Dieter’s Electronics Collective Bargaining

Management• Save Money• Reduce some benefits to save costs• More Flexible work hours from employees

Workers• Wages• Benefits

– Medical– Sick leave– Vacation– Dental– Vision– Retirement

• Job Security • Work Hours

Current pay and Benefits• Lowest wages range from $12 per hour to $85,000 for

corporate level non management positions.• Currently a PPO medical plan is offered to all employees

– (PPO is one of the best plans offered alternative is HMO)• No vision• No dental• 2 Weeks Vacation• 1 Week worth of Sick leave• All employees must work one weekend day at store locations.• The lower wage workers have the least job security and there

is frequent turn over.

Macroeconomics Institutions

CH 8, 3 & 4

3

CH 8, Section 3:

• Unskilled labor• people who work primarily with their hands.• Lack training and skills required for other

tasks.– Diggers– Pickers– Cleaners

• Low-wage earners

4

Semi-skilled labor

• workers with enough mechanical or service abilities and skills to operate machines and handle basic operations

• Require a minimum amount of training– Floor polishers– Fast-food workers– Gardeners

• Pay is low, but better with skills achieved

5

Skilled labor• workers able to operate complex equipment or services.• High investment of training/education• Experienced

– Carpenters– Typists– Tool and die makers– Computer technicians– Computer programmers– Chefs

• Wages low or high depending on job market, complexity and responsibility.

6

Professional labor

• individuals with the highest level of knowledge-based education and managerial skills.– Doctors– Scientists– Lawyers– Corporate executives

• Normally earn highest incomes depending on size of business.

7

Non-competing labor grades

• labor categories that do not directly compete with one another.

8

Wage rate

• A standard amount of pay given for work performed

• Differ depending on nature of occupation– Skill/experience level– Often hourly

• Depends on supply and demand for job– Number of workers to job openings offered

• Based also on union contracts• Also based on “signaling theory”

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Traditional theory of wage determination

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

Equilibrium wage rateThe wage rate that leaves neither a surplus or

shortage in the labor market.

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Theory of negotiated wages

• organized labor’s bargaining strength is a factor in determining wages.– Union strength may demand a wage higher than

market equilibrium.• Seniority• The length of time a person has been on the

job– Senior workers receive higher wages• Also higher job security

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Signaling theory

• employers are willing to pay more for people with– Certificates– Diplomas– Degrees– Other indicators of experience and superior ability

• These documents awarded by education/training/government institutions “signal” a worker’s special abilities and superiority to workers who do not have the documents.

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Labor mobility 4/22

• the ability and willingness of workers to relocate in markets where wages are higher.

• Depends on….– Relatives– Cost of living– Convenience– location

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Section 4

• Giveback• something union members give up to the

company when their contract is renegotiated:• Wages• Fringe benefit• Work rule

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Two-tier wage system

• a hiring method that keeps high wages/salaries for current workers,

• But has lower wages/salaries for newer workers.

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Glass ceiling

• an “invisible” barrier that prevents the advancement of some workers up the corporate ladder.

• Discriminatory and illegal if it can be proven.– Minority groups– women

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Jon Stewart Equal Pay

• How much do women earn for every $1 earned by a man?

• According to the projections when will women receive equal pay to men?

• When was the first Equal Pay law passed and by which president?

• What did the Lilly Ledbetter act do?• What could be created before women receive

pay equality? (3)

Comparable worth

• the idea stating that people should receive equal pay for work that is different from, but just as demanding as, other types of work.

• Nurses = to road workers• Complicating factors include:• Hazards• Educational requirements• Degree of physical difficulty• May reduce gender discrimination, but is thought, by

some, to also be unfair…..

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Set-aside contract

• a guaranteed contract reserved for a targeted group.

• Government may require that a percentage of contracts go to – minority-owned businesses– Women

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Part-time workers

• those employees working less than 35 hours a week.

• One out of five jobs• Ratio is increasing as companies…..• Do not have to give benefits• Usually not unionized.

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Minimum wage

• the lowest wage can be legally paid to a worker

• 1939 = US, .25 cents/hour. • Federal Minimum wage – $7.25

• California Minimum wage– $9.00

• Seattle Minimum wage– $15.00

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Current dollars

• dollars that are not adjusted for inflation• 1937 $.10 current dollar was = to 8 2003

dollars.• Chart 8.10

22

Real or constant dollars

• Dollars that are adjusted in a way that removes the distortion of inflation.

• Uses a• Base year• a year that serves as a comparison for all

other years

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Assessments: Checking for Understanding

• 1 Explain why wage rates differ among regions.

• Wage rates differ among regions due to – lack of labor mobility– Cost of living– Attractiveness of location

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Assessment

• 3 List the four categories of labor.• Unskilled labor• Semiskilled labor• Skilled labor• Professional labor

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Assessment

• 4 Explain the importance of noncompeting labor grades.

• Individuals with different levels of – Experience– Training– Education

• Do not compete against one another for jobs.

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Assessment

• 5 Describe three different approaches to wage determination.

• Traditional Theory of Wages• Theory of Negotiated Wages• Signaling Theory

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Assessments: Checking for Understanding

• 1 Write a definition of comparable worth in your own words.

• people should receive equal pay for work that is different from, but just as demanding as, other types of work.

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Assessment

• 3 List three reasons for the decline of unions.• Many employers kept unions out• Additions to labor force have little loyalty to

organized labor• Unions are victims own success

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Assessment

• 4 Describe three reasons for the income gap between men and women.

• Women tend to fill lower-paying positions• Discrimination prevents them from getting

promotions• Career interruptions for child-bearing affect

women’s seniority

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Assessment

• 5 Describe the current trends in part-time employment.

• It has been growing due to increasing hours in retail and the need to fill extra positions during peak periods.

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Assessment

• 6 Explain why it is necessary to consider inflation when examining the minimum wage.

• As prices tend to increase over time, purchasing power of fixed minimum wage decreases.

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Image, p. 206

• Questions• 1 How do the expenditures in the United States

compare with those in France?• the United States spends about 5% less than France.• 2 • No, clearly many nations in the sample are below

20%• Yes, on the average, the sample runs close to 20%

(average considering 6.3 billion (not shown) vs 700 million people)

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Image, p. 207

• How does this theory differ from the theory of negotiated wages?

• Traditional theory of wage determination:• Theory of negotiated wages

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Image, p. 208• What can you infer about the theory of negotiated

was from the figure?• That unionization does help determine wages and

can help make wages higher.• +is there a downside to this?• Junior workers do not get raises– May be laid off so company can save money

• New workers may not be hired.– May get hired but on different contract terms than older

workers• Usually with less benefits

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Image, p. 212

• How would you describe the trend of union membership during the 1980s and 1990s?

• Steadily decreasing: • also steadily decreasing

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Image, p. 213

• When did median female income first reach 70 percent of male median income?

• The late 1980s or 1990

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Image, p. 214• In what occupations do women make up between

60-80 percent of the workforce?• Sales• Retail and personal services• Teachers, except college and university• Health service workers• Private household service workers• Secretaries• Stenographers • typists

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Image, p. 217

• Because prices increased during that period the purchasing power of the minimum wage declined.

• + in what two years was the minimum wage, as a percent of the average manufacturing wage, the highest?

• 1950, 1968• Approximately what was the minimum wage

adjusted for inflation in those years? • 1950: About $4.95 (2003)• 1968: About $2.60 (2003)

39

Quick Write

• What are some of the negative and positive effects of seniority in the workplace?