1. Competency 37 Demonstrate knowledge that many factors affect income Do Now: Average NFL player’s salary - $1.9 million E1 US soldier salary - $18,378 1 st year PWCS employee - $51,500 Average pediatrician salary - $189,000 1)What causes the difference in pay? 2)What factors affect wages of people in different jobs? 3)Is this difference in pay fair or unfair?

2. Supply and Demand: Labor Private firms and government demand labor They hire workers to produce goods and services Usually, firms compete for workers Demand for labor is derived demand Demand depends on some other demand Example: demand for cooks in a market depends on the demand for restaurant meals

3. How Does the Labor Market Affect Wages? Workers are usually paid based on the value of what they produce Workers who produce more will usually be promoted to higher paying jobs than those who produce less Productivity of Labor – the amount of goods and services workers can produce in a given time Supply of labor comes from people willing to work for wages The more a job pays, the more people will want the job Demand for labor comes from the need of certain workers The higher the price of labor, the lower the demand for workers

4. Different Wages for Different Workers Why do workers earn different wages? The supply and demand for different jobs isn’t the same Example: Supply of pro athletes is small, but the demand is great Why are some skills valued more than others? 1)Difference in ability 2)Difference in effort and jobs 3)Difference in experience 4)Difference in education and training

5. Four Groups of Skill Level 1)Unskilled Labor – requires no special skills, education, or training 2)Semiskilled Labor – requires some training and education 3)Skilled Labor – requires advanced skills and education 4)Professional Labor – requires advanced skill and education Why are some people paid less than equilibrium wage? Wage Discrimination – treating a person differently and paying them less because of a social group they belong to

6. Income Distribution Definition: the way the nation’s total income is spread out among its population Lowest 5 th – 3.4% of total income Second 5 th – 8.6% of total income Third 5 th – 14.5% of total income Fourth 5 th – 22.9% of total income Highest 5 th – 50.5% of total income

7. To The Book! Guiding question chart – page 303 Section 2 Assessment 1-5 – page 309 Graph Skills questions 1-2 – page 470 Section 3 Assessment #4 – page 473

8. Dream Job Vs Favorite Athlete Research the average salary for your dream job and your favorite athlete Give me some information about each Short description or bio of the athlete What someone in the career actually does and what education is required Draw the supply and demand curve for each type of labor and explain the difference in wages  Use a full sheet of paper, add some color, be creative  If you need help, ask me

9. Example Equilibrium Wage $15.1 Million Work Hours Per Week Hourly Wage Supply Demand

10. Make sure you:  Write your name, block number, and the date  Label the different sections assigned  Write in complete sentences

11. Extra Do Now: Don’t Have To Write Anything Do you think the Oompa Loompas have weird growths coming off their legs or is that just the way their outfit looks?

12. Now Let’s Get Started! Read page 27 silently Write 3-5 sentences about how physical and human capital relate to wages Any volunteers to share? 1)Last week we learned that people are paid based on the value of what they produce and how much they can produce 2)Physical capital helps speed up the production process by cutting down on manual labor 3)Learning how to better utilize equipment adds to human capital 4)Increased capital adds to productivity of labor 5)Therefore, workers with more capital would earn higher wages

13. Stay In School – Group Discussion How does supply and demand of a good affect income? How much does your family spend on food each week?  The average household spends 10% of disposable income on food 35-40% of high school dropouts live in poverty ($10,830/year) How much money for food in a year? Month? Week? What would happen to Charlie’s family income if the price of cabbage went up?

14. Small Group Quiz 1)What overarching economic concept determines wages? 2)What is derived demand? 3)How is professional labor different from the other types of labor we discussed? 4)Treating a person differently and paying them less because of a social group they belong to is called what? 5)How do physical and human capital impact production?

15. Missing the Book Yet? Read pages 29-30 Answer the chart question on page 29 If the US has a high standard of living when compared to other countries, what does that mean about our economic indicators such as average income, unemployment, and poverty rate? Why would trade and expansion of free markets improve standard of living? (Speculate)

16. Almost Done! Page 156-159 Graph skills questions 1-7 on page 159 It’s almost body-sledding season