Labor and Government Regulation

Warm Up: Quick Write1. Are labor unions overall good/bad?2. Is minimum wage worth keeping?

Labor Unions

• Objectives– Higher pay for workers– Improve working conditions– Increase demand for workers/decrease supply

The Demand for Union Labor

• If demand for a good goes down, so does demand for the labor that produces that good (visa versa)

Supply of Union Labor

• The lower the supply, the higher your wage• Some people criticize labor unions for

controlling supply of labor– Closed shops: only hire union members

• Taft-Hartley Act (1947)– Closed shops illegal– Gave states the right to pass right-to-work laws– Prohibit employers from establishing union

membership as a condition of employment

Right to Work Laws

• 22 states• Mostly south, mid-west• Not NY

Views on Unions

• Traditional view – obstacle to establishing reasonable work standards and thus make companies less competitive

• Newer view – valuable collective voice and as a result have a higher rate of productivity

Brief History of Unions

• Knights of Labor• American Federation of Labor• Sherman Anti-Trust Act• Norris-LaGuardia and Wagner Acts• The Congress of Industrial Organizations• Taft-Hartley Act• Landrum-Griffin Act

Government Regulation

• Governments regulate – Price ceilings/floors : min wage– Natural monopolies– Businesses: air quality– Labor markets: hiring practices, and safety

• Occupational Safety and Health Administration (OSHA)

• Consumer Product Safety Commission (CPSC)• Environmental Protection Agency (EPA)

Argument Against

• Regulation is too costly for taxpayers• Increases costs on businesses

Argument For

• Even though costs are high, benefits are higher• Highway fatalities would be 40% higher• Childproof lids resulted in 90% fewer deaths

caused by accidental swallowing of poison/pills• Restrictions on asbestos save between 630 and

2500 persons from dying of cancer each year