3 Labor ForceLabor Force (def.): all non-military people (employed or unemployed)Economists consider people employed if they are:16 years of age or olderWorked at least one hour for pay in the past weekWorked at least 15 hours without pay in a family businessHeld jobs but did not work due to illnesses, vacations, labor disputes, or bad weather
4 Labor ForceEconomists consider people unemployed if they do not meet that criteria and are:Temporarily without workAre not working but have looked for work in the past 4 weeks
5 Labor Force To be counted as unemployed: 1) A person must have work lined up for the futureOR2) Must be actively searching for a new job.Examples of people NOT part of the labor force are:full time students,stay at home parents, andretirees.
6 Labor ForceBureau of Labor Statistics (BLS) tracks developments in the job market information, wages, occupational outlook, summaries, incidence of injuries, etc. ***Includes how many people are in the labor force AND how many people are employed and unemployed.
8 Occupational Trends Late 1900s – 2000: Information Age Fewer goods, more servicesFactory and manufacturing jobs are being done outside of the US where labor costs are lower.Lower skilled workers are demanded lessSkilled workers are demanded more
9 Change in the Labor Force In the 1950’s you needed a high school diploma to secure a forty hour/week job. Most of the time you would stay there until retirement at 65 years old.Now you need a college degree and you will have 4 or 5 jobs before you retire.
10 Change in the Labor Force Learning Effect: The theory that education increases productivity and results in higher wages.A college graduate earns more than person with a high school diploma.A person with a professional degree (doctor, lawyer) will earn more than a person with a Bachelor’s degree.Screening Effect: A theory which suggests that the completion of a college degree indicates to an employer that a job applicant is intelligent and hard working.
11 Another Trend… Contingent Employment: Temporary or part time job. Five reasons companies rely more and more on temporary workers:Flexible work schedule (seasonal business)Firing temporary workers is easier than permanent employeesTemporary workers usually get paid lessSome workers actually prefer flexible schedulesFirms do not pay for benefits
12 Trends in Wages and Benefits Wages for college graduates have increased.Wages for non- college graduates have decreased.Many companies are doing away with paid health insurance due to the high costs.Companies might provide medical coverage but at a high cost to the employee.
14 Labor & Wages Productivity - the value of output Workers are paid according to the value of what they produce.Productivity - the value of outputWorkers are worth a portion of their productivity. This varies from business to business.
15 What determines our wages??? ANSWER: Supply and DemandWages are high for professions where supply is low and demand is high.Wages are low for low skilled jobs because the supply of unskilled workers is high and demand is low with cheaper labor overseas.
16 Labor & WagesSupply and demand graphs can be used to find the equilibrium wage.Equilibrium Wage: The wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market.
17 Wages & Skill LevelsWages vary according to workers’ skill level and education as well as according to supply and demand.
18 Wages & Skill LevelsJobs are often categorized into FOUR skill levels:1) Unskilled LaborNo specialized skills, education or trainingExamples: factory/farm workers2) Semi- skilled LaborMinimal specialized skills and educationHourly wagesExamples: lifeguard, word processors, short order cook
19 Wages & Skill Levels 3) Skilled Labor 4) Professional Labor Requires specialized abilities and trainingUsually hourly wagesExamples: mechanics, plumbers, bank tellers, chefs, firefighters, carpenters4) Professional LaborDemands advanced skills and educationUsually white collar workers who receive salariesExamples: managers, teachers, bankers, doctors, lawyers
20 Wages & Skill LevelsAnother factor which causes earnings to vary is differences in working conditions.These conditions affect the number of workers willing to do a certain job.Level of dangerPhysical/emotional stressLocationweather conditions
21 Wage DiscriminationWomen and minorities historically got paid less than white men for the same job.In the 1960’s Congress passed anti- discrimination laws that prevent companies from paying lower wages to employees based on gender or race.
22 Wage DiscriminationThe Equal Pay Act of 1963: Required male and female employees in the same workplace performing the same job to receive the same pay.Title VII of the Civil Rights Act of 1964: Prohibited job discrimination on the basis of race, sex, color, religion, or nationality. (religious institutions and small businesses are exempt from the law)The Civil Rights Act also created the Equal Employment Opportunity Commission (EEOC) to enforce the laws.
23 Wage DiscriminationThere is still a gap between men and women’s earnings although it is decreasing.WHY????Women are encouraged to do “women’s work”Teaching, nursingHuman capitalAlthough changing, women have had less advanced training and experience in certain high- paying jobs.Employers assume female employees are not interested in career advancements and will leave for child rearing.
24 Wage DiscriminationWomen often find it difficult to receive top level promotions.There is said to be a barrier called a glass ceiling.Glass ceiling: An unofficial, invisible barrier that prevents women and minorities from advancing in businesses dominated by white men.Minorities tend to earn lower wages than whites. This is true because historically whites have had access to more education and work experience.
25 Other Factors Affecting Wages 1938: Fair Labor Standards ActFirst law which created nationwide mandatory rules for laborSet minimum wageRequired employers to pay overtime for work beyond 40 hrs/wkSafety LawsIf work is safer, more workers are willing to take the job – decreasing payUnionsOrganization of workers that tries to improve working conditions, wages and benefits for its members.
27 Brief History of Unions Early to Mid 1800s: Industrial Revolution brought about the factory worker.12 – 16 hours/ day7 days a weekLow wagesPoor working conditionsChild labor
28 Brief History of Unions Worker discontent grew into organized protests.1886: Samuel Gompers founded the American Federation of Labor (AFL)Unions used strikes to try to get what they wanted.Strike: An organized work stoppage intended to force an employer to address union demands.
29 Brief History of Unions Unions grew in number and in membership.Membership peaked in the 1940’s at 35%.It started to decline, however, because of corruption and abuse of power.By 2009, 12.3% of the workforce was unionized.
30 2009 StatisticsMore public workers than private workers even though there are less public jobs38.1% were teachers/librariansMore African Americans than any other raceNY had the highest rate 25%California the least 3.1%
31 Reasons for the Decline Taft- Harley Act (1947)Right to Work Laws: banned mandatory union membershipLess blue collar workers: someone who works in an industrial job and receives wagesMore white collar workers: someone in a professional or clerical job usually earning a salary.Foreign competitionCompanies moving overseasMore women in the workforceWomen are less likely to join a union
32 Labor & ManagementA union gains the right to represent workers at a company when a majority of workers vote to accept the union. After that, the company is required by law to bargain with the union.
33 Labor & ManagementCollective Bargaining: The process in which the union and the company representatives meet to negotiate a new labor contract.Main Goals of the Union:Better wages and benefitsBetter working conditionsJob securityIf a member is discharged for reasons the union feels violates the contract, the union will fight for the worker.
34 Labor & ManagementWhen a contract is about to expire the company and union bargain.If no agreement can be reached, a mediator is brought in.Mediation: A settlement technique in which a neutral third party (mediator) meets with each side to try to find a solution that both sides will accept.Not legally binding
35 Labor & ManagementIf mediation does not work, talks will go into ARBITRATION.Arbitration is a settlement technique in which a third party (arbitrator ) reviews the case and imposes a decision that is legally binding on both sides.