Just Think…Don’t Speak

• Why do you think our society pushes young people to work and get jobs as soon as possible?

• If you have a job right now, why did you get one in the first place?

• How much of your check is actually spent on YOU?

Macroeconomics

Topics In this Unit

• Jobs and Their Wages

• How the Government Makes Money

• What does the Government Spend Our Money On

What is Macroeconomics?

• The study of economics as a whole

• Deals with things like…• Employment• Gross Domestic Product• Inflation• Economic Growth• Population Income

Labor

• Most vital part of our Economic System

• Main aspect by how we are measured as people

• Means Personal Satisfaction– Status– Income

Civilian Labor Force

• Are you a part of this group?

Civilian Labor Force

• All members of the population ages 16 and up who are...– Employed– Unemployed but actively

seeking for a job

• And are not– In the military– In Prisons– In Mental Hospitals

Time For a Break

• How many hours do you think you would be able to work a day…max?

• You were accused of sexual harassment at work…what rights do you think you will have?

• What keeps your employer from firing you just because they think you’re ugly?

Labor Protection

• Why is it important?– Unfair Treatment– Unfair Hours– Unfair Firings– Unfair Wages– Unfair Hiring– Injuries

Labor Protection (cont.)

• Labor Unions– Unions help the workers by fighting for them with

their employer.• Higher Pay• Better Hours• Working Conditions• Job Security

– If the Union is not satisfied with the employer they do a couple of things to show their power

Labor Protection (cont.)

• Strike– Workers refusing to work

• Picket– Parade in front of

workplace with signs of protest

• Boycott– Mass refusal to buy

products for those companies

• Example: Grape Boycott of 1964

What about Employers?• Employers can also fight

against their employees• Lockout

– Refusal to let employees work until their demands were met

• Example: 1998-1999 NBA Season

– Scabs• Hiring brand new workers

while regulars were on strike

• Example: 1996 MLB Season

My Labor Union

Think Again1. What job/career can you see yourself

working in? 2. Which does it fall under?

• Unskilled• Semi-Skilled• Skilled• Professional

3. How long do you think you would be able to last at that job/career?

Categories of Labor

• 4 major categories of labor are based on the level knowledge and skill needed– Unskilled Labor– Semiskilled Labor– Skilled Labor– Professional Labor

Unskilled Labor• Those who mainly work

with their hands• Lack training and

specific skill• Examples

– Ditch Diggers– Fruit Pickers– Floor Mopper

• Have the least amount of training and education which makes them the lowest paid

Semiskilled Labor

• Enough ability to work machinery but requires a minimum about of training

• Examples– Electric Floor

Polisher– Dishwasher– Lawn Cutter

Skilled Labor• Jobs which require the

ability to operate more complex equipment and do not need a lot of supervision

• High levels of training and ability

• Examples– Carpenters– Typists– Computer Techs– Chefs– Computer Programmers

Professional Labor

• Highest level of education required as well as managerial skills

• Examples– Doctors– Scientists– Lawyers– Corporate Executives– Educators

Wages

• Wage rates differ from job to job and sometime within the same job

• Why are they different???– 3 Theories

• Traditional Theory• Negotiated Wages Theory• Signaling Theory

Traditional Theory

• “The supply and demand for a worker’s skills and services determine the wage or salary”

• If more people need you or your job you will get paid more and…

• If less people do the job that you do, you become more valuable and therefore may get paid more

Theory of Negotiated Wages

• “Organized labor’s bargaining strength is a factor that helps determines wages”

• Those jobs that are backed by a union or some sort of organized group will be able to fight or push for higher wages

• Also, those at the same job use seniority as a way of making more money

Signaling Theory• “Employers are willing to pay

more for people with certificates, diplomas, degrees, and other indicators or ‘signals’ of superior ability”

• Employers hire and pay more $ to an applicant with a college degree rather than someone who doesn’t

• Degree = SIGNAL – Says that person is intelligent and

qualified

Wage Differences• Workers in one part of the

country or state get paid more/less than someone in another part of that country or state

• Workers have the opportunity to leave their job and go to that higher paying area.

• Example– Teachers in Connecticut =

$57,760– Teachers in South Dakota=

$34,039

Taxes

FACT:

The U.S. Government collected about 3 trillion dollars in taxes for 2010

(That’s About 10,000 dollars per person!)

Economic Impact of Taxes

1. Taxes on businesses = Decreased sales2. Taxes encourage people to buy domestic

products not foreign products3. Also discourage people from working

harder or getting higher paying jobs because of the amount that will be taken away from them.

2 Principles of Taxation

• Benefit Principle– If you benefit from a government and their

services, you should pay them back through taxes

• Ability to Pay Principle– You should be taxed the amount you

realistically are able to pay– The more you make = The more they take

3 Types of Taxes

• Proportional Tax– The percentage of your income that is taken out by taxes is

the same despite how much you make. – (Ex: 10% to taxes for $10k and 10% to taxes for $100k)

• Progressive Tax– The percentage of taxes taken goes up as your income goes

up – (Ex: 10% for $10k and 20% for $100k)

• Regressive Tax– The percentage taken goes down as your income goes

higher – (Ex: 30% for $10k and 10% for 100k)

2010 Tax Brackets

How does Uncle Sam Take $?• Payroll Withholding

System– Takes a percentage out

of your monthly paycheck

– Sent to IRS which collects taxes

– If one has overpaid in taxes due to deductions and such they receive a tax return

How does Uncle Sam Take $?

• FICA Tax– (Federal Insurance

Contributions Act)– Collected from

everybody– Pays for Social

Security and Medicare– Regressive tax after

about $80k

Breakdown of Federal Taxes

Breakdown of California Taxes

Government Spending

• Our Government is a Huge Business

• It spends more money per year than all other businesses combined

• It is a huge part of our economy because of how much its spends per year

• Total is about $4-5 Trillion

Graph Breakdown

How Much Again?• $586.1 billion (+7.0%) – Social Security• $548.8 billion (+9.0%) - Defense • $394.5 billion (+12.4%) - Medicare • $294.0 billion (+2.0%) - Unemployment and welfare • $276.4 billion (+2.9%) - Medicaid and other health related • $243.7 billion (+13.4%) - Interest on debt • $89.9 billion (+1.3%) - Education and training • $76.9 billion (+8.1%) - Transportation • $72.6 billion (+5.8%) - Veterans' benefits • $43.5 billion (+9.2%) - Administration of justice • $33.1 billion (+5.7%) - Natural resources and environment • $32.5 billion (+15.4%) - Foreign affairs • $27.0 billion (+3.7%) - Agriculture • $26.8 billion (+28.7%) - Community and regional development • $25.0 billion (+4.0%) - Science and technology • $23.5 billion (+0.8%) - Energy • $20.1 billion (+11.4%) - General government

California Budget 2008-2009

Spending

• Purchase of Goods & Services– Tanks, Planes, Ships, Space Shuttles– Office Buildings, Park Land, Capital Goods for

Schools and Laboratories– Military STUFF

• Transfer Payments– Social Security, Welfare, Unemployment, Disability– Goes to Individual People or Local Aid (highways,

schools)

Impact of Government Spending

• Allocation– When Mr. Obama spends money on stuff that can benefit

you and your situation rather than like Space Travel or New Weapons

• Redistribution– When the government puts money into needy family

programs or businesses that boost your income

• Competition– When government institutions (public colleges and hospitals)

compete and drive down prices of privately owned institutions