9-1 LABOR MARKET TRENDS
Economists define the labor force as nonmilitary workers over 16 who are employed or unemployed. People who are not looking for work, such as students, full-time parents, and retirees, are not considered part of the labor force.
One trend (Census link go to pages 26-31) in the U. S. economy is the shift from manufacturing to services. Production of services is increasing faster than the production of goods—especially in computer-related fields.
Another important trend is the increasing numbers of women in the workplace. Changing social roles have encouraged many women to gain education and employment skills.
A third trend is the rise of contingent employment, or temporary work. Firms use contingent employment to gain flexibility and to save money. It is easier to discharge temporary workers than permanent employees, so firms can quickly adjust the number of workers to increase or decrease output.
What is the correalation between these employment trends and the economy?
American workers are paid well compared to people in some countries. However, the average earnings of college graduates has increased, while the average earnings of those without college degrees has decreased by a large amount. One reason for this is that competition from foreign companies has decreased the demand for low-skilled workers.
Outsourcing (in the U.S.) is when U.S. companies use workers in other countries to perform jobs that were previously done by U.S. workers.
9-2 LABOR AND WAGES
In a competitive labor market, the price of labor—the wage rate—is determined largely by supply and demand. Workers are paid according to their productivity, the level of output produced. Competitive demand for labor drives wages up. Some firms attempt to cut labor costs by substituting machines for people. Labor supply comes from households. The higher the wage, the larger the quantity of labor supplied. The equilibrium wage is the wage rate that produces neither an excess supply of workers nor an excess demand for workers
Jobs can be classified into four skill levels. Semiskilled labor requires minimal specialized skills and education. Unskilled labor requires no specialized skills or training. Skilled labor requires specialized skills and training. Professional labor requires advanced skills and education. Workers with higher skill levels usually receive higher wages. In addition, union members tend to earn higher wages than nonunion workers in similar jobs. In the 1960s, Congress outlawed wage discrimination based on gender or race. Yet women still earn about 75 percent of men's earnings, and minorities tend to earn lower pay than whites.
Affirmative Action - For federal contractors and subcontractors, affirmative action must be taken by covered employers to recruit and advance qualified minorities, women, persons with disabilities, and covered veterans. Affirmative actions include training programs, outreach efforts, and other positive steps. These procedures should be incorporated into the company’s written personnel policies. Employers with written affirmative action programs must implement them, keep them on file and update them annually.
The glass ceiling, an unofficial and invisible barrier in some workplaces, prevents some women and
minorities from advancing in certain companies.
9-3 ORGANIZED LABOR
The labor union movement, which took shape over more than a century, was largely a response to changes brought on by the Industrial Revolution and the dangerous conditions and long hours of new factory jobs. Samuel Gompers, who founded the American Federation of Labor in 1886, focused on three reforms: higher wages, shorter hours, and safer work environments.
Union membership peaked in the 1940s. In 1947, in an effort to curb union power, Congress passed the Taft- Hartley Act, which allowed states to pass right-to-work laws. Since the 1940s, overall union membership has dropped to 13.5 percent of the labor force.
In a union workplace, management and labor periodically come together to negotiate employment contracts for wages and benefits, working conditions, and job security using the process of collective bargaining.
If a deadlock occurs, the union members may vote to strike -a process whereby workers refuse to work. It is a tool of last resort. It may be damaging to both labor and management. Sometimes the two sides agree to mediation in which a third party is asked to find a solution both parties will accept. However, mediation is not binding.
If it fails, the talks may go to arbitration in which the third party’s decision is legally binding.
Why couldn't we buy Twinkies?