1. How do we determine pay? Equilibrium: where labor demanded (companies) = labor supplied (people)

2. Why do some people earn more than others? Demand: –secure a job that lots of people want the good or service provided Supply: –pick a job not many people can do –Be productive Innate ability Invest in yourself: develop a skill or get educated

3. How skilled are you? (How unique) Unskilled –No specialized training, education –Hourly wages Semi-skilled –Minimal skills and education, operate equipment –Hourly wage Skilled –Specialized sills and training, complicated equipment –Hourly wages Professional –Advanced skills and education –Salary, “white collar”

4. Labor

5. Which one would you choose? Imagine you have been offered three jobs: –Hometown at $30,000/yr –2000 miles from home at $50,000/yr –Most beautiful location at $25,000/yr –What other information would you need to know to decide? –How much do other things besides money play into your decision?

6. Benefits Co-workers Location Health care Vacation Hours Job tasks

7. How do you decide? Benefits in job= money + nonmoney benefits –Nonmoney should make up for smaller salary if you go that way

8. Minimum Wage Congress sets wage rate above equilibrium Effect: people make more money Unintended effect: less people hired because businesses cannot afford them

9. Wages Money wages: how much someone makes (ex. $35,000/year) Real Wages: how much someone’s money can buy them –Real wage= money wage/consumer price index CPI: average price levels, computed yearly by gov., use a variety of goods to determine

10. Government Regulation Benefits –Helps environment –Protects workers –Provides minimum standards to make products safer Costs –Increase cost to taxpayers –May rise product price –Some workers may lose jobs

11. Unions a worker association that bargains with employers for wages and working conditions Two views –Obstacle to reasonable work standards, make companies less competitive –Valuable collective voice, make employees more confident