1. What were the major
steps in the United States’
progression from an
agricultural economy to a
service economy?
The U.S. starts as a
nation of farmers.
Manufacturing
becomes the
powerhouse
industry.
1970s opens the
“Information Age”
with the bloom of
computers.
Industrial
Revolution takes
hold in the North
Mid 20th century has boom in
electronics producing surge in
factory jobs.
This will lead to the shift from
manufacturing economy to a
service economy. (Jobs like
banking, insurance,
investments)`
2. What is the screening
effect and how does it
differ from the learning
effect?
Learning effect - The theory that education increases productivity
and results in higher wages
(Basically says you are better worker because you are smarter)
Screening effect – The theory that the completion of college
indicates to employers that a job applicant is intelligent and hard
working
(Basically says that because you stuck it out and
graduated, you are hard working)
3. If you gain human
capital, what effect might
that have on your wages,
and why?
Since fewer people become highly
educated, there is smaller supply of
these workers. Therefore, a smaller
supply of workers leads to a high
equilibrium wage. Higher earnings
compensate these workers for their
high training costs.
4. Give two possible
reasons for the increased
presence of women in the
labor force.
1. Women were encouraged to get a
higher education. This adds to their
human capital and potential earnings.
2. The stereotype of women as
housewives and being completely
supported by their husbands no longer
is the case.
5. What is contingent
employment?
Contingent employment is
a temporary or part-time
job.
6. Do you think you would
hire permanent workers or
contingent workers if you
owned:
A. A pool and garden shop
in Minnesota
Because of the winters - contingent
B. An architecture firm
After they build what you would like you
would not keep them on staff so contingent
C. A Laundromat
People will always have to do laundry
throughout the year so… permanent
D. A tax service
There is a tax season so….contingent is
the way to go!
7.Which jobs were held by
most workers in the
United States at the
founding of the country?
Farmer
8. Why are U.S. firms
moving manufacturing
jobs overseas?
Labor costs less overseas
9. What percentage of
adult women are in the
work force today?
60%
10. What is one reason
many firms hire temporary
workers to do a particular
job?
Flexible work
arrangements
11. How have the earnings
of U.S. workers changed
over the last 20 years?
Wages of college
graduates only have gone
up.
12. What percentage of the
total compensation in the
U.S. economy today is
composed of benefits?
28%
13. Which job is expected
to double in the next few
years?
Computer engineering
Labor and Wages
Labor Force
 All non military people who are
employed or unemployed
Productivity
 Level of output
Equilibrium wage
 The wage rate that produces neither an
excess supply of workers nor an excess
demand for workers in the labor force
Unskilled Labor
 Labor that requires no specialized skills,
education, or training
Semi-skilled Labor
 Labor that requires minimal specialized
skills and education
Skilled Labor
 Labor that requires specialized skills
and training
Professional Labor
 Labor that requires advanced skills and
education
Affirmative Action
 The use of policies, programs, and
procedures to ensure the inclusion of
minorities and women in job hiring,
college admission, and the awarding of
government contracts.
Glass Ceiling
 An unofficial, invisible barrier that
prevents women and minorities from
advancing in businesses dominated by
white men
 The good ol’ boy system
Featherbedding
 The practice of negotiating labor
contracts that keep unnecessary
workers on a company’s payroll
 Caboose men
1. What groups of people
does the government
consider to be…
A. In the labor force?
 Anyone not in the military that is
employed or unemployed
B. Employed
 People are considered employed if they
are 16 years or older and meet at least one
of the following requirements:
 They work at least one hour for pay within the
past week
 They worked 15 or more hours without pay in
a family business (farms)
 They held jobs but did not work due to
illnesses, vacations, labor disputes, or bad
weather
C. Unemployed
 People are counted as unemployed if they are 16
years old or older, not institutionalized (prison,
loony bin, or nursing home), not currently
working, and meet one of the following criteria:
 They are temporarily laid off from their jobs
 They will be reporting to new jobs within 30 days
 They are not working but have looked for jobs
within the last 4 weeks.
You MUST be actively looking for a job to be considered
unemployed.
2. What is the basic
economic principle that
decides how high wages
will be?
Supply and demand
control wages
3. What is one strategy
that employers use to
continue to do business
despite high wages?
Replace some of the
workers with machines
4. What factors can affect
wages?
 Minimum wage laws
 Safety laws
 Labor unions
5. How does the pay level
of men compare to
women?
 Women earn about 75% of what men earn
6. What is generally a
major difference between
union and nonunion
workers?
 Union workers earn more money for similar work
7. What generally happens
to the equilibrium wage
when…
a. Demand for workers is
low and supply is high
 A low equilibrium wage
b. Demand for workers is
high and supply is low
 A high equilibrium wage
8. Are you part of the labor
force? If so, would the man
consider you employed
during the past week, or
unemployed? If the man
would not consider you
employed, explain why.
9. A union is facing the layoff of
workers whose jobs are no longer
needed because machines can now
do the work. One possible course of
action is featherbedding. How
might this affect the long-term
interests of the union? What other
actions might the union take?
11. Employment in a labor
market depends on how
closely the demand for
workers meet
___________.
 The supply
12. The price of labor
(earnings) depends on
______________.
 Conditions in the labor market
13. Professional labor
requires __________.
 Advanced skills and education
14. In a competitive
market, workers are
usually paid according to
___________.
 How much revenue they produce
15. Higher labor prices
decrease the _________.
 Amount of labor demanded
16. Firms can respond to
higher wages by replacing
_________.
 Human capital with physical capital
17. Higher wages increase
the ________.
 Quantity of labor supplied
18. Jobs in the skilled labor
category require
____________.
 Specialized skill and training
19. A high equilibrium
wage is the result of
__________.
 Low supply and high demand in a
given field of labor
20. The Equal Pay Act of
1963 provided that
____________.
 Male and female employees in the
same workplace performing the same
job had to receive the same pay.
21. Title VII of the 1964 Civil
Rights Act forbids job
discrimination on the basis
of _________.
 Race, color, sex, religion, or nationality
22. Lack of human capital
and possible
discrimination contributes
to low wages for
_________.
 Women and minority workers
23. Negative effects on
nonunion wages can be
reduced when unions
_____________.
 Practice of negotiating labor contracts
that keep unneeded workers on a
company’s payroll.
Organized Labor
Labor Union
 An organization of workers that tries to
improve working conditions, wages,
and benefits for its members
Strike
 An organized work stoppage intended
to force and employer to address union
demands
Industrial Union
 An organization of workers in a variety
of occupations within a single industry
Craft Union
 An organization of workers in a single
occupation or craft
Right-to-work law
 A measure that bans mandatory union
membership
Blue-collar worker
 Someone who works in an industrial
job, often in manufacturing, and who
receives wages
White-collar worker
 Someone in a professional or clerical
job who usually earns a salary
Closed Shop
 A workplace that hires only union
members
Union Shop
 A workplace that will hire nonunion
members but requires them to join the
union within a certain period of time
Agency Shop
 A workplace that will hire nonunion
workers and does not require them to
join the union
Collective Bargaining
 The process in which union and
company representatives meet to
negotiate a new labor contract
Mediation
 A settlement technique in which a
neutral mediator meets with each side
to try to find a solution that both sides
will accept
Arbitration
 A settlement technique in which a third
party reviews the case and imposes a
decision that is legally binding for both
sides.
1. What are some the key
goals of labor unions?
 To try and improve working conditions,
wages, and benefits for its members
2. How does an industrial
union differ from a craft
union?
 Industrial union is for a variety of
occupations within a single industry
while a craft union is for a single
occupation.
3. How are strikes
damaging to workers and
companies?
 Most firms cannot produce the goods and
services without their union workers and if
the strike is lengthy the workers will suffer
from the loss of wages.
4. How do mediation and
arbitration differ?
 In mediation a neutral mediator meets
with each side and try to find a solution
acceptable enough for both sides to
accept. An arbitration is where a third
party will review the case and just
impose a decision that is legally binding
for both sides.
6. What is generally the
difference between bluecollar workers and white
collar- workers?
 Blue-collar workers have industrial jobs while
white-collar workers have professional or
clerical jobs
7. Which legislation
enacted in 1947 may have
been a reason for the
decline in union
membership?
 Taft-Hartley Act – allowed states to pass rightto-work laws that would ban mandatory
union membership.
8. What is one of a labor
union’s primary goals?
 To secure its workers’ jobs
9. What is considered a
negative impact caused by
a strike?
 Loss of profits
10. What has been the
pattern of union
membership in recent
years?
 Growth in neither private or government
sectors
11. What U.S. labor
organizations formed
between 1869 and 1955?
 1869 – Knights of Labor
 1886 – American Federation of Labor (AFL)
 1938 – Congress of Industrial Organizations
(CIO)
 1955 – AFL and CIO merge into AFL-CIO