Employment Trends and Issues Chapter 8, Section 4

Decline of Union Influence (pg. 212, Figure 8.7) Decline of both union membership and influence Union Membership 1945 – 35.5% of non-agricultural workers 1980 – 21.9% of non-agricultural workers 2002 – 13% of non-agricultural workers What is the reason for the decline?

Reasons for Decline Employers want to keep unions out of their business Additions to the labor force Unions are the victims of their own success

Renegotiated Union Wages Employers want to lower union wages: Giveback – wage, fringe benefit, or work rule given up when a labor contract is renegotiated Companies declare bankruptcy to get rid of labor contracts Two-tier wage system: keep high wages for current workers, but a much lower wage for newly hired workers

Lower Pay for Women (pg. 213, Figure 8.8 and pg. 214, Figure 8.9) Human Capital Differences: Differences between skills and experience (raise families, lower levels of education) Gender and Occupation: uneven distribution of men and women in various occupations Discrimination: Glass ceiling – invisible barrier that prevents advancement up the corporate ladder

Lower Pay for Women: Solutions – Legal Remedies Equal Pay Act of 1963 Applies to men and women that work at the same job Requires equal pay for jobs that require equal skills Civil Rights Act of 1964: Title VII – prohibits discrimination in all areas of employment based on the basis of gender, race, color, religion, and national origin. Equal Employment Opportunity Commission (EEOC) – investigates charges of discrimination, issues guidelines and regulations, conducts hearing and gathers statistics

Lower Pay for Women: Solutions – Comparable Worth The idea that people should receive equal pay for equal work that is different, but just as demanding as, other types of work Factors: Occupational hazards Educational requirements Degree of physical difficulty

Lower Pay for Women: Solutions – Comparable Worth Most economists believe that fair and unbiased comparisons of occupations are almost impossible to make Comparable worth is not necessary as long as people are free to obtain training and enter the profession of their choice Others believe that comparable worth is necessary to remove gender discrimination in the workplace

Lower Pay for Women: Solutions – Set-Aside Contract Guaranteed contract reserved for a targeted group Certain number of defense contracts be reserved exclusively for minority-owned businesses 1988 – CA required 5% of state’s bond contracts reserved for women lawyers, bankers, and women who place bonds with other investors Intent of these programs is to “boost” and not provide a permanent subsidy “graduation” clause

Part-Time Workers Workers who regularly work less than 35 hours/week 1 out of 5 jobs in the U.S. Economy are part-time jobs

Part-Time Workers: Reasons for Growth Retail positions are helpful addition family incomes Allow additional activities (college courses, time with family) Flexible schedules (lunch rush, seasonal) Lower cost to businesses (low health, retirement and other benefits)

Part-Time Workers: Criticisms Wages are too low and hours are too few to earn a decent living Some part-time workers think they are abused by the system and forced to work inconvenient schedules Others believe the system denies full-time employment to a large number of capable workers Unions are opposed to part-time workers 1997 – UPS strike

Minimum Wage Debate (pg. 217, Figure 8.10A) Lowest wage than can be paid by law to most workers Original intent was to prevent exploitation of workers and provide equity and security to unskilled workers Supporters Equity and security consistent with U.S. economic goals Opponents Object on the grounds of economic freedom Wage discriminates against young people

Minimum Wage: Measured in Current Dollars (pg. 217, Figure 8.10A) Current dollars are dollars that are not adjusted for inflation Viewed in this manner, it seems as though minimum wage increased dramatically Does not take into account inflation

Minimum Wage: Adjusted for Inflation (pg. 217, Figure 8.10B) Real or constant dollars – economists use dollars that are adjusted in a way that removes distortion of inflation Base year – year that serves as a comparison for all other years Panel B shows minimum wage had more purchasing power in 1968 Panel B also shows minimum wage increases whenever it increases faster than inflation (1997)

Minimum Wage: Compared to Manufacturing Wages (pg. 217, Figure 8.10C) Panel C – minimum wage as a percent of average manufacturing wage