ChapterChapter

LaborLabor

MarketsMarkets10

Who is in the Labor Force?

• Labor force = total number of people willing and able to work (16 or older)

Types of Work

• Sector=part of the economy; type of work• 3 main sectors:

– Farming• Many left to join manufacturing/construction in early 1900s

– Manufacturing/Construction• Largest sector by 1920

– Service Industries• Once the smallest, now the largest• Ex: Computers Technicians, Hairdressers, Scientists,

Teachers, Cooks, Bankers

Which Sector do they Work In?

Skill Levels

• Unskilled– No special training– Quickly learned skills– Easy to hire and replace

• Semiskilled– More training– Narrow range of skills, short

amount of time• Skilled

– Extensive training and experience– Specialized knowledge

• Professionals– College degree + specialized

training– White-collar professions– Difficult to replace– Ongoing education

• Unskilled– Store Clerk– Ditch Digger– Receptionist

• Semiskilled– Telephone operator– Small Store Manager– Nurse’s aides

• Skilled– Plumber– Electrician– Police Officer– Dental Assistant

• Professionals– Lawyer– Teacher– Engineer– Dentist– Doctor

Skill Levels

• Types of labor do not directly compete with one another

• Each type of labor is essential to the economy

• Education allows people to progress from one skill level to another

Categorize the Following Jobs:

• Carpenter• Secretary• Accountant• Professional Quarterback• Waiter• Toll Collector• Scientist• Professor

Manufacturing/construction; semiskilled

Service; semiskilled

Service; skilled

Service; skilled

Service; unskilled

Service; unskilled

Service; professional

Service; professional

The Demand for Labor

• Value of labor is derived from the value attached to the product or service a worker helps produce

• Derived demand= demand for one thing arises from a demand for something else

• Wages= price paid for labor

The Supply of Labor

• What affects the supply of labor?– Population– Wages– Elasticity/Inelasticity

• Location• Skill Level Required

Wages

• Why can a rise in wages have a negative effect on supply?– Substitution Effect– Income Effect

Wages: Supply & Demand

Remember: Wages are a Price!

How are wages

determined?

Collective Bargaining:

Tools:• Labor Unions• Negotiation• Labor Contract• Strike• Lockout

Preferences & Discrimination:

• Why are employers willing to pay more for an employee with a college degree than one with a high school degree if both employees will do the same work?

• How businesspeople view college degrees:– Sign of intelligence– Hard work– Willingness to complete a long term goal

• These are qualities valued in an employee.

Preferences & Discrimination:

Preference based on race, religion, national origin, or gender

(EE0) Equal Employment Opportunity: Treating an

employee differently based on anything other than job

performance or character is illegal

Education & Earnings

Define the Following Terms:Define the Following Terms:

1.Civilian Labor Force2.Substitution effect3. Income effect4.Equilibrium wage rate5.Labor union6.Collective bargaining7.Strike