Chapter 9: Labor Opener. Copyright © Pearson Education, Inc.Slide 2 Chapter 9, Opener Essential Question How can workers best meet the challenges of a

Chapter 9: LaborChapter 9: LaborOpenerOpener

Chapter 9: LaborChapter 9: LaborOpenerOpener

Copyright © Pearson Education, Inc. Slide 2Chapter 9, Opener

Essential QuestionEssential Question

• How can workers best meet the challenges of a changing economy?


Guiding QuestionsGuiding Questions

• Section 1: Labor Market Trends– How do economic trends affect workers?

• Shifts in the economy toward different industries can affect workers. Another trend that can affect workers include new demographics in the work force, like women, foreign-born workers, and temporary workers.



• Section 2: Labor and Wages– Why do some people earn more than others?

• What people earn is based on many factors including education, the demand and supply of labor, skill levels, gender, and race.



• Section 3: Organized Labor– How do labor unions support the interests of

workers?• Labor unions support the interests of workers with

respect to wages, benefits, and working conditions.

Chapter 9: LaborChapter 9: LaborSection 1Section 1



ObjectivesObjectives

1. Describe how trends in the labor force are tracked.

2. Analyze past and present occupational trends.

3. Summarize how the U.S. labor force is changing.

4. Explain trends in the wages and benefits paid to U.S. workers.


Key TermsKey Terms

• labor force: all nonmilitary people who are employed or unemployed

• outsourcing: the practice of contracting with another company to do a specific job that would otherwise be done by a company’s own workers

• offshoring: the movement of some of a company’s operations to another country

• learning effect: the theory that education increases efficiency of production and thus results in higher wages


Key Terms, cont.Key Terms, cont.

• screening effect: the theory that the completion of college indicates to employers that a job applicant is intelligent and hard-working

• contingent employment: a temporary and part-time job

• guest workers: members of the labor force from another country who are allowed to live and work in the United States only temporarily


IntroductionIntroduction

• 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


Tracking the Labor ForceTracking the Labor Force

• Each month the Bureau of Labor Statistics (BLS) assembles information on the labor force—all nonmilitary people who are employed or not employed.


The Labor ForceThe Labor Force

• A person is considered employed if they are 16 years or older and meet at least one of the following requirements:– They worked at least one hour for pay in the

past week– They worked 15 hours or more without pay in

a family business– They held jobs but did not work due to illness,

vacations, labor disputes, or bad weather.


Composition of the U.S. Labor ForceComposition of the U.S. Labor Force

• People are considered unemployed if they are either temporarily unemployed or if they are not working but are looking for jobs.– 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?


The BLSThe BLS

• Checkpoint: What important information can we learn from the Bureau of Labor Statistics (BLS)?– The BLS tells us how many people are in the

labor force as well as how many people are employed or unemployed at a given time.

– It also provides information on historical trends in the labor force and reports the unemployment rate each month.


Occupational TrendsOccupational Trends

• The job market is constantly changing.– The United States, for example, began as an

agricultural society that gave way to heavy industry in the early 1900s.

– Electronics came next as a major industry in the 1950s, followed by computers opening new employment opportunities in the 1970s.


Occupational Trends, cont.Occupational Trends, cont.

• In the past decade, the United States has shifted from a manufacturing economy to a service economy.– Many manufacturing

jobs have gone overseas through outsourcing and offshoring forcing many Americans to find work in other areas.

– How many service-producing employees were added in the period shown?


The Changing Labor ForceThe 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.


Women in the Work ForceWomen in the Work Force

• The number of women in the workforce has drastically changed in the last 50 years.– Women were

encouraged to get an education and increase their human capital, which led to more women entering the workforce.

– The increase in service sector jobs also added to the increase of women in the workforce.

Which decade shows the largest increase in the percentage of women entering the labor force?


Temporary WorkersTemporary Workers

• Another trend in the workforce is the increase in temporary workers, or contingent employment.

• Reasons for this trend include:– The ability of firms to easily adjust their workforce to

changing demand for their output.– Temporary workers are paid less and given fewer

benefits.– It’s easier to discharge temporary workers and less

costly.– Some workers prefer the flexibility of temporary work


Foreign-Born WorkersForeign-Born Workers

• Foreign-born workers have also influenced the labor force in recent years.

• Guest workers are allowed to work for a company that can show they cannot meet their labor needs with native-born workers.– Critics of guest workers say that they hold

down the wages of Americans.– Supporters claim immigrant workers do jobs

that Americans are unwilling to do because the wages are low and these companies can charge less for their goods as a result.


WagesWages

• 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?


BenefitsBenefits

• 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.


ReviewReview

• Now that you have learned about how economic trends affect workers, go back and answer the Chapter Essential Question.– How can workers best meet the challenges of

a changing economy?





1. Analyze how supply and demand in the labor market affect wage levels.

2. Describe how skill levels and education affect wage levels.

3. Explain how laws against wage discrimination affect wage levels.

4. Identify other factors affecting wage levels, such as minimum wage and workplace safety laws.


Key TermsKey Terms

• derived demand: a type of demand that is set by the demand for another good or service

• productivity of labor: the quantity of output produced by a unit of labor

• equilibrium wage: the wage rate that is set when the supply of workers meets the demand for workers in the labor market

• unskilled labor: work that requires no specialized skills, education, or training

• semi-skilled labor: work that requires minimal specialized skills and education



• skilled labor: work that requires specialized skills and training

• professional labor: work that requires advanced skills and education

• glass ceiling: an unofficial barrier that sometimes prevents some women and minorities from advancing to the top ranks of organizations dominated by white men

• labor union: an organization of workers that tries to improve working conditions, wages, and benefits for its members

• featherbedding: the practice of negotiating labor contracts that keep unnecessary workers on a company’s payroll



• 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 DemandLabor 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.


Supply of LaborSupply of Labor

• The supply of labor comes from people willing to work for wages.

• The higher the wage for a particular job, the larger the quantity of labor supplied.– According to the demand curve, if each cook works a 40-

hour work week, how many cooks will be hired at $12 an hour and $16 an hour?


Equilibrium WageEquilibrium Wage

• Checkpoint: What determines the equilibrium wage of labor?– The equilibrium wage is

the wage rate, or price of labor or services, that is set when the supply of workers meets the demand for workers in the labor market.

– At equilibrium there is no pressure to raise or lower wages.


Wage and Skill LevelsWage and Skill Levels

• In addition to varying according to labor supply and demand, wages also vary depending on workers’ skill levels and education.

• Jobs are often categorized into four skill levels:– Unskilled labor– Semi-skilled labor – Skilled labor– Professional labor


Wage and Skill Levels, cont.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.


Wages for High-Risk, Low-Risk JobsWages for High-Risk, Low-Risk Jobs

• These graphs show how wages compare for similar jobs with different degrees of risk.– Write a sentence that compares the demand curves

for the two graphs.– Write a sentence that compares the two supply

curves.


Wage DiscriminationWage 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)


Pay Levels for WomenPay Levels for Women

• Despite protections, women still earn less than men as a result of three factors:– 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.


Pay Levels for Women, cont.Pay Levels for Women, cont.

• Women’s career paths– Women are often

perceived by employers as not being interested in advancement.


Pay Levels Across SocietyPay Levels Across Society

• Racial discrimination has led to the wage gap for minorities.

• Non-discrimination laws are designed to give minorities improved access to education and job opportunities so they can close the wage gap.– Checkpoint: What

groups have been hurt by wage discrimination?


Other FactorsOther Factors

• Minimum wage laws and safety laws also affect wages.– Minimum wage

creates a minimum hourly rate that employers must pay workers.

– Workers are willing to work for lower wages when jobs are safer.


Employer Actions and Labor UnionsEmployer Actions and Labor Unions

• Employer actions and labor unions also affect wages.– Employer actions

• A company may try to cut labor costs, which in turn, lowers wages. They often replace human capital with physical capital.

– Labor unions• Labor unions can affect wages by persuading

employers to increase their pay. Unions are a much disputed aspect of the labor force in today’s world.


ReviewReview

• Now that you have learned why some people earn more than others, go back and answer the Chapter Essential Question.– How can workers best meet the challenges of

a changing economy?





1. Describe why American workers have formed labor unions.

2. Summarize the history of the labor movement in the United States.

3. Analyze reasons for the decline of the labor movement.

4. Explain how labor and management negotiate contracts.


Key TermsKey Terms

• strike: an organized work stoppage intended to force an employer to address union demands

• right-to-work law: a measure that bans mandatory union membership

• blue-collar worker: someone who performs manual labor, often in a manufacturing job, and who earns an hourly wage

• white-collar worker: someone who works in a professional or clerical job and who usually earns a weekly salary



• collective bargaining: the process in which union and company management meet to negotiate a new labor contract

• mediation: a settlement technique in which a neutral person, the mediator, meets with each side to try to find a solution that both sides will accept

• arbitration: a settlement technique in which a neutral third party listens to both sides and then imposes a decision that is legally binding for both the company and the union



• 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 UnionsLabor 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 MovementThe 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.The Labor Movement, cont.

• Many employers did not respond well to unions and forced workers to sign yellow-dog contracts, promising not to join unions.– In the 1930s, Congress passed measures that

protected unions. Union strength grew, peaking in the 1940s at about 35 percent of the nation’s non-farm workforce being members.

– Checkpoint: Why did union membership rise in the 1930s?


The Labor Movement, cont.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 DeclinesThe Movement Declines

• Checkpoint: 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


The Movement Declines, cont.The Movement Declines, cont.

• Another theory for union decline is that other institutions now provide many of the services that had been won in the past by unions.– What was the peak of

union membership?


Change in Union Membership Change in Union Membership


Labor and ManagementLabor and Management

• A union gains the right to represent workers at a company when a majority of workers in a particular work unit vote to accept the union.

• Once this happens, the company is required to bargain with the union to negotiate an employment contract.– Contracts get negotiated through collective

bargaining.


Collective BargainingCollective Bargaining

• The 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.


StrikesStrikes

• Sometimes agreements cannot be reached between the union and management. – In these instances,

unions may ask its members to vote to approve a strike, which can cripple a company.

– A long strike can also be hard on workers, since they are not getting paid.


Outside HelpOutside Help

• If a strike continues for a long time, the two sides can call in a third party to help settle the dispute.– In mediation, a neutral person meets with each side to try to

find a solution that both sides will accept. This decision, though, is nonbinding.

– In arbitration, a neutral third party listens to both sides and imposes a decision, which is legally binding.


ReviewReview

• Now that you have learned how labor unions support the interests of workers, go back and answer the Chapter Essential Question.– How can workers best meet the challenges of

a changing economy?

Documents

Chapter 9: Labor Opener. Copyright © Pearson Education, Inc.Slide 2 Chapter 9, Opener Essential Question How can workers best meet the challenges of a