Employment, Labor, and Wages

Employment, Labor, and Wages

The Labor Movement• Are unions still important today?• What events took place during the labor movement?• What improvements in labor standards happened

during the Great Depression?• What major labor improvements have happened

since WWII?

• The study of labor is part of Macroeconomics, or the branch that deals with the economy as a whole.

• It covers such topics as employment, GDP, inflation, growth and the distribution of income.

• Most of the public make up the civilian labor force.

Early Union Development• The development of the union started during

the colonial period. Most of the early unions consisted of skilled workers such as printers.

• Two main types of unions emerged over time, trade unions and industrial unions.

• Unions participate in different kinds of demonstrations for the support of worker rights. Three are strikes, pickets, and boycotts.

Employer Resistance and the Courts Reaction

Employers call lockouts, or refusals to allow employees to work, and they form company unions to protest the actions of worker unions.

The courts have ruled to keep labor in line. They have instituted such laws as the Sherman Antitrust Act and the Clayton Act.

Labor during the Depression and WWII

• The Norris-LaGuardia Act (1932) prevented federal courts from ruling against unions engaged in peaceful protests.

• The National Labor Relations Act (Wagner Act) established the right of unions to participate in collective bargaining.

• The Fair Labor Standards Act (1938) established a minimum wage and prohibited oppressive child labor.

Labor Since WWII

• The Taft Hartley Act put limits on what unions can do in labor/management disputes. It had two provisions– 80 day cooling-off period – Right to work law

• The AFL-CIO was set up to unionize industry that had not been in the past. The Congress for Industrial Organization (CIO) was another way that the unions could organize nationally.

Kinds of Union Arrangements

Closed Shops

Employers agree to hire union members for jobs.

Union Shops and Modified Union Shops

Workers are hired, but have to later join unions. Modified shops do not force union membership by threatening termination.

Agency Shops

Does not require a worker to join union, but does require worker to pay union dues.

What is this cartoon saying about the relationship between unions and business?

Section 2-7b

Collective Bargaining

• Negotiations occur to settle disputes between labor and management.

• Mediation, Arbitration and Fact-finding are three ways that negotiations occur without court or govt. intervention.

• Injunctions involve court orders to prevent strikes and lockouts.

• Seizures and Presidential Intervention are two ways that the govt. can step in to resolve the issue.

Labor and Wages

• There are four major categories of labor. – Unskilled labor have the least amount of human

capital and generally paid the lowest.– Semiskilled workers usually operate basic

equipment that call for minimal amounts of training.

– Skilled Laborers can perform tasks with little supervision. They possess a higher human capital and hold jobs like carpenter, typists, computer techs.

– Professionals have the highest knowledge based education for their jobs.

Wage Determination

• Traditional wage theory determination states that S and D determine salary of labor.

• The optimal wage for a worker will exist at the equilibrium wage rate. It leaves neither a surplus nor shortage in market.

• Theory of Negotiated Wages allows unions to negotiate wages for the worker.

• Signaling Theory explains why employers pay more for certified and educated labor.

Regardless of the rate, different wages exist for certain jobs, this leads to labor mobility.

Employment trends and issues

Reasons for Union Decline

1. Employers made strong effort to keep union out.

2. New additions to the labor force had little loyalty to unions.

3. Unions are victims of their own success.

Renegotiation Wages• Employers have been

able to reduce union wages through givebacks.

• Two-tier wage systems are effective because they pay tenured workers more money.

Gender differences

• According to the study in your book(1998), Women make less money than men due to a number of reasons.– Differences in skill and experience/education– Women drop out of labor force to raise children– More men in higher paying jobs– Discrimination/glass ceiling phenomena

Legal Remedies, Comparable Worth and Set-Aside Contracts

• Equal Pay act of 1963 prohibits wage discrimination.

• Civil Rights Act of 1964 promotes equal opportunity for employment.

Comparable Worth closes gap between men and women. Equal pay should be given for jobs with equal difficulty.

Govt. grants set-aside contracts to guarantee work for a specific group of people.

Part-time Workers and Minimum Wage• Part time employment has risen

drastically in the last 50 years.• A majority of people are working

less than 35 hours a week.• Reasons

– Evolving nature of the economy.

– Odd business hours.– Reduce labor costs.

• Was at $.25 in 1939, %5.15 in 1997, $7.25 today.

• The minimum wage adjusts with inflation.

• Supporters use the argument that the wage promotes equality, While opponents argue that it doesn’t promote economic freedom and is not in line with U.S. economic goals.