Chapter 9 - LaborChapter 9 Section 1

Organized Labor

Labor Unions in the US

Labor union decline lately

Types of unions

Collective Bargaining/ Strikes

Labor and Labor Unions Labor powers the US economy

Most people are employees, not employers

Employees have little control over conditions of their work

Hours Wages Safety

Labor Unions Organization of workers that tries to improve

working conditions, wages, and benefits

When employees get together, they can bring their concerns to management

Less than 14% of workers in the US belong to a unionAbout 42 Million people

3 Types of Unions 1. Closed Shop

Hires only union workers Illegal today

2. Union ShopWill hire non-Union workers, but will

require them to join the union within a certain amount of time

Types of Unions 3. Agency Shops

Will hire non-union workers and will not require them to join in order to keep their jobs

Still must pay fees similar to the dues Covered by the contract as well Free Rider problem?

Join the union for the protection and benefits, and not have to pay

Rise of the Labor Unions The plight of Workers

Labor unions sprung from Industrial Revolution 12-16 hour days, 7 days a week Long days at dangerous machines

Many lost sight, hearing, fingers, limbs, lives

To protect their interests workers started banding together Striking - organized work stoppages in order to get their

demands met

Knights of Labor 1869 Garment workers in Philadelphia

Grew to be a powerful organizationAn industrial union

Workers in a single industry who perform a variety of jobs

1880s disputes over strategy started the decline

American Federation of Labor 1886 - Samuel Gompers

Considered the father of American labor mov’tWanted three things

Higher wages Shorter hours Safer work environment

Federation of Craft workers Organization of workers in a single/similar occupation Trade Union

Resistance to Unions Viewed as threats to free enterprise early

Sherman Antitrust Act? Union workers were often fired

Yellow dog contracts Injunctions were used to get workers to

end strikes Militias hired

Congress and Unions Until the 1930s, unions had no real

protection

1935 - National Labor Relations Act (Wagner Act)Gave labor the right to organize/bargainNational Labor Relations Board

Congress and Unions 1938 - Fair Labor Standards Act

Created minimum wageOutlawed child laborOvertime for over 40 hours of workFirst Nationwide mandatory regulation of

wages and hours 1950’s saw a peak in union membership

Nearly 30% of employeesGained Billions in duesBecame very powerful groups

Decline of Unions With this new power came abuse

In order to protect jobs (technology) Corruption – Teamsters

Decline of Unions1. Structural changes in US economy?

Blue collar vs White collar(Hourly vs salary)

2. Manufacturing over seas

3. Women in the workforce

Statistically less in blue collar jobs

4. Movt of company to different areas of the country (Less union activity in the South)

5. Goals fulfilledOSHA and other Govt programs

Collective Bargaining Process by which union and company

representatives meet to negotiate a new labor contract

Contracts last 2-5 years Union will usually come with goals

Wages Overtime, raises, benefits Ask for too much, company may have lay offs Seniority

Collective BargainingWorking Conditions

Safety, comfort

Job Security What can get an employee fired Grievances

StrikesGenerally occurs when there is a deadlock

Strikes Members will vote Can be bad for both sides

“strikebreakers” No pay checksDon’t normally happen until contract expires

MediationNeutral third party comes in to find solutionNonbinding agreement

ArbitrationThird party decision that is legally binding

9.2 Labor and Wages Who makes up the labor force

Supply/Demand and Labor

Wages and skill level

Labor Force Labor force is made up of all nonmilitary

people who are employed or unemployed

Employed - must be 16 and meet one of the following

Work at least one hour for pay within the last week Worked 15 or more w/o pay in a family business Have a job, but did not work due to illness, vacation,

labor disputes, or bad weather

Labor Force Unemployed - 16 or older, not institutionalized, not

currently working and meet one of the following Temporarily laid off Will report to work a new job within 30 days Not working but have looked for work within the last 4 weeks

To be counted as unemployed, you must actively be looking for a job

People who do not want jobs (stay at home parents, retirees) are not considered unemployed

Unemployed? Retired Grandfather?

Stay at home mom?

Thief serving time in prison

Friend in the military?

Full Time College Student?

NONO

NONONO

Supply/Demand and Labor Labor demand

Govt and private industries that produce goods and services Provide the jobs to workers, along with pay based on productivity (value of output)

If one company pays more for the same work?Pay More – or - Buy more machines

ATM Assembly Lines Self Service Gas Stations

Supply/Demand Labor Workers response to low wages

Look elsewhereThreaten to or actually strikeFind a new career

Labor SupplyHigher wagers will draw more workersEquilibrium Wage

No excess and no shortage of workers

Wages and Skill level Unskilled Labor - no specialization, education or

skills Usually will earn an hourly wage

Semi-Skilled - minimal special skills or education Usually get an Hourly Wage

Skilled Labor - Special skills and training Usually earn an Hourly Wage

Professional Labor - advanced skills and education Generally salaried positions

Wage Discrimination

Part of our nation’s historyMen need more money to support familyWomen work for extra money

Racial and ethnic prejudices as wellAfrican Americans and other minorities

paid less Equal Pay Act of 1963

Male and Female workers must be paid the same

Wage Discrimination Civil Rights Act 1964-

Title VIII of the Act forbids job discrimination based on race, sex, color, religion, or nationality

Affirmative Action Policies to ensure inclusion of minorities and women

in hiring, college admission, and issuing of govt contracts

Equal Employment Opportunity Commission Handles complaints of discrimination

Women and Wages Women still earn about 75% of what men earn Why?

Women’s Work - encouraged to find jobs in lower paying fields

Human Capital - generally less educated or experience

Career paths offered - many companies do not feel that women really want to be managers

Women and Wages Glass ceiling - unofficial, invisible barriers

that exist which limit opportunities for women

Lily Ledbetter Paid anywhere from $500 - $1500/month less

than her male counterparts

Minorities and wages Make less than whites Less access to education? Less work experience? Denied entrance to jobs (discrimination)

Wages and Unions Union members do make more than nonunion

1998 - made $160 more/week Pensions and medical benefits

Unions drive wages down? Unions demand raises Quantity of labor demanded goes down Union workers laid off, have to go look for

nonunion jobs Bigger supply of nonunion workers makes

wages go down

Featherbedding

Keeping unnecessary workers on company payroll Caboose-men

Ch 9.3 Labor Market Trends

Occupational trendsUS - farming to manufacturing to information

age

Shift from manufacturing to service industryBanking, insurance, investmentOnline/InternetHealth care

More service jobs, less manufacturing jobsNeed for a more educated work forceLess unskilled and semi-skilled jobs

High school education will not go as far today as it used to

1950’s typical workers only had HS education

College and work A college education is unattainable for many

Americans 64% go to College, only 29% earn a bachelor

degree College degree can double your earning

potential Higher education = higher wages

Learning effect - education increases productivity and wages

Screening effect - completing college proves intelligence and work ethic. People with these attributes do well in school and keep going to school

Women’s labor trends 1960 - 38% of women worked 1997 - 60% +

More women encouraged to go to college Gender roles have changed Households have changed

Households Higher education = More income, more

incentive for women to continue education Housework is easier with new technology

Less time needed to take care of the house More income needed to live comfortably

Costs increase faster than wages Divorce rate

Temps Contingent employment

Hired to perform a specific job, then releasedUsually earn less than permanent employees,

but can be successful1.9 - 4.4% of workersBenefits to hiring temps

Flexible lay offs - no severance pay/less rights Cheaper - $ and benefits

More freedom as a temp Move around to different jobs

Earnings have actually gone down 1980 - $275/week* 1997 - $261/week*

Average* College grads earnings have increased No college - decreased Competition from overseas has taken low skilled

jobs Deregulation has driven wages down Benefits are expensive - costs more, pay less

Social Security matched by employers