View
217
Download
0
Category
Tags:
Preview:
Citation preview
Lecture #15: Labor, Employment & Wages
New info for the rest of the semester:
Notes ARE REQUIRED but Cornell notes are NOT required (choose your own format)
Basics 11-13 are not required We will still have quizzes You can choose if you want to do the Basics as a
study guide
Today’s Objective
Students will understand what determines wages and have a basic understanding of unions.
Essential Learning: What is the correlation between skill level and income, and how do unions protect worker’s rights?
CA STATE STANDARDS12e.1.2 Explain opportunity cost and marginal benefit and marginal cost.
12e.1.3 Identify the difference between monetary and nonmonetary incentives and how changes in incentives cause changes in behavior.
12e.3.1 Understand how the role of government in a market economy often includes providing for national defense, addressing environmental concerns, defining and enforcing property rights, attempting to make markets more competitive, and protecting consumers' rights.
12e.3.4 Understand the aims and tools of monetary policy and their influence on economic activity (e.g., the Federal
Reserve). 12e.4 Students analyze the elements of the U.S. labor market in a global setting. 12e.4.1 Understand the operations of the labor market, including the circumstances surrounding the establishment of
principal American labor unions, procedures that unions use to gain benefits for their members, the effects of unionization, the minimum wage, and unemployment insurance.
12e.4.2 Describe the current economy and labor market, including the types of goods and services produced, the types of
skills workers need, the effects of rapid technological change, and the impact of international competition.
12e.4.3 Discuss wage differences among jobs and professions, using the laws of demand and supply and the concept of
productivity.
What determines wages?
Supply & Demand
in the Labor Market
• The price of labor is called the wage rate.
How the Equilibrium Wage Rate is Established?
Equilibrium Wage Rate
• The equilibrium wage rate is the wage at which the quantity demanded of labor = the quantity supplied of labor.
Wage Rate
Number of Workers
$7.75
5,000
Supply
Demand
How the Equilibrium Wage Rate is Established?
Equilibrium Wage Rate
• When the quantity demanded of labor is greater than the quantity supplied, there is a shortage of labor & wage rates rise.
Wage Rate
Number of Workers
$9.00
3,000
Supply
Demand
7,000
Why do some people earn more than others?
Wage Rates
• Wage rates differ b/c the supply for different types of labor is not the same.
• They may also differ b/c the demand is also not the same.
How does wage differ in a Socialist Society and a Capitalist Society?
Are money benefits the only thing that matters?
Money—not the
only thing that
matters!
• A higher income is not the only thing that matters to people.
• Other influences include:• coworkers• distance between home & work• hours worked per week • vacation time
The demand for a good and wage rates
Derived Demand
• If demand for a product decreases, then demand for employees to produce that product will also decrease.
• Derived Demand = is demand that is the result of some other demand
What will you earn?
Wages • Wage rates differ by occupation
• Will also depend on:• The demand for the good you produce• Your productivity
• Which is influenced by your natural ability, education & training
• The supply of qualified people also helps determine wages
Going to college pays!
Notice how men still earn more than women!
Discrimination in the work place still exists!
Look at how wages differ between gender and ethnicity!
Read articles on Women’s Earnings (Socratic Seminar on Friday)
Minimum Wage Laws
Min.
Wages
Minimum Wage law is a federal law that specifies the lowest hourly wage rate that can be paid to workers.
Originally passed during the Great Depression at 25 cents/hour
$5.85 - Summer of 2007$6.55 - Summer of 2008$7.25 - Summer of 2009
California Minimum
wage is higher: why?
Minimum Wage Laws
Minimum
Wages
States can set their rate higher than the federal rate.
California has now increased its minimum wage to $8.00!
Which industry has the most Minimum Wage Earners?
States with minimum wage rates higher than the Federal
States with minimum wage rates the same as the Federal
States with no minimum wage law
States with minimum wage rates lower than the Federal
American Samoa has special minimum wage rates
Effective July 24, 2008
Effective January 2009
State or other jurisdiction
2008
Federal (FLSA)
6.55Will be 7.25 on 7/24/09
Alabama …
Alaska 7.15
Arizona 6.90
Arkansas 6.25
California 8.00
Colorado 7.02
Connecticut 7.65
Delaware 7.15
Florida 6.79
Georgia 5.15
Hawaii 7.25
Idaho 6.55
Illinois 7.75
Indiana 6.55
Iowa 7.25
Kansas 2.65
Kentucky 6.55
Louisiana …
Maine 7.25
Maryland 6.55
Mass 8.00
Michigan 7.40
Minnesota5.25 - 6.15
Mississippi
Missouri 6.65
Montana4.00 - 6.55
Nebraska 6.55
Nevada 6.85
New Hampshire
6.55
New Jersey 7.15
New Mexico 6.50
New York 7.15
North Carolina
6.55
North Dakota
6.55
Ohio 7.00
Oklahoma 6.55
Oregon 7.95
Pennsylvania 7.15
Rhode Island 7.40
South Carolina
…
South Dakota
6.55
Tennessee …
Texas 6.55
Utah 6.55
Vermont 7.68
Virginia 6.55
Washington
8.07
West Virginia
7.25
Wisconsin 6.50
Wyoming 5.15
District of Columbia
7.55
Guam 5.85
Puerto Rico 4.10
U.S. Virgin Islands
4.30 - 6.15
http://www.dol.gov/esa/programs/whd/state/stateMinWageHis.htm
State or other jurisdiction
2009
Federal (FLSA)
6.55Will be 7.25 on
7/24/09
Alabama …
Alaska 7.15
Arizona 7.25
Arkansas 6.25
California 8.00
Colorado 7.28
Connecticut
8.008.25 on 1/1/10
Delaware 7.15
Florida 7.21
Georgia 5.15
Hawaii 7.25
Idaho 6.557.25 on 7/24/09
Illinois7.75
8.00 on 7/1/098.25 on 7/1/10
Indiana6.55
7.25 on 7/24/09
Iowa 7.25
Kansas 2.65
Kentucky 6.557.25 on 7/1/09
Louisiana …
Maine 7.257.50 on 10/1/09
Maryland 6.557.25 on 7/24/09
Mass 8.00
Michigan 7.40
Minnesota 5.25 - 6.15
Mississippi
Missouri 7.05
Montana4.00 - 6.557.25 on 7/24/09
Nebraska 6.557.25 on 7/24/09
Nevada 6.85
New Hampshire 7.25
New Jersey 7.157.25 on 7/24/09
New Mexico 7.50
New York 7.157.25 on 7/24/09
North Carolina
6.557.25 on 7/24/09
North Dakota 6.557.25 on 7/24/09
Ohio 7.30
Oklahoma6.55
7.25 on 7/24/09If less than 10 employees $2.00/hr
Oregon 8.40
Pennsylvania 7.157.25 on 7/24/09
Rhode Island 7.40South Carolina …
South Dakota 6.557.25 on 7/24/09
Tennessee …
Texas 6.557.25 on 7/24/09
Utah 6.557.25 on 7/24/09
Vermont 8.06
Virginia 6.557.25 on 7/24/09
Washington 8.55
West Virginia 7.25
Wisconsin 6.50
Wyoming 5.15
District of Columbia 7.55
Guam 5.85
Puerto Rico 4.10
U.S. Virgin Islands 4.30 - 6.15
2007 chart: Workers that get tipped don’t always get the full minimum wage!
2 Types of Wages: Money & Real
Money & Real
Wages
Nominal Wage/Money Wage = How much money a person gets
Real Wage = how much a person can buy with their wage rate
A person’s money wage can rise but their real wage falls. This happens when the price of goods &
services increases more than wages.
The gov’t measures the “average price” of a variety of goods called the price index.
2 Types of Wages: Money & Real
Consumer Price Index (CPI)
Consumer Price Index (CPI) is computed annually
Real Wage = Money Wage
CPI
Even though your money wage increased this year—your real wage decreased b/c the average cost of the CPI basket of goods increased by such a large amount
Labor & Government Regulation
Labor Union
Is an organization that seeks to increase its members’ wages & improve working conditions
To get higher pay It can try to increase demand for labor
Can be done by advertising— “Made in the U.S.A” It can try to decrease supply for labor
The fewer people qualified to perform a job—means the more money people can demand in wages
Labor & Government Regulation
Closed Shops
In the past, unions supported Closed Shops Organizations that
only hired union workers
The Taft-Hartley Act of 1947 made them illegal.
Labor & Government Regulation
Right-to-work
laws
The Taft-Hartley Act also gave states the right to pass Right-to-Work Laws
These states prohibit employers from requiring employees to join a union as a condition of employment
22 states have passed right-to-work laws
Labor & Government Regulation
Union Shop
Legal in many states Is an organization that requires
employees to join the union within a certain period after being hired
Approx 12.5% of all workers are member of unions
Labor & Government Regulation
Strike Labor unions work by gaining control over the supply of labor
Union members can pressure an employer by calling a strike
Strike = an agreement to stop working until the employer agrees to do what the union demands Increased wages Increased benefits Decreased hours
Unions’ Effects
Effect on
Wages
If a union gets higher wages, employers will seek to reduce the number of employees
Employees who get fired will join the nonunion labor market
Nonunion labor supply increases—causing wages of nonunion jobs to dip!
2 views of Labor Unions
Views Traditional view: labor unions are an obstacle to establishing reasonable working standards Companies that employ union labor
are less competitive
Newer view: Labor union is a valuable collective voice for its members Some evidence shows that union
firms are more productive—b/c members have a voice & feel more secure at work!
Essential Learning: What is the correlation between skill level and income, and how do unions protect worker’s rights?
Review—True or False1. The price of labor is called the derived demand.
2. The equilibrium wage rate is established where the quantity demanded of labor equals the quantity supplied of labor.
3. Location could be a nonmoney benefit.
4. If the demand for a good increases, the wage fro the producers of that good decreases.
5. The minimum wage law sets a wage floor.
Review—True or False1. The price of labor is called the derived demand.
FALSE
2. The equilibrium wage rate is established where the quantity demanded of labor equals the quantity supplied of labor. TRUE
3. Location could be a nonmoney benefit. TRUE
4. If the demand for a good increases, the wage fro the producers of that good decreases. FALSE
5. The minimum wage law sets a wage floor. TRUE
Review—True or False
1. A union can raise the demand for a product through advertising.
2. Labor unions try to increase the labor supply.
3. On average, union workers receive higher pay than comparable nonunion workers do.
Review—True or False
1. A union can raise the demand for a product through advertising. TRUE
2. Labor unions try to increase the labor supply. FALSE
3. On average, union workers receive higher pay than comparable nonunion workers do. TRUE
Recommended