1. The Role of Labor Chapter 9 Sections 1 & 2

2. The Role of Labor Labor, the human effort that produce goods and services, is subject to the same forces of demand and supply that govern the rest of the economy. The value for labor depends on the value of job

3. How Are Wages Determined? Labor: Demand and Supply Price of land, labor, capital, entrepreneurship are production costs Price of labor is wages-payment workers receive for their work Wages are governed by supply and demand ◦Equilibrium wage-number of workers needed equals number available.

4. Labor: Demand and Suppy Demand For Labor Wages reflect productivity’ Producer’s demand for labor is derived demand-demand based on its contribution to the final product Supply of Labor More workers willing to work at higher wages ◦Supply curve of labor is upward sloping Equilibrium Wage Wages gravitate toward equilibrium ◦Price at which there neither surplus or shortage

5. Why Do Wage Rates Differ? Wage rates- rates of pay for specific jobs Rates determined by supply and demand Supply and demand influenced by four factors: ◦Human capital-knowledge and skills that enable workers to be productive ◦Working Conditions ◦Discrimination in Workplace ◦Government Actions

6. Why Do Wage Rates Differ? Factors Factor 1:Human Capital ◦Unskilled: house cleaning, sanitation ◦Semiskilled: construction or clerical ◦Skilled: Plumbers, Electricians ◦Professional: Doctor, Attorney ◦Skilled Worker: high demand and productivity, low supply high wages Factor 2 ◦High wages paid for dangerous or unpleasant jobs ◦Advantages may make up for low wages Factor 3:Discrimination ◦Wage discrimination based on race, ethnicity, gender, or other factors ◦Glass-Ceiling – unseen barriers preventing skilled workers from advancing Factor 4: Govt Actions ◦Minimum Wage-lowest legally allowed wage for one hour of work

7. Trend’s in Today’s Labor Market A Changing Labor Force ◦1950’s workers planned to work for the sme company most of their life ◦Today few workers stay with the same company ◦Civilian Labor Force- is people 16 or older who are employed or looking for work ◦Since 1950’s, many women have entered the workforce ◦Workforce is better educated

8. Changing Occupations Occupations grouped into three economic sectors ◦primary: Jobs related directly to natural resources ◦Secondary: jobs producing goods or processing raw material ◦Tertiary: service-industry jobs Ten fasted-growing occupations are service related, most medical

9. Globalization and Jobs Outsourcing-contracting with outside company for goods and services Insourcing- foreign companies establishes operations in the U.S. Both practices tied to trends toward service, technology-related jobs

10. Changes in the Way People Work Telecommuting- working away from the office, using technology Contingent employment- temporary or part- time work Independent contractors-sells services to businesses on contract basis Working at the office from home ◦Less stress, flexible hours ◦Larger labor pool, more productive ◦Less pollution ◦Interferes with social life