Chapter 9 - Economics

Economics _ principles in action, california edition -- O'sullivan, Arthur_, Sheffrin, Steven M_ -- California teacher's ed_, Boston, Mass

Labor force

All nonmilitary people who are employed or unemployed.

Unemployed

People without a job who are available for work and actively looking for work.

Why BLS matters

It tracks labor-force and unemployment data to show labor market trends.

Labor market trend in the U.S.

The economy has shifted more toward service jobs and away from many traditional manufacturing jobs.

Electronics boom effect

It created many new technology-related jobs.

1970s and later job growth

More service-sector and high-tech jobs grew.

Higher education effect

More education helped workers qualify for the changing job market.

Why more women entered the labor force

Expanding service jobs and broader economic/social changes increased women’s participation.

Have all workers had lower wages?

No. College graduates generally did better than less-educated workers.

Competition and wages

Global and domestic competition lowered wages in some jobs.

Learning effect

Education raises wages because workers become more productive.

Screening effect

Employers may see a college degree as proof that a worker is intelligent and hard-working.

Contingent employment

Temporary and/or part-time work instead of permanent full-time jobs.

Benefit trend

Rising fringe-benefit costs have affected labor costs and take-home earnings.

Labor market

The place where workers sell their labor and employers demand labor.

Price of labor

Wages or earnings.

What determines wages in a competitive labor market?

Supply and demand, based on how much value a worker produces.

Equilibrium wage

The wage where there is neither a shortage nor a surplus of workers.

If wages rise, what usually happens to labor demand?

Employers demand less labor.

If wages rise, what usually happens to labor supply?

More people are willing to work.

How firms respond to high wages

They may replace workers with machines or technology.

Professional labor

Jobs needing advanced education and specialized skills.

Skilled labor

Jobs requiring training and specialized abilities.

Why some jobs pay more

High demand, low supply, more skill, more education, or more dangerous/stressful conditions.

Dangerous job effect on wages

Riskier jobs often pay more to attract workers.

Wage discrimination

Unequal pay for the same job, skills, performance, and seniority.

Equal Pay Act of 1963

Men and women doing the same job in the same workplace must receive the same pay.

Title VII of the Civil Rights Act of 1964

Bans job discrimination based on race, sex, color, religion, or nationality.

EEOC

The agency that enforces anti-discrimination laws in employment.

Glass ceiling

An unofficial, invisible barrier that blocks some women and minorities from reaching top positions.

Featherbedding

Contract rules that keep unnecessary workers on a company’s payroll.

Labor union

An organized association of workers formed to protect and advance their rights and interests.

Goal of unions

Better wages, hours, benefits, and working conditions.

Knights of Labor

Founded in 1869; one of the first major U.S. labor organizations.

AFL

American Federation of Labor, founded in 1886 by Samuel Gompers.

CIO

Congress of Industrial Organizations, became an independent federation in 1938.

AFL-CIO

Formed in 1955 when the AFL and CIO merged.

Strike

Organized work stoppage to pressure an employer.

Collective bargaining

Negotiation between a union and employer over wages, hours, and working conditions.

Mediation

A neutral third party helps both sides try to reach an agreement.

Arbitration

A neutral third party reviews the case and makes a binding decision.

Right-to-work law

A law that bans mandatory union membership as a condition of employment.

Anti-union strategies before the 1930s

Firing organizers, yellow-dog contracts, lockouts, injunctions, and strikebreakers.

Why unions grew

Workers wanted safer conditions, shorter hours, and better pay.

Why union power declined

Manufacturing shrank, service jobs grew, global competition increased, and anti-union laws/policies expanded.

Traditional union strongholds

Heavy industry and manufacturing.

Main issues in union contracts

Wages, hours, benefits, and working conditions.

Blue-collar worker

Industrial/manual labor worker.

White-collar worker

Professional or office worker, often salaried.

Labor force =

employed + unemployed

Equilibrium wage =

no labor shortage, no labor surplus

Learning effect =

education makes workers more productive

Screening effect =

degree signals quality to employers

Glass ceiling =

invisible barrier to top jobs

Featherbedding =

unnecessary workers kept on payroll

Knights of Labor =

1869

AFL =

1886

CIO =

1938

AFL-CIO =

1955

Collective bargaining =

union + employer negotiate

Arbitration =

outside party decides

Mediation =

outside party helps negotiate

Right-to-work law =

no forced union membership