Chap 22: Business and Labor

Types of BusinessThe American Labor ForceBusiness in Our EconomyChap 22: Business and LaborTYPES OF BUSINESSES IN THE U.S. ECONOMYSole ProprietorshipsPartnershipsCorporationsCooperativesNon-ProfitsSOLE PROPRIETORSHIPS: This business is operated by a single ownerADVANTAGESDISADVANTAGESFull pride of owning a business Receives all profitsMakes all decisions without having to consult a bossPay no corporate income tax

Unlimited liabilityComplete legal responsibility to repay debt and/or damagesIf not repaid, property (house, car, jewelry) may be taken to pay the debt

Examples of Sole Proprietorships

Baby SitterPARTNERSHIPS: A business that is owned and operated by more than one person.ADVANTAGESDISADVANTAGESTwo heads are better than one Raise more moneyEach owner brings unique qualities/talentsLarger size = more efficient operationPay no corporate income tax

Profit must be split between partners.Partners can argueComplicated legal structure; each time a member leaves/added, a new agreement needs to be written upUnlimited liability

Types of PartnershipsGeneralLimitedMost commonAll partners are responsible for the management and financial obligationsAt least one partner is not active in the daily routine of running the business but they have contributed the funds to help run the businessEXAMPLES OF PARTNERSHIPS

CORPORATIONS: An organized business that by law has many of the same rights as an individual. ADVANTAGESDISADVANTAGESCan easily raise huge sums of money through the sale of stock Easy to borrow large sums of moneyProduces 80 percent of all goods and services, yet only makes up 20% of all businesses in the U.S.Has the ability to grow into large companies

Complicated & expensive to start upBusiness owners have little say in the management of the companySubject to double taxationProfits and stockholders earningsMuch regulation by the governmentRelease detailed reports on a regular basis to keep potential/current shareholders informed

EXAMPLES OF CORPORATIONS

NON-PROFITS: A business that invests 100 percent of its profits back into the business. ADVANTAGESDISADVANTAGESNon-profits help those in needProvides needs the government cant provideDo not pay stockholders or investors100% of the profits go back to the business

COOPERATIVES: A voluntary association of people designed to carry on an economic activity that benefits its members. ADVANTAGES

ADVANTAGES Members receive benefits at low costMembers often have to put their own time in to help

LABOR VERSUS MANAGEMENTLABOR UNIONS: Groups of workers who band together to fight for better working conditions and pay.RIGHT-TO-WORK-LAWS: Laws which prevent mandatory union membership.BOYCOTT: A refusal to buy a companys goods or ervices.STRIKE: A Work StoppagePICKET LINE: A line that consists of striking workers and is dangerous to cross.Types of UnionsLocalNationalMembers of a union in a factory, company, or geographic location

Above the local unionsRepresent the local unions on a nationwide levelExample: American Federation of Labor-Congress of Industrial Organizations (AFL-CIO)Public Employee UnionsMembers work for the local, state, or federal governmentExample: American Federation of Government Employees (AFGE)

Union ArrangementsClosed shop: Became illegal in 1947; workers had to join a union before being hiredUnion shop: Right-to-work laws (22 states, including NC) prevent mandatory union membership. Modified, does not require membership to be hired or keep the job.Agency shop: Workers must pay a fee to the union for representing them regardless if they do not belong to the union.* Unions cannot be brought into a workplace unless a majority of the employees vote for it.HOW DO LABOR AND MANAGEMENT WORK THINGS OUT?Negotiations Through Outside Help:COLLECTIVE BARGAINING: Face to face talks that involve direct negotiations between labor and management. MEDIATION: Talks have broken down and both sides use a neutral third party to talk to each other.ARBITRATION: Both sides refuse to talk to each other and give a third party the power to make a decision for both sides.

Labor-Management Conflict: Techniques used to pressure the other side to accept their positionLabor Tools: StrikePicketingboycottManagement Tools:Lockout: Building is closed off until terms are acceptedInjunctions: Legal order of a court to prevent strike or limit picketingSeizure: Extreme case when the government takes over the operation and the government negotiates with the union

Roles of BusinessProvide jobsAct as consumers/boost the economy (Buy goods/services from other businesses)Produce items to meet an individuals basic needs (food, clothing, shelter) as well as their wants/desires/pleasures (movies, cars, jewelry, etc.)

RESPONSIBILITIES OF BUSINESSESConsumers:SELL PRODUCTS THAT ARE SAFE AND WORK AS ADVERTISED.Owners:TRANSPARENCY: Corporations should be honest with stockholders and tell then all the good and bad things about the business.Employees:Treat all employees fairly, with respect and do not DISCRIMINATE against them. Provide a safe working environmentCommunity:SOCIAL RESPONSIBILITY: Corporations should not pollute the environment, Corporations should also GIVE BACK to the community in which it is located.