Economics 4-22 to 4-26

Agenda 4/23

BW- Final Word

Wall Terms

Discuss Chapter

9

Exit ticket

30 Days on

Minimum Wage

Final Word Wall Terms

1. innovate—to do something in a new or unique way

2.Copious-- plentiful in number

3.corporation- a legal entity, owned by individual stockholders

4.depression—a long and severe repression in the economy

5.deregulation-a removal of government control over the economy

6.diversification-strategy of spreading out investments to reduce risk

7.Industrialization-- the development of industries in a country or

region on a wide scale.

8. Inflation—a general increase in prices across an economy

9.Interdependence—the shared need of countries for resources,

goods, services, labor and knowledge provided by another country

10.Investment—redirecting resources from being used today so they

can be used in the future

Chapter 9 questions—Answer as we go over notes

Section 1

Who is considered part of the labor force?

Would a person in the hospital for more than a month be considered employed or unemployed?

What is the learning effect? How are education and income connected?

What is the difference between outsourcing and off shoring? Why do companies use offshoring?

Section 2

5. Describe and give 1 example for the 4 wage and skill levels.

6. What 2 laws did the Federal Government pass to try to stop wage discrimination

7. What groups have been hurt by wage discrimination? How?

8. What are 2 (3) actions can employers take to reduce the cost of wages?

Section 3

9. What is a labor union?

10.Why do workers join unions?

11.Why did union membership rise in the 1930’s?

12.What are 3 reasons for the decline of union membership today?

13.What are 3 issues usually addressed with collective bargaining? What can workers do if the demands

are not addressed? What are 2 options if that does not work?

Chapter 9: Labor

Section 1

Introduction How do economic trends affect workers?

Economic trends affect

Employment rates

Outsourcing and offshoring

The demographics of the work force

The level of education of the work

force

Wages and benefits

Economics define the labor force as all nonmilitary

people who are employed or unemployed.

Employment

• People are considered employed if

they are 16 years or older and meet at

least one of the following

requirements:

• They worked a least one hour for pay

within the last week; or

• They worked 15 or more hours without

pay in a family business; or

• The held jobs but did not work due to

illness, vacations, labor disputes, or

bad weather.

Unemployment

• People are considered unemployed if

they are 16 years or older and meet the

following criteria:

• They do not have a job; and

• They have actively looked for work in

the prior 4 weeks; and

• They are currently available for work.

Composition of the U.S. Labor Force

Understanding Checkpoint

What are the parts that

form the total U.S.

population?

How does being

unemployed differ

from not being a

part of the labor

force?

Education Pays

Education and Income—Learning effect

Potential earnings increase with increased

educational attainment.

The Changing Labor Force

Many people in today’s workforce seek better employment

opportunities by getting a college degree.

People with advanced degrees can make more money than those

with lesser degrees and they are viewed by employers as hard-

workers.

Wages

Economists also study trends in benefits and wages.

Americans earn higher wages than people in many other countries but in recent years the trend has been toward slow growth in earnings, as a result of outsourcing and deregulation.

What is the average salary of a worker who is employed in a retail trade or services job?

Trends in Wages and Benefits

Earnings Up for Some, Down for Others

Earnings for college graduates have increased, while earnings for

workers without college degrees have decreased.

Average weekly earnings in the United States decreased from $275 in

1980 to $271 in 1999, as measured in inflation-adjusted dollars.

Cost of Benefits Rises

Benefits now make up about 28 percent of total compensation in the

economy.

For employers, rising benefits costs raise the cost of doing business

and decrease profits. Many firms are turning to contingent

employment to curb benefits costs.

Benefits

For many workers, benefits like pensions and health insurance are a significant share of total compensation.

This share rose fairly steadily during the 1900s and early 2000s.

Employers are finding that these rising benefits costs increase the cost of doing business and thus cut into their profits.

If such costs continue to rise, companies may have to find ways to cut benefits, which may prove unpopular with workers.

Contingent employment is temporary or

part-time employment.

Temporary Employment

Temporary employees offer firms some of the following benefits:

1. Flexible work arrangements.

2. Easy discharge due to the lack of severance pay for temporary workers.

3. Temporary workers are often paid less and receive fewer benefits than their full-time counterparts.

4. Some employees prefer temporary arrangements.

Off shoring and Outsourcing

offshoring:

the movement of

some of a company’s

operations to another

country

outsourcing

outsourcing:

the practice of

contracting with

another company to

do a specific job that

would otherwise be

done by a company’s

own workers

Chapter 9: Labor

Section 2

Introduction

Why do some people earn more than

others?

What people earn for what they do

is largely a matter of how many

people are willing and able to do

the job and how much that job is in

demand.

Like other goods, labor is a good

that is bought and sold.

Labor Demand

The demand for labor comes from private firms

and government agencies that hire workers to

produce goods and services.

Demand for labor is called derived demand

because it is set by the demand for another

good or service.

In a competitive labor market, workers are

usually paid according to the value of what

they produce.

Effects of Wage Increases

A new restaurant opens in town,

offering higher wages for cooks.

Other restaurants must raise wages for

cooks in order to compete for scarce

labor.

Restaurants increase the price of meals to

cover their increased labor costs.

When the price of meals increases,

consumer demand decreases.

As business decreases, restaurants’

demand for cooks decreases.

Supply and Demand in the Labor MarketLabor Demand

The higher the wage rate,

the smaller the quantity of

labor demanded by firms

and government.

Labor Supply

As wages increase, the

quantity of labor supplied

also increases.

Equilibrium Wage

The wage rate that

produces neither an excess

supply of workers nor an

excess demand for workers

in the labor market is called

the equilibrium wage.

Wages and Skill LevelsWages vary according to workers’ skill levels and

education. Jobs are often categorized into the

following four groups:

Unskilled Labor

Unskilled labor requires no

specialized skills, education,

or training. Examples:

waiters, messengers, janitors

Semi-Skilled Labor

Semi-skilled labor requires

minimal specialized skills

and education. Example:

fork-lift operator

Skilled Labor

Skilled labor requires

specialized skills and

training. Examples: auto

mechanics, plumbers

Professional Labor

Professional labor demands

advanced skills and

education. Examples:

lawyers, doctors, teachers

Wage and Skill Levels, cont.

Labor supply and demand can create a

significant difference in pay scales for workers

with various skills.

Doctors, for example, who have extensive

training and experience enjoy a high demand

for their services relative to the supply and,

therefore, earn higher wages.

High levels of danger or physical or emotional

stress can affect the equilibrium wage for a

particular job as well.

Education Pays

Coal Mine Worker SalaryA Coal Mine Worker earns an average wage of $23.04 per hour.

Wage Discrimination

Some people are paid less not because of their skill level but because of the social group they belong to. This practice is known as wage discrimination.

Women and minority groups have both suffered wage discrimination.

Congress has passed several anti-discrimination laws to prevent wage discrimination including:

Equal Pay Act of 1963

Civil Rights Act of 1964, which established the Equal Opportunity Commission (EEOC)

Wage DiscriminationLaws Against Wage Discrimination

The Equal Pay Act of 1963 declared that male and

female employees in the same workplace

performing the same job had to receive the same

pay.

Title VII of the Civil Rights Act of 1964 forbids job

discrimination on the basis of race, sex, color,

religion, or nationality. Civil Rights Act of 1964

established the Equal Opportunity Commission

(EEOC)

Pay Levels for Women

Despite these protections, American women today

earn about 75 percent of what men earn.

Pay Levels for Minorities

As the figure to the right shows, racial minorities

tend to earn lower pay than white men.

Pay Levels for Women

Despite protections, women still earn less than men as a result of

these factors—minority women are the most affected:

Women’s work

Historically women have been encouraged to seek careers in

teaching, nursing, and clerical work, which has led to a high

supply of workers.

Human capital

Overall, women are less educated than men, making them

ineligible for high-paying, male-dominated jobs.

Minimum wage: history

In 1914, Henry Ford announced his $5 a day

program for autoworkers at his factory (for an

8 hour day)

For many Ford workers, this policy more

than doubled their pay

Minimum wage: history

At the time, there were no minimum wage laws in

the U.S.

Ford wanted to reduce worker turnover since

training new workers was costly

Ford’s policy was also likely motivated by a desire

to discourage workers from organizing a union

Minimum wage: history

The Fair Labor Relations Act (the legislation

passed in 1938 as part of FDR’s New Deal)

guaranteed a minimum wage for the first time in

U.S. history.

It was intended to help full-time workers avoid

poverty and/or unfair treatment by employers.

Minimum wage: Today

States can set a minimum wage higher than the

wage set by the federal government, but not below

Federal Minimum wage = $7.25 an hour

Ohio Minimum wage = $8.15 an hour

Minimum Wage

Minimum vs living Wage

Living Wage Definition: A wage that is high

enough to maintain a normal standard of living

Chapter 9 section 1 and 2

questions

What is one action an employer can take to lower wage levels?

a. Hire workers with more experience.

b. Hire only union workers.

c. Replace some workers with machines.

d. Stop wage discrimination.

What is one action a worker can take to earn higher wages?

a. Get a job that pays the minimum wage.

b. Get more education.

c. Get a job that pays the

equilibrium wage.

d. Get a less dangerous job.

Introduction

How do labor unions support the interests of workers?

Labor unions support the interests of workers with respect to wages, benefits, and working conditions.

They provide workers with the power of collective bargaining.

Labor Unions

What can employees do who feel that they are

paid too little, work too many hours, or work in

unsafe conditions?

Many workers choose to join labor unions to

deal with such issues.

In the United States today, one out of every

eight workers belongs to a labor union.

In the past, though, unions had a stronger

influence on the nation’s economy.

The Labor Movement

Labor unions arose largely in response to changes in working conditions brought about by the Industrial Revolution in the early to mid-1800s.

Working conditions in factories were poor and very dangerous.

Skilled workers began to form unions to protect their interests but many were fired for joining.

In 1886, Samuel Gompers founded the American Federation of Labor (AFL), which ignited the U.S. labor movement.

The Labor Movement, cont.

Unions became the dominant force in

many industries, making money in

member dues and controlling the day-to-

day operations of many industries.

As they grew, some unions began to

abuse their power. As a result, companies

in need of improved efficiency in order to

stay competitive found unions to be an

obstacle.

The Movement Declines

: What are three explanations for the decline in union

membership?

In 1947, Congress passed right-to-work laws, banning

mandatory union membership.

Other reasons for decline include:

The decline of manufacturing in the United States, where

unions were the strongest

Rise of women in the workforce

Movement of industries to the South, which historically has

been less friendly to unions

Change in Union Membership

Collective BargainingThe union brings the following goals to the collective

bargaining table:

Wages and benefits

The union negotiates for wage rates, overtime rates, planned raises, and benefits.

Working conditions

Safety, comfort, worker responsibilities, and other workplace issues are written into the final contract.

Job security

The contract spells out the conditions under which a worker may be fired.

Labor Strikes and SettlementsStrikes

If no agreement is met between the union and the company, the

union may ask its members to vote on a strike. A strike is an

organized work stoppage intended to force an employer to

address union demands. Strikes can be harmful to both the union

and the firm.

Mediation

To avoid the economic losses of a strike, a third party is sometimes

called in to settle the dispute. Mediation is a settlement technique

in which a neutral mediator meets with each side to try and find an

acceptable solution that both sides will accept.

Arbitration

If mediation fails, talks may go into arbitration, a settlement

technique in which a third party reviews the case and imposes a

decision that is legally binding for both sides.

Agenda 4/26

30 Days on

Minimum wage

Argumentative

short answer—

Minimum wage

Minimum Wage Argumentative Short Answer

Proposition—The US Federal Minimum wage should be raised to $15.

Write 1-2 paragraphs in which you

argue Pro or con for the proposition

above. You must give valid evidence

to back up your claim. You also must

address some of the counterclaims

against your position

https://minimum-wage.procon.org/

https://www.thebalancecareers.com/

pros-and-cons-of-raising-the-minimum-

wage-2062521

https://vittana.org/18-should-

minimum-wage-be-raised-pros-and-

cons

If you use a source other than the ones

listed they must be properly cited.