[ 5.6 ] Labor and Wages
[ 5.6 ] Labor and Wages
Learning Objectives
•
•
•
•
Analyze how supply and demand in the labor market affect wage levels.
Describe how skill levels and education affect wages.
Explain how laws against wage discrimination affect wage levels.
Identify other factors affecting wage levels, such as minimum wage and workplace
safety laws.
The LABOR FORCE
LABOR FORCE is defined as all nonmilitary
workers over 16 who are employed or
unemployed (but looking for work).
Supply, Demand, and the Labor Market
How important is it to you to make a lot of money?
In 2012, the mean annual salary for surgeons was
about $230,000
A lawyer might make $600 for a one-hour
consultation, while the clerk at the local
convenience store might make $9.25 an hour.
What will determine the size of your paycheck?
Supply, Demand, and the Labor Market
Analyze Information Based on the information, what do you predict is likely to happen to the number
of workers if customer demand for the toy decreases?
Four Kinds of Workers
• Unskilled workers possess no specialized skills
or training.
• Semi-skilled workers have minimal skills.
• Skilled workers have specialized skills and
training.
• Professional workers have advanced
education.
A restaurant server is an unskilled worker.
A lifeguard is a semi-skilled worker.
Labor and Skills
Auto mechanics like this one are part of the skilled labor
force.
Prospective auto mechanics often attend a technical
college for specialized training.
A doctor is
a professional
worker.
The more
educated a
worker is, the
higher the
worker’s
wage.
Labor and Skills
The graphs show how wages compare for similar
jobs with different degrees of risk.
Discrimination in the Labor Market
Women and members of minority groups often received
lower wages than white male workers for the same work.
This practice is wage discrimination.
The Glass Ceiling
• Sometimes gender discrimination prevents
female employees from advancing.
• Economists speak of a glass ceiling.
• A glass ceiling is an invisible barrier that
prevents women from advancing in the
workplace.
Discrimination in the Labor Market
An EEOC official gives a news conference about a lawsuit carried out
on behalf of workers whose employer illegally required them to
reveal confidential information when taking sick leave.
Affirmative Action
• Affirmative action promotes the hiring of
women and minorities.
• Affirmative action policies recognize that
women and minorities have historically been
denied access to certain jobs.
• Affirmative action policies seek to remedy
past injustices and promote diversity in the
workplace.
Education
leads to
higher wages
but gender
discrimination
still affects
wages.
E. Napp
Additional Factors Affecting Wages
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•
•
•
Minimum Wage Laws
Safety Laws
Employers Respond to Wage Levels
Unions
In the early years of the Industrial Revolution, workers were frequently exploited.
Union
• UNION: An organization of workers which tries to
improve wages, working conditions, and benefits for
their members.
• Bosses tried to break unions but unions survived.
E. Napp
Additional Factors Affecting Wages
In 1938, unionized garment workers in San Francisco went on a strike that resulted in their obtaining
higher wages, better hours, and improved working conditions.
Union Tactics
• STRIKE: An organized work stoppage. Sometimes
union members go on strike to improve their working
conditions or wages.
• COLLECTIVE BARGAINING: occurs when union and
company representatives meet to negotiate a new
contract
• Unions use many tactics to improve the lives of their
members.
When union and company representatives
meet to negotiate a new contract, collective
bargaining occurs.
Mediation and Arbitration
• Sometimes union and company representatives
cannot agree on the terms of a new contract. To
ensure a new contract, mediation or arbitration can
occur.
• MEDIATION: A neutral party tries to find a mutually
beneficial solution. The solution can be rejected.
• ARBITRATION: A neutral party imposes a solution. It
must be accepted. It is legally binding.
Mediation, you can reject.
Arbitration, you must accept.
Employment and Unions
• Eventually, unions gained power. Though it is
illegal today, unions forced employers to use
closed shops.
• A closed shop is a business that only hires
union members.
• A union shop is a business that will hire
nonunion members but requires them to join
the union once they are hired.
The Agency Shop
• An agency shop is a business that does not require
workers to join the union but does require all
workers to pay union dues.
• Even nonunion members must pay union dues to
prevent the problem of the free rider.
• A free rider is a person who would not pay for a
particular service but would nonetheless benefit
from the service.
Quiz: Supply, Demand, and the Labor Market
What determines the equilibrium wage of labor?
A.
B.
C.
D.
The demand for workers in a labor market is less than the supply.
The supply of workers in a labor market meets the demand for workers.
The supply of workers in a labor market exceeds the demand for workers.
The demand for workers in a labor market exceeds the supply.
Quiz: Labor and Skills
Which is an example of a semi-skilled laborer?
A.
B.
C.
D.
a worker in a food-processing plant
an auto mechanic
a hotel manager
a dishwasher
Quiz: Discrimination in the Labor Market
Which law requires that men and women performing the same job receive the same pay?
A.
B.
C.
D.
Civil Rights Act of 1964
Fair Labor Standards Act of 1938
Equal Pay Act of 1963
Federal Employees’ Compensation Act
Quiz: Additional Factors Affecting Wages
Which of these describes an action an employer may take to reduce the cost of wages?
A.
B.
C.
D.
hiring permanent, rather than temporary, workers
including featherbedding jobs in union contracts
substituting workers for machines
outsourcing jobs to another country