelry, etc.)

RESPONSIBILITIES OF BUSINESSES Consumers: SELL PRODUCTS THAT ARE SAFE AND WORK AS ADVERTISED. Owners: TRANSPARENCY: Corporations should be honest with stockholders and tell then all the good and bad things about the business. Employees: Treat all employees fairly, with respect and do not DISCRIMINATE against them. Provide a safe working environment Community: SOCIAL RESPONSIBILITY: Corporations should not pollute the environment, Corporations should also “GIVE BACK” to the community in which it is located.