Labor Force and Wages

Economics

Labor force

All of working-age population employed or actively seeking work (Unemployed)

Employed

Doing work for pay or profit, including temporary absence from job. 16 years or older

Work at least one hour for pay in the last week

Work 15 or more hours without pay in a family business such as a farm or a family owned store

unemploymed

Not employed and actively looking for work

Discouraged workers

Those who have stopped looking for work

Not in the labor force

Includes students, retirees, stay at home parents/guardians, military personnel, people institutionalized, and those unable to work

Shift to service production

Labor market moving from goods production to service production

International competition

Outsourcing and offshoring affecting labor market

Outsourcing

Contracting another company to do a specific job that would otherwise be done a company's own workers.

Offshoring

Moving operations to another country

History of changing labor force

Shift from agriculture and manufacturing to service sector

Human capital

Knowledge, skills, health, and abilities possessed by workers

Effects of education and college

Higher wages, lower unemployment, and improved skills

Screening effect

Theory that the completion of college indicates to employers that a job applicant is intelligent and hard working. College Degree=Good Employee, perseverance and skills.

Learning effect

Theory that education increases efficiency of production, which results in higher wages. College Degree=More efficiency

Women in the workforce

Significant increase in the number of women in the labor force

Reasons for rise of temporary workers

Flexible work arrangements allow companies to adjust based on changing demand and output

Temporary workers are paid less and given fewer benefits

Discharging temporary workers is easier and less costly

Some workers actually prefer temporary work

Contingent employment

Temporary employment without traditional benefits

Child labor

Once common, now restricted by laws, but on the rise.

Impact of foreign-born workers

Foreign-born workers filling jobs in various industries

Real wages

Earnings adjusted for inflation, down over the past 50 years.

Costs of benefits

Increased burden for employers, passed on as lower wages. 30% of an employees salary

Supply and demand of labor

Employers hiring workers to produce goods and services

Labor demand

Derived from demand for goods and services

Labor supply

Number of people willing and able to work at a given wage

Equilibrium wage

Wage rate where labor demanded equals labor supplied

Unskilled labor

Labor not requiring specialized training or education

Skilled labor

Labor requiring specialized training or education

Wage discrimination

the practice of paying different wages to workers based on their race, gender, ethnicity, or other factors that are not related to their productivity

Pay levels across society

Wide variation in wages across different occupations

Minimum wage laws

Legally mandated lowest hourly wage

Safety laws

Protecting workers from injury and illness

Employer response to wage levels

Hiring fewer workers, investing in technology, or relocating

Unions

Organizations representing workers in negotiations with employers

Derived Demand

the demand for a good or service that results from the demand for a different, or related, good or service.