Labor

The Labor MarketLabor Force – all nonmilitary people who are employed or unemployed

Employed1. Worked at least 1 hour for pay in the past week2. Worked 15 or more hours without pay in a family business, such as a farm or family – owned store 3. Held jobs but didn’t work due to illnesses vacations, labor disputes, or bad weather

Unemployed4. Temporarily without work5. Not working but have looked for jobs within the last 4 weeks6. They must have work lined up for the future or7. Must be actively looking for a new job

Discouraged Workers• People who once sought work but have given up looking• Not counted in the employment statistics• Full time students, stay at home parents, retirees are in this group

Trends

What effects the job market?• Changes in the economy• Changes from a manufacturing to a service

economy• Competition from foreign countries– Outsourcing– Offshoring

How the Workforce has Changed

Workers are becoming college educated• Learning effect• Screening effect

Women are in the workforce more and more

Part-time workers are replacing more and more fulltime workers (contingent employment)

• Sometimes they are a part of a temp agency• In skilled contingent jobs, the worker is usually well paid.

Reasons for increased use of Temporary Employment

1. Flexible work arrangements2. Less pay and fewer benefits

1. As of 2012 – the Affordable Healthcare Act is responsible for changing the laws regarding employee benefits

1. In response many businesses have cut many of their full time employment to part – time employment.

3. Firing temporary workers is easier and less costly 4. Many workers prefer to be part – time due to the

flexibility

Foreign Labor

Many cases they become permanent residents.

The rest are called guest workers• Companies must prove that they cannot get a certain set of skills or

in some way meet the needs of their company from the native population in order to import the foreign labor.

The issue is argued as to those for and against itPro – that they do jobs that supposedly Americans won’t do or are

unwilling to doCon – holding down the wages of jobs• creating greater competition for jobs that native workers could get

Wages and Benefits

The real wage that Americans earn has fallen over the last thirty years.

Benefit costs have risen – health and pension benefits especially.

How Supply and Demand Effects Labor

Labor comes from when companies and the government compete to hire people of a certain skill set.

The demand for labor is called derived demand

Productivity of labor is the quantity of output produced by a unit of labor.• As productivity of the worker rises along with demand for his/her services,

his/her wage will increase as well. (the reverse is also true)

Supply of labor comes from people who are willing to do work for a certain wage

Equilibrium Wage occurs when the supply of workers and the demand for workers stop rising and falling. (the wage is the dot where they meet on the graph)

Wages vs. Skills

Wages are determined by a few things1. The supply of labor2. The skill required of the available labor3. The education level of the available labor.

Wage Discrimination

Occurs when workers do the same job, the same work but are paid differently due to outside influences such as prejudice based on sex, race, or age.

For women it has been based in the past on the idea of “women’s work”, lack of human capital and that women are more interested in having a family rather than a career

Some minorities were historically discriminated against due to color, and lack of training.

Rise and Fall of UnionsStarted in the 1800s to combat very low wages, unsafe working conditions, and very long

hours.• Chief tool was to strike

AFL started in 1886 by Samuel Gompers

By the 1930s allowing unions to form,

Unions began featherbedding as well as other abuses of power. • Some were rumored to be linked to organized crime

The Taft – Hartley Act of 1947 allowed states to create “Right to Work” laws that banned mandatory union membership.

• Allowed the South to remain the largest section of “Right to Work” states in the country• Many of the “Rustbelt” states are starting to change to Right to Work states.

– Wisconsin was first, followed by Michigan, and Indiana with other states starting to follow.

Other Influences on WageMinimum Wage Laws • Fair Labor Standards Act

Safety Laws • Workers are usually willing to work at a job for a lower, but safer job.

Employers using the cheapest means to do the job• Ex. Firing workers and replacing them with robots or offshoring to find a

cheaper labor pool.

Unions – when workers negotiate a contract as a group. • It has been argued that they depress the wages of nonunion workers in similar

jobs.• Some unions still practice featherbedding

Reasons for the shrinkage of Unions

1. Right to work states2. More white-collar jobs instead of blue-collar

jobs where unions were strongest3. Reduction of jobs that were traditionally

union jobs1. Ex. Automobile, steel, and coal

4. Women are less likely to join unions5. Lack of need for the union

How it worksFirst the majority of the workers at a business have to vote to accept the union.

Afterwards, if accepted, the union and the business must negotiate a contract through collective bargaining

The contract spells out all of the rights and responsibilities of the contract to both sides.

Things covered are • Wages and Benefits• Working Conditions• Job security• Time limit on the contract

When the contract runs out and no new contract can be negotiated. Workers may strike.• Must be voted on by the membership

Some firms are crippled while others have managers and “scabs” or strikebreakers to do the jobs that the union usually does.

Both sides suffer and usually the one that can hold out the longest is the one that wins.

Should both sides not reach an agreement, they can agree to mediation by a third party.

• They are neutral and usually aide both sides to see the other’s point of view.

• It is non binding

Finally there is the possibility of Arbitration – which is a neutral third party listens to both sides and comes up with a solution that is binding by law.