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Chapter Menu
Chapter Introduction
Section 1: The Labor Movement
Section 2: Wages and Labor Disputes
Section 3: Employment Trends and Issues
Visual Summary
Chapter Intro 1
Yesterday you found out that your first college choice has accepted you and offered you a scholarship to cover your tuition and books. You will still have to pay for your room and board. Today, your best friend announced that she has received a “full ride” basketball scholarship to the same college—all her expenses will be covered. Why do you think she received a larger scholarship even though your grades are much better than hers? Read Chapter 8 to find out more about labor and wages.
Chapter Intro 2
The labor market, like other markets, is determined by supply and demand.
Section 1-Preview
Section Preview
In this section, you will find out that labor unions are organizations that attempt to improve the working conditions of their members.
Section 1-Key Terms
Content Vocabulary
• craft union
• trade union
• industrial union
• strike
• picket
• boycott
• lockout
• company union
• Great Depression
• right-to-work law
• independent union
• closed shop
• union shop
• modified union shop
• agency shop
• civilian labor force
A. A
B. B
C. C
Section 1
Are you familiar with the many historic struggles between workers and employers in the United States?
A. Yes, many of them
B. No, none of them
C. Maybe a few of them
A B C
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Section 1
Colonial Times to the 1930s
Early unions formed to negotiate terms for their members, but employers and courts opposed them.
Section 1
Colonial Times to the 1930s (cont.)
• Unions played a major role in creating legislation that affects our pay and working conditions today.
• The first attempt to organize labor was in 1778 with the printers in New York City.
• Most unions up until 1820 were made up of skilled workers who possessed strong bargaining power.
Section 1
• After 1820, immigrants began to arrive in great numbers and posed a threat to the unions, as did public opinion.
• From the Civil War to the 1930s manufacturing expanded and farming declined.
Colonial Times to the 1930s (cont.)
Section 1
• Working conditions were difficult in some industries—hostile feelings about unions declined.
Colonial Times to the 1930s (cont.)
Section 1
• Types of unions in industrial post-Civil War period
– Craft union or trade union
– Industrial union
Colonial Times to the 1930s (cont.)
Trade (Craft) and Industrial Unions
Section 1
• Unions helped workers by
– Negotiating higher pay
– Helping job security
– Achieving better hours and working conditions
Colonial Times to the 1930s (cont.)
Trade (Craft) and Industrial Unions
Section 1
• Workers would strike, picket, and even boycott if employers did not meet agreements.
• Employers fought back with a lockout or even a company union.
Colonial Times to the 1930s (cont.)
Trade (Craft) and Industrial Unions
– Deadliest in history was the Ludlow massacre of 1914.
Section 1
• Courts during this period held an unfavorable attitude toward unions.
Colonial Times to the 1930s (cont.)
Trade (Craft) and Industrial Unions
A. A
B. B
C. C
D. D
Section 1
A B C D
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Which industry giant did the Ludlow massacre involve?
A. Andrew Carnegie and the mining industry
B. Andrew Carnegie and the railroad industry
C. John Rockefeller and the mining industry
D. John Rockefeller and the oil industry
Section 1
Labor Since the 1930s
Most of the significant labor laws in effect today were passed in the 1930s, 1940s, and 1950s.
Section 1
• Common problems from the Great Depression united factory workers and renewed union efforts.
Labor Since the 1930s (cont.)
Section 1
• Congress passed a series of labor protection laws that supported organized labor during the 1930s, with many still in effect today.
– Norris-LaGuardia Act of 1932
– The National Labor Relations Act, or Wagner Act
– The Fair Labor Standards Act
Labor Since the 1930s (cont.)
Section 1
• Union movement grew strong by the end of World War II.
• Public opinion of unions began to shift again.
Labor Since the 1930s (cont.)
– Taft-Hartley Act of 1947 allowed individual states to pass a right-to-work law.
Right-to-Work, State by State
Section 1
• The American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO) merged in 1955 to form the AFL-CIO.
– In 2005 many of the trade and service unions making up the AFL-CIO left and formed the Change to Win Coalition.
Labor Since the 1930s (cont.)
Section 1
• Unions unrelated to the AFL-CIO and Change to Win Coalition are called independent unions.
Labor Since the 1930s (cont.)
A. A
B. B
C. C
Section 1
What was the average hourly wage in 1932?
A. 55 cents
B. 25 cents
C. 5 cents
A B C
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Section 1
Organized Labor Today
Unionized workers can participate in several types of union arrangements.
Section 1
• Union arrangements
– Closed shop
– Union shop
– Modified union shop
– Agency shop
Organized Labor Today (cont.)
The Global Economy & YOUEU’s Four Largest Countries—
Percentage of Union Workers
Section 1
• About 150 million people in the United States make up the civilian labor force.
Organized Labor Today (cont.)
Profiles in Economics:César Chávez
Section 1
• Approximately 13.7 million workers are union members or represented by unions.
– Union membership is uneven among the different demographic groups.
– Union membership differs considerably by state.
Organized Labor Today (cont.)
Union Membership and Representation by Industry
Section 1
– Local, state, and federal governments have the highest rate of unionization.
Organized Labor Today (cont.)
Union Membership and Representation by Industry
A. A
B. B
C. C
D. D
Section 1
A B C D
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Which is not a factor contributing to the decline of unions?
A. Rise in the number of working women
B. Increase in part time workers
C. Growth of large companies
D. Expansion of the service industry
Section 2-Preview
Section Preview
In this section, you will learn that unions and management negotiate contracts through a process known as collective bargaining.
Section 2-Key Terms
Content Vocabulary
• wage rate
• unskilled labor
• semiskilled labor
• skilled labor
• professional labor
• market theory of wage determination
• equilibrium wage rate
• theory of negotiated wages
• seniority
• signaling theory
• collective bargaining
• grievance procedure
• mediation
• arbitration
• binding arbitration
• fact-finding
• injunction
• seizure
A. A
B. B
C. C
Section 2
Do you favor or disfavor professional sports teams striking?
A. Favor
B. Disfavor
C. Doesn’t matter
A B C
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Section 2
Wage Determination
Different occupations and levels of training are rewarded with different wages.
Section 2
Wage Determination (cont.)
• A wage rate can differ amongst and sometimes within the same occupations.
Median Weekly Earnings by Occupation and Union Affiliation
Section 2
• Reasons for these differences
– Categories of labor
Wage Determination (cont.)
• Unskilled labor
• Semiskilled labor
• Skilled labor
• Professional labor
Median Weekly Earnings by Occupation and Union Affiliation
Section 2
– The market theory of wage determination
• The intersection of supply and demand determines the equilibrium wage rate.
Wage Determination (cont.)
Market Theory of Wage Determination
Section 2
– The theory of negotiated wages
• Seniority is an important factor to unions.
Wage Determination (cont.)
– Signaling theory
A. A
B. B
C. C
D. D
Section 2
A B C D
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What might be an exception to the market theory of wage determination?
A. Political influence
B. Family ties
C. Discrimination based on race or gender
D. All of the above
Section 2
Resolving Labor Disputes
There are a number of different ways to resolve a labor dispute if collective bargaining fails.
Section 2
• Methods used to resolve labor disputes
– Collective bargaining
Resolving Labor Disputes (cont.)
• Grievance procedure—included in final contract for future concerns
– Mediation
– Arbitration or binding arbitration
– Fact-finding
Section 2
– Injunction
• Seizure in extreme cases
Resolving Labor Disputes (cont.)
– Presidential intervention
A. A
B. B
C. C
D. D
Section 2
A B C D
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With what group has the President of the United States intervened in a strike?
A. National Hockey League
B. Professional baseball
C. Air traffic controllers
D. Luggage and baggage handlers at airports
Section 3-Preview
Section Preview
In this section, you will learn that important employment issues include union decline, unequal pay, and the minimum wage.
Section 3-Key Terms
Content Vocabulary
• giveback
• two-tier wage system
• glass ceiling
• set-aside contract
• minimum wage
• current dollars
Academic Vocabulary
• trend • equivalent
• constant dollars
• real dollars
• base year
A. A
B. B
Section 3
Which is the better relationship for all involved in working?
A. Us against them attitude
B. Workers input throughout process for a sense of ownership
A B
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Section 3
Decline of Union Influence
Labor unions have been losing their influence and power ever since the 1940s.
Section 3
Decline of Union Influence (cont.)
• Reasons for today’s declining trend in union membership
– Employers make efforts to keep unions out of their business.
– Additions to labor force have little loyalty to organized labor.
– Unions’ higher wages make their products more expensive.
Union Membership
Section 3
• Employers’ attempts to lower their union wages
– Requesting a giveback
– Filing bankruptcy
– Two-tier wage system
Decline of Union Influence (cont.)
A. A
B. B
C. C
Section 3
Do you think the two-tier system is fair and equitable to the employees?
A. Yes, completely
B. No, not at all
C. Fair to some, not to others
A B C
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Section 3
Lower Pay for Women
Men are generally paid more than women because of differences in skills, the types of jobs they choose, and discrimination.
Section 3
• Income earned by women is generally less than the income earned by men.
Lower Pay for Women (cont.)
Gender and Income
Section 3
• Reasons for this difference in pay
– Differences in skills and experience brought to the labor market.
– Women generally have lower levels of education.
Lower Pay for Women (cont.)
Gender and Income
Section 3
– Uneven distribution of men and women among various occupations
– Discrimination in the labor market—glass ceiling
Lower Pay for Women (cont.)
Gender and Occupation
Section 3
• Two federal laws designed to fight wage and salary discrimination
– Equal Pay Act of 1963
– Civil Rights Act of 1964
Lower Pay for Women (cont.)
A. A
B. B
C. C
D. D
Section 3
A B C D
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In which occupations do women make up less than 20% of the workforce?
A. Architectural and engineering
B. Protective services
C. Sales and related
D. Transportation and material moving
Section 3
The Minimum Wage
The minimum wage has lost purchasing power over time because it was fixed at $5.15 while prices were rising.
Section 3
• The minimum wage has always been controversial.
• Supporters argue
The Minimum Wage (cont.)
The Minimum Wage
– Objectives, equity, and security are consistent with economic goals.
– Wage isn’t high to begin with.
Section 3
• Opponents argue
– Wage discriminates; young people can’t find jobs.
– Economic freedom is not promoted.
The Minimum Wage (cont.)
The Minimum Wage
Section 3
• Minimum wage is shown in current dollars and in real or constant dollars.
– Constant dollars involve the use of a base year.
– Inflation erodes the purchasing power of the minimum wage.
The Minimum Wage (cont.)
Section 3
• Some people want to link minimum wage to inflation—wage automatically rises when prices rise.
The Minimum Wage (cont.)
A. A
B. B
C. C
Section 3
Some people want to link the minimum wage to inflation, so the wage automatically rises when prices rise. What do you think?
A. Agree
B. Disagree
C. Not sure
A B C
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Wage Determination Wage rates can be explained in three ways. The market theory of wage determination relies on the tools of supply and demand. The theory of negotiated wages recognizes the influence of unions in bargaining for higher wages. The signaling theory states that employers are willing to pay higher wages to people with diplomas and other signals of ability.
VS 1
VS 2
Labor Dispute Resolution Union and management representatives can use several strategies to resolve deadlocks when collective bargaining fails.
VS 3
Employment Issues Current labor issues include the loss of influence and power since the 1940s, the wage gap between women and men, and the minimum wage and its purchasing power.
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Figure 7
Figure 8
Figure 9
Figure 10
Profile
César Chávez (1927–1993)
• led the only successful union to organize farmworkers
• posthumously awarded the Presidential Medal of Freedom in 1994, the highest honor given to civilians
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Vocab1
craft union
labor union whose members perform the same kind of work
Vocab2
trade union
labor union whose members perform the same kind of work
Vocab3
industrial union
labor union whose members perform different kinds of work in the same industry
Vocab4
strike
union organized work stoppage designed to make an employer meet union demands
Vocab5
picket
demonstrate or march before a place of business to protest a company’s actions
Vocab6
boycott
refusal to buy products from an employer or company
Vocab7
lockout
management refusal to let employees work until demands are met
Vocab8
company union
union organized, supported, or run by an employer
Vocab9
Great Depression
worst period of economic decline in U.S. history, lasting from 1929 to approximately 1939
Vocab10
right-to-work law
state law making it illegal to require a worker to join a union
Vocab11
independent union
labor union not affiliated with the AFL-CIO or the Change to Win Coalition
Vocab12
closed shop
arrangement under which workers must join a union before they are hired
Vocab13
union shop
arrangement under which workers must join a union after being hired
Vocab14
modified union shop
arrangement under which workers have the option to join a union after being hired
Vocab15
agency shop
arrangement under which nonunion workers must pay union dues
Vocab16
civilian labor force
noninstitutionalized part of the population, aged 16 and over, either working or looking for a job
Vocab17
legislation
enactment of a law
Vocab18
prohibited
prevented or forbade
Vocab19
wage rate
prevailing pay scale for work performed in an occupation
Vocab20
unskilled labor
workers not trained to operate specialized machines and equipment
Vocab21
semiskilled labor
workers who operate machines that require a minimum amount of training
Vocab22
skilled labor
workers who are trained to operate complex equipment and require little supervision
Vocab23
professional labor
workers with a high level of training, education, and managerial skills
Vocab24
market theory of wage determination
explanation of wage rates relying on theory of supply and demand
Vocab25
equilibrium wage rate
wage rate leaving neither a surplus nor a shortage in the market
Vocab26
theory of negotiated wages
explanation of wage rates based on the bargaining strength of organized labor
Vocab27
seniority
length of time a person has been on a job
Vocab28
signaling theory
theory that employers are willing to pay more for people with certificates, diplomas, and other indicators of superior ability
Vocab29
collective bargaining
process of negotiation between union and management representatives over pay, benefits, and job-related matters
Vocab30
grievance procedure
provision in a labor contract that outlines how future disputes and disagreements will be resolved
Vocab31
mediation
process of resolving a dispute by bringing in a neutral third party
Vocab32
arbitration
agreement by two parties to place a dispute before a third party for a binding settlement
Vocab33
binding arbitration
agreement by two parties to place a dispute before a third party for a binding settlement
Vocab34
fact-finding
agreement between union and management to have a neutral third party collect facts about a dispute and present nonbinding recommendations
Vocab35
injunction
court order issued to prevent a company or union from taking action during a labor dispute
Vocab36
seizure
temporary government takeover of a company to keep running during a labor-management dispute
Vocab37
anticipate
to expect or be sure of in advance
Vocab38
distorted
not truthfully represented
Vocab39
giveback
wage, fringe benefit, or work rule given up when renegotiating a contract
Vocab40
two-tier wage system
wage scale paying newer workers a lower wage than others already on the job
Vocab41
glass ceiling
seemingly invisible barrier hindering advancement of women and minorities in a male-dominated organization
Vocab42
set-aside contract
guaranteed contract or portion of a contract reserved for a targeted group, usually a minority
Vocab43
minimum wage
lowest legal wage that can be paid to most workers
Vocab44
current dollars
dollar amounts or prices that are not adjusted for inflation
Vocab45
constant dollars
dollar amounts or prices that have been adjusted for inflation
Vocab46
real dollars
dollar amounts or prices that have been adjusted for inflation
Vocab47
base year
year serving as point of comparison for other years in a price index or other statistical measure
Vocab48
trend
a pattern or general tendency
Vocab49
equivalent
equal in value
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