Chapter 8Employment, Labor and Wages

The Labor Movement

The study of labor is part of macroeconomics or the branch of economics that deals with the economy as a whole Employment Gross domestic product Inflation Economic growth The distribution of income

The Labor Movement

Civilian labor force-men and women 16 and older who are either working or actively looking for a job 140 million Americans belong Excludes those in armed forces, prison

or other institutions

Early Union Development The development of unions started

in the colonial period Peaked in the 1930’s

What do labor unions do?

Unions

Craft or trade union-association of skilled workers who perform the same kind of work

Industrial union-association of all workers in the same industry, regardless of the job each worker performs

Strike, picket or boycott

The Great Depression

Collapse of the stock market in October 1929

1 in 4 workers were jobless 1929 average manufacturing

wage=$0.55/hour 1933 average manufacturing

wage=$0.05/hour

Antiunion Legislation

Right-to-work law-state law making it illegal to force workers to join a union as a condition of employment, even though a union may already exist at the company

The AFL-CIO

1886 The American Federation of Labor (AFL) was formed

1935 The Committee for Industrial Organization (CIO) was formed

1955 the AFL and CIO joined to form The American Federation of Labor and Congress of Industrial Organization (AFL-CIO)

Union Arrangements

Closed Shops- the employer agrees to hire only union members

Union Shops-workers do not have to belong to the union to be hired, but must join to remain employed

Union Arrangements

Modified Union Shops-workers do not have to belong to the union to be hired, and cannot be made to join one to keep their jobs

Agency Shops- does not require workers to join a union as a condition to get or keep a job, but does require them to pay union dues to help pay collective bargaining costs

Collective Bargaining

Mediation-bringing in a neutral 3rd party to help settle a dispute

Arbitration-both sides agree to place their differences before a 3rd party whose decision will be accepted as final

Fact-finding-agreement between union and management to have a 3rd party collect facts about a dispute and provide nonbinding recommendations

Collective Bargaining

Injunction-court order not to actSeizure-temporary takeover of

operations to allow the govt. to negotiate with the union

Presidential Intervention

Categories of Labor

Unskilled Labor (physical labor) Semiskilled Labor (operate

machinery) Skilled Labor (operate complex

machinery) Professional Labor

Wage Determination

Traditional Theory of Wages The supply and demand for a worker’s

skills and services determine the wage or salary

Theory of Negotiated Wages Organized labor’s bargaining strength is

a factor that helps determine wages Signaling Theory

Employers are willing to pay more for people with “signals” or superior ability

Labor Today

Decrease in unions Lower pay for women than men Increase in part-time employment Increase in the minimum wage