Labor Market Trends

Labor Market Trends 9.1

Objectives • Describe how trends in the labor force are tracked. • Analyze past and present occupational trends. • Summarize how the US labor force is changing. • Identify and explain trends in the wages and benefits paid to US workers

Tracking the Labor Force- all nonmilitary people who are employed or unemployed

Employment • Characteristics 1. 16 years or older and one of the following: a. 1 hr for pay in week • 15< for family business w/o pay • Didn’t work b/c of illness, vacations, labor disputes, or bad weather

b. Unemployment i. Unemployed if meet above criteria and either: • temporarily without work or • are not working but have looked within last 4 weeks

c. The Bureau of Labor Statistics- provides answers to two important questions: i.How many people are in the labor force? ii.How many are employed and unemployed at any given time?

II. Occupational Trends a. A changing US Economy i. The US began with agriculture 1. corn, wheat, cotton, tobacco

ii. 1800s, the US yielded to the industrial revolution 1. jobs in textile mills, shoe factories, and other manufacturing enterprises

iii. late 1800s to early 1900s, Heavy Manufacturing began by 1. John D. Rockefeller- Standard Oil 2. Andrew Carnegie- steel works 3. Henry Ford- automobile manufacturing

iv. Mid-1900s- electronics boom 1. radio, television 2. General Electric, Westinghouse, Carrier

v. Late-1900s- personal computer 1. computer jobs in businesses, government 2. Information Age

b. Fewer Goods, More Services i. Banking, insurance, investment, web design, online marketing, advertising, research, consulting, health care

c. Effects of International Competition i. Factory work formerly done in the US is now done overseas, where labor costs less

ii. Demand for unskilled American workers decreases iii. Forces unskilled workers to go back to school for job training programs

III. Changing Labor Force a. College Graduates i. Human capital is necessary- education, training, and experience

ii.More and more high school diplomas are becoming insufficient iii.Learning Effect- theory that education increases productivity and results in higher wages

iv.Screening effect- theory that the completion of college indicates to employers that a job applicant is intelligent and hard working

b. Temporary Workers- becoming more popular i. Contingent employment- a temporary or part-time job

ii.Reasons for popularity: 1. Flexible work arrangements 2. Temporary employees are easier to hire and fire

3. Temporary employees are paid less and given fewer benefits 4. Some workers actually prefer temporary employment

IV.Trends in Wages and Benefits a. Earnings up for college grads, down for others

b. Cost of Benefits i. Benefits make up 28% of total compensation in the US ii.Cost of benefits are rising

iii. Response is to move more jobs overseas where wages are lower and benefits nonexistent iv.If costs continue to rise, companies will respond further

Labor and Wages9.2

I. Supply and Demand for labor a. Labor Demand- comes from private firms and government agencies that hire workers to produce goods and services

b. Labor Supply- comes from the people who provide labor in exchange for wages

c. Equilibrium Wage- the point at which supply of and demand for labor intersect.

II. Wages and Skill Levels a. Unskilled Labor i. No specialized skills, education or training ii. Hourly wages iii. Dishwashers, messengers, janitors, and some factory and farm workers

b. Semi-Skilled Labor i. Requires minimal specialized skills and education ii. Hourly wages iii. Lifeguards, word processors, short-order cooks, some construction workers

c. Skilled Labor i. Requires specialized abilities and training to do tasks such as operating complicated equipment ii. Need little supervision iii. Hourly wages iv. Mechanics, bank tellers, plumbers, firefighters, chefs, and carpenters

d. Professional Labor i. Demands advanced skills and education ii. White-collar workers iii. Salaried iv. Managers, teachers, bankers, doctors, athletes, computer programmers

e. Difference in earnings i. Higher demand = higher earnings ii. Doctor vs. janitor iii. Working conditions

III. Wage Discrimination- people with the same job, same skills and education, performance, and seniority receive unequal pay

a. “Reasons” for wage discrimination i. Claimed that men needed the money to support families, while women were simply working to earn some extra cash ii. Expected that women would leave their jobs at some point to have children iii. Racial discrimination is also present

b. Laws against Wage discrimination i. Equal Pay Act of 1963- male and female employees in the same workplace performing the same job receive the same pay ii. Title VII Civil Rights Act of ’64- prohibits job discrimination based on race, sex, color, religion, or nationality iii. Equal Employment Opportunity Commission enforces these laws

IV. Pay Levels for Women- discrimination based on sex is still prevalent today a. “Women’s Work”- historically women were discouraged from entering higher paying fields and encouraged to move toward the lower waged areas

b. Human Capital- In the past, b/c women were also discriminated in regards to higher education, they were not as productive as someone who had been to college

c. Glass Ceiling- an unofficial, invisible barrier that prevents women and minorities from advancing in businesses dominated by white men

d. Pay levels for Minorities i. B/c Caucasians have had more access to education and opportunity, they are generally more productive ii. As more opportunity in education and training is afforded to minorities, this productive gap is shrinking

V. Other Factors Effecting Wages a. Minimum Wage Laws i. Fair Labor Standards Act of 1938 1. 40 hour work week and overtime ii. Helps poor Americans earn enough to live

b. Safety Laws make increase costs, therefore decreasing the amount of money employers are willing to pay workers

c. Employers Respond to Wage Levels and begin to lay-off workers, cut hours or raise prices to compensate for higher wages.

d. Unions- an organization of workers that tries to improve working conditions, wages, and benefits for its members i. Make wages artificially high ii. Featherbedding- forcing employers to hire more workers than are needed.

Occupational Trends A labor union is an organization of workers that tries to improve working conditions, wages, and benefits for its members. • Less than 14 percent of U.S. workers belong to a labor union.

Key Events in the U.S. Labor Movement Year Event 1869 Knights of Labor founded 1911 Fire in the Triangle Shirtwaist Factory in New York kills 146, spurring action on workplace safety 1932 Norris-La Guardia Act outlaws “yellow dog” contracts, gives other protection to unions 1935 Wagner Act gives workers rights to organize 1938 AFL splinter group becomes the independent Congress of Industrial Organizations (CIO), headed by John L. Lewis 1955 AFL and CIO merge to create AFL-CIO 1970s Rise in anti-union measures by employers 1990s Increase in public-sector unions, including teaching assistants at some universities Labor Force Trends • The union movement took shape over the course of more than a century. • The 1935 National Labor Relations Act, also known as the Wagner Act, gave workers the right to organize and required companies to bargain in good faith with unions.

Declines in Union Membership • Several factors have led to declines in union membership since the 1950s: “Right to Work” Laws • The Taft-Harlety Act (1947) allowed states to pass right-to-work laws. These laws ban mandatory union membership at the workplace. Economic Trends • Unions have traditionally been strongest in the manufacturing sector, representing blue-collar workers, or workers who have industrial jobs. Blue-collar jobs have been declining in number as the American economy becomes more service-oriented. Fulfillment of Union Goals • With the government setting standards for workplace safety, and with more benefits being provided by both private and government sources, some claim that the union membership has decreased simply because their goals have been fulfilled by other organizations.

Collective Bargaining Collective bargaining is the process in which union and company representatives meet to negotiate a new labor contract. Wages and Benefits • The Union negotiates on behalf of all members for wage rate, overtime rates, planned raises, and benefits. Working Conditions • Safety, comfort, worker responsibilities, and other workplace issues are negotiated and written into the final contract. Job Security • One of the union’s primary goals is to secure its members’ jobs. The contract spells out the conditions under which a worker may be fired.

Labor Strikes and Settlements Strikes • 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.

Labor Market Trends