CHAPTER 9 LABOR Labor-human resources Wages – the price paid for labor Supply and demand determine wages in a free enterprise economy At the equilibrium wage rate the supply of works = the demand for workers The demand for labor is a derived demand- meaning it is dependent on something else Consumer demand production levels demand for labor How does the price of labor figure into the above equation?
Wage rate quantity
Exit exercise Graph the data in the table, label the demand curve (d) and the supply curve( s). If the demand for labor increased by 100 units at each wage rate and the supply of workers remained constant graph the new demand curve and label it d1 and answer the following question. What happens to the equilibrium wage and why? _____________
SUPPLY AND Demand determine wages in a free enterprise economy, but they are influenced by four factors • Human Capital- The amount of education and training a worker has invested in himself. Page 261 text • Working conditions • Discrimination- race, ethnicity, gender, occupational segregation, jobs viewed as women’s jobs is an example. • Legislation has been passed in an attempt to lessen occupational segregation • Equal Pay Act 1963 • Civil Rights Act 1964 • Government actions- such as minimum wage, Fair Labor Standards Act 1938
The 1964 Civil Rights Act made racial discrimination in public places, such as theaters, restaurants and hotels, illegal. It also required employers to provide equal employment opportunities. Projects involving federal funds could now be cut off if there was evidence of discriminated based on race or national origin.
The Labor Force- Includes all people who are 16 years and older who are working or actively seeking work • 2005-150 million • 2020- 165 million members in the civilian labor force
Under 16 In Armed Forces Institutionalized Total population Not in the Labor force Non-institutionalized Adult civilian population employed Civilian Labor force unemployed
Changes in the U.S. labor force More women have entered the labor force Better educated labor force Productivity has increased Changing occupations Primary sector- jobs related directly to natural resources Secondary sector – related to the production of good Tertiary sector- service related jobs. Page 268 text Technology- 50% of workers use computers on the job Outsourcing Insourcing More technology and service related jobs Technology has both positive and negative impact on the job market- Work from home- telecommuting Less full time work more part time positions- in what ways could this benefit companies? Independent contractors-Benefits? Negatives? More changes of career in your work lifetime
ORGANIZED LABOR IN THE UNITED STATES In the 1800’s workers worked an average of 60 hours per week for low wages Dangerous working conditions If workers complained they were fired Workers were easily replaced the supply of workers was greater than the demand for workers. Large numbers of Immigrants were willing to work for low wages in order to survive. Muckrakers attempt to expose the unsafe working conditions in factories and mines. Workers start to organize and important labor leaders emerge.
Muckrakers and Labor Organizers JOHN SPARGO- THE BITTER CRY OF CHILDREN Mary Harris Jones- labor organizer
Work in the coal breakers is exceedingly hard and dangerous. Crouched over the chutes, the boys sit hour after hour, picking out the pieces of slate and other refuse from the coal as it rushes past to the washers. From the cramped position they have to assume, most of them become more or less deformed and bent-backed like old men. When a boy has been working for some time and begins to get round-shouldered, his fellows say that "He's got his boy to carry around whenever he goes." The coal is hard, and accidents to the hands, such as cut, broken, or crushed fingers, are common among the boys. Sometimes there is a worse accident: a terrified shriek is heard, and a boy is mangled and torn in the machinery, or disappears in the chute to be picked out later smothered and dead.
From the breakers the boys graduate to the mine depths, where they become door tenders, switch boys, or mule drivers. Here, far below the surface, work is still more dangerous. At fourteen and fifteen the boys assume the same risks as the men, and are surrounded by the same perils. Nor is it in Pennsylvania only that these conditions exist. In the bituminous mines of West Virginia, boys of nine or ten are frequently employed. I met one little fellow ten years old in Mt. Carbon, W. Va., last year, who was employed as a "trap boy." Think of what it means to be a trap boy at ten years of age. It means to sit alone in a dark mine passage hour after hour, with no human soul near; to see no living creature except the mules as they pass with their loads, or a rat or two seeking to share one's meal; to stand in water or mud that covers the ankles, chilled to the marrow by the cold draughts that rush in when you open the trap door for the mules to pass through; to work for fourteen hours-waiting-opening and shutting a door-then waiting again-for sixty cents
Triangle Factory Fire Pauline Newman And the ILGWU
The Jungle • Among Sinclair's most famous books is THE JUNGLE (1906). It launched a government investigation of the meatpacking plants of Chicago, and changed the food laws of America.
Excerpt From The Jungle "There was never the least bit attention paid to what was cut up for sausage; there would come all the way back from Europe old sausage that had been rejected, and that was moldy and white - it would be dosed with borax and glycerin, and dumped into the hoppers, and made over again for home consumption. There would be meat that had tumbled out on the floor, in the dirt and sawdust, where the workers had trampled and spit uncounted billions of consumption germs. There would be meat stored in great piles in rooms; and the water from leaky roofs would drip over it, and thousands of rats would race about on it. It was too dark in these storage places to see well, but a man could run his hand over piles of meat and sweep off handfuls of the dried dung of rats. These rats were nuisances, and the packers would put poisoned bread out for them; they would die, and then rats, bread and meat would go into the hoppers together."
Making literary connectionsSinclair and Schlosser • Schlosser’s searing portrayal of the industry in his book Fast Food Nation is disturbingly similar to Upton Sinclair's The Jungle, written in 1906: nightmare working conditions, union busting, and unsanitary practices that introduce E. coli and other pathogens into restaurants, public schools, and homes.
Fast Food Nation • On any given day, one out of four Americans opts for a quick and cheap meal at a fast-food restaurant, without giving either its speed or its thriftiness a second • thought.
Economic connections Thirty years ago, Americans spent about $6 billion on fast food; in the year 2000, they spent about $110 billion, Schlosser reveals. Americans spend 134 billion dollars on fast foods annually. Fast food is the term given to food that can be made and served very quickly. While any meal with low cooking time can be thought to be fast food, typically the term refers to food sold in a restaurant or store with preheated or precooked ingredients, and served to the customer in a packaged form for take-out/take-away. About 50,000,000 Americans eat at fast food restaurants daily. That is about 1/8 of the American population. Adults spend $1,200 a year on consumer electronics and own, on average, 25 CE products per household, according to a study by the CEA. The study also found that teens spend $350 a year on gadgets, roughly half of their discretionary money, and adults with teens living in the home, spend $500 more than the national average of $1,200.
David Graham Philips Treason of the U.S. Senate- Topic- Bribery and Graft in the U.S. Senate. Reduce influence of corporations and financial institutions on government policy. Led to the passage of the 17th Amendment.
A Short History Of Labor Unions Labor Union-is an organization of workers who collectively seek to improve wages, working conditions, benefits, job security and other work related matters. 1869 – Uriah Stevens founded the Knights of Labor, it organized workers by industry not trade. Platform 8 hour day End to child labor Owners worked hard against union organization and some labor protests turned violent Haymarket Square- Haymarket Riot Chicago 1886 Homestead Steel Strike – 1892 Railroad Strike – 1894 1886- Sam Gompers founded the AFof L American Federation of Labor it was a craft union. Merged in 1955 with the CIO Congress of Industrial Organization
The AF of L organized auto workers under the UAW in 1935. After a sit down strike in Flint Michigan in 1937 General Motors recognized the UAW Under the leadership of Walter Ruther auto workers became one of the highest paid groups of industrial workers. John L. Lewis led the United Mine Workers and Steel Workers in the 1940’s.
Union membership decline • Reputation- featherbedding, wastefulness ,supposed connections to organized crime. • Changes in the work force • Closed shops outlawed by the Taft Hartley Act • Union Shops • Right to work laws Map page 279
Contract negotiations • Collective bargaining- Labor and management meet to discuss terms of a labor agreement. Hopefully they reach an agreement if not they move to the next step • Mediation- a third party is called in to offer non binding suggestions to both labor and management • The Taft Hartley Act of 1947 established the FMCS Federal Mediation and conciliation service. This service mediates disputes • Arbitration- 3rd party makes binding decisions on both parties
Labor and management tactics if mediation does not work • Strike- Work stoppage • Picketing- carry signs telling of grievences • Boycott stop buying products from companies accused of unfair labor practices • Secondary Boycott- stop doing business with companies that do business with a company whose employees are on strike. • Coordinating campaigning use of boycotts and pickets together.
Management tactics • Hire replacement workers • Lockout • Injunction- court order stopping a strike
CHAPTER 13 UNEMPLOYMENT, POVERTY AND INFLATION Unemployment rate-the percentage of the labor force that is jobless and actively seeking work. The Bureau of Labor Statistics calculates the unemployment rate.
The unemployment rate does not account for Discouraged workers who have given up looking for a job Underemployed workers, working part-time because they cannot find full time employment or people who work jobs below their skill levels. Unemployment rate is calculated by Dividing the number of unemployed persons by the total number of people in the Civilian Labor Force
FULL Employment does not mean Zero Unemployment • 4 to 6 % unemployment is full employment in the United States due to Frictional Unemployment • Types of Unemployment • Frictional-temporary unemployment experienced by people who are changing jobs. • Frictional unemployment is a sign of a healthy economy it is normal. • Seasonal unemployment- Outdoor construction workers in Northeastern Ohio. Other examples • Structural Unemployment- Triggers • New technology • New industries requiring specialized education • Change in Consumer demand • Outsourcing • Cyclical unemployment- business cycles – low point in a business cycle (recession)
Impact of Unemployment Unemployment is inefficient it wastes human resources. Inequality graphs page 386 Discouraged workers
POVERTY AND INCOME DISTRIBUTION
What is poverty? Lack of income or resources to achieve a minimum standard of living. In the United States the government has established a poverty threshold( poverty line). Official minimum income needed for the basic necessities. The poverty line was calculated in 1964 by The Agricultural Department, based on the cost of a nutritionally sound diet, then multiplying by three. The poverty rate-The % of people living in households that have incomes below the poverty line. About 50% of people across the globe live in poverty In the U.S. 40 million people live in poverty. Table page 395
FACTORS AFFECTING POVERTY • Level of education • Discrimination • Demographic trends-Single Parent families • Change in the labor force- move from manufacturing to service related economy
Measuring Income Distribution Lorenz Curve of Income Distribution Measures inequality in income distribution
Exit exercise- Lorenz curve Using the following data construct a Lorenz Curve. You will have two lines. Be sure to label the x and y axis correctly. Label the two curves Remember this is cumulative. What % of income does the top 20% of households hold on the line of inequality that you Constructed? _________
INFLATION • Inflation- a sustained rise in the level of prices (fall in the purchasing power of money.) • Price Deflation- A decrease in the average price level of all products in an economy.
CPI-(consumer price index)The average change overtime in the price of a fixed group of products • using the market basket to calculate rate of inflation • Food and drink • Housing • Clothes • Transportation • Medical care • Entertainment • Education/communication 8. Other goods/services
BLS- Bureau of Labor Statistics determines the CPI BLS establishes a base period. The cost of the market basket is assigned an index number of 100. The BLS checks the cost of the market basket each month and year. The updated cost is compared to the base period cost to determine the index for that month/year CPI= Updated cost divided by base period cost times 100 Inflation rate= CPI current year- CPI previous year divided by CPI previous year times 100 2011 base year cost $24,263.18 2012 cost year one $ 40,439.53 2013 Cost year two $ 39,762.61 Calculate the rate of inflation between 2012 and 2013