Economics Unit 8 Labor and Unions These documents are being distributed for educational discussion purposes only. They do not reflect any attempt by the North East Independent School District, its trustees, administrators, or teachers, to promote any particular viewpoints or opinions expressed in the documents over any others, nor do the viewpoints or opinions expressed in the documents necessarily reflect those of the NEISD, its trustees, administrators or teachers.
Sect. 1: The U.S. Labor Force The labor force includes all people who are at least 16 years of age and who are working or actively looking for work Does not include those in the military, in prison, or in mental institutions. The term wage is the hourly, weekly, monthly, or annual pay that a worker receives in exchange for his labor
Unemployment Rate, 3/2016
Considerations when looking for work Most people consider the following when looking for work wages skills working conditions location intrinsic rewards market trends
Wages The laws of supply and demand affects the wages paid for workers labor Wages paid for occupations where large numbers of people qualify for the job tend to be low Wages paid for occupations where small numbers of people qualify for a job tend to be high
Equilibrium Wage The equilibrium wage is the point where the quantity of workers supplied and quantity of workers demanded is the same at a particular salary Lets examine the equilibrium wage for two sample occupations
Plotting Equilibrium Wages
Skills Businesses want to hire only qualified people Skill levels required limit the supply of workers Jobs requiring high skill levels usually offer higher wages Jobs requiring lower skill levels usually offer lower wages
Working Conditions Most jobs are covered by federal and state health and safety standards Noise levels/cleanliness High risk jobs still exist such as skyscraper construction, fire fighting, and coal mining High risk jobs sometimes compensate workers for the risk involved in the occupation
Location When considering an occupation you should also consider where you want to be City/country Are you willing to work in remote or distant locations
Intrinsic Rewards Intrinsic rewards are nonmonetary reasons for working at a particular job Pride and satisfaction in the job Status, prestige, respect
Market Trends What industries are expanding? consumer demands for a good or service create a demand for jobs in that area What industries are contracting? Occupational Outlook Handbook Derived demand is when demand for workers follow demand for a good or service
Changes in the Labor Force The people who make up the labor force are very different today than in the past We started with most of the people in the US earning their living from agriculture New technologies introduced industrialization, the process of mechanizing all major forms of production
Industrialization The Industrial Revolution started in Great Britain in the mid 1700 s and spread to the US created new factory based jobs shifted economy away from agriculture caused a greater reliance on capital goods
More About Industrialization Industrialization caused the US economy to become capital-intensive or dependent on machines to produce goods This is the opposite of labor-intensive economies which produce goods through animal and human power
Women In The Workplace World Wars I & II brought many women into the workplace in what was then nontraditional jobs for women Auto mechanics, truck drivers, brick layers, metal workers, railroad engineers, pilots, shipbuilding, etc.
Women in the Workplace Princess Elizabeth worked as a truck mechanic for the British military during WWII Why?
Women In The Workforce Before industrialization most women worked on family farms without being paid a wage England s textile industry began to employ women in the early 1800 s By 1900, women made up about 18% of the total labor force
Higher Education Levels The general education level of workers has increased over the years Free, public schools have increased the education level of US citizens In the 1960 s 41% had a high school education 2014-US HS graduation rate was 82% 2014-TX HS graduation rate was 88% 2014-Northeast graduation rate was 92%
Higher Education = Higher Wages A direct relationship exists between a worker s level of education and his/her income
Government Influence on Labor Passed mandatory attendance laws to encourage more people to get higher levels of education Passed several anti-discrimination laws to protect rights of workers Minimum wage laws
Anti-Discrimination Laws Equal Pay Act of 1963 required employers to pay the same wages to male and female workers who performed the same job Civil Rights Act of 1964 protects workers from discrimination based on race, sex, religion, or national origin Same act created the Equal Employment Opportunity Commission (EEOC) to enforce it s provisions
Affirmative Action In the 1960 s President Johnson pursued a policy of affirmative action-making up for patterns of discrimination against women, minorities, etc. The Department of Labor followed by establishing the practice of quotas, or numerical goals for hiring and promoting women and minorities Using quotas continues to be controversial and has prompted numerous court actions
Minimum Wage Laws The 1938 Fair Labor Standards Act attempted to insure that all workers be paid at least a basic level of income It established a minimum wage or lowest hourly wage an employer legally can pay a worker for a job 40 cents was the original minimum wage and has risen to $7.25 effective 7/24/09
Demands to Increase Minimum Wage When minimum wage workers demand unreasonable wage increases sometimes their demands backfire and causes them to lose their jobs to machines and computers.
Tracking Minimum Wage
Sect. 2: Growth of Labor Unions A labor union is an organization of workers that negotiates with employers for better wages improved working conditions and job security The first labor union in the US was when printers in New York City joined forces to demand higher pay in 1778
Development of Unions The industrial revolution changed the relationship between employers and their workers The switch to capital intensive industrialization placed more power with factory owners than with laborers In 1860 the average work week was 60 hours and the average wage was 10 cents In 1890 nearly 20% of children between the ages of 10-15 worked for wages
Types of Unions A craft union is composed of one trade s skilled workers-for example plumbers, electricians, or carpenters Ex. International Union of Bricklayers An industrial union includes all workers in an industry, whether they are skilled, semiskilled, or unskilled Ex. United Auto Workers
Early Union Organizations One early union, the Knights of Labor, welcomed both skilled and unskilled laborers from a variety of crafts and industries It offered membership to women and African Americans It supported an 8-hour work day, the end of child labor, and other social issues
American Federation of Labor Beginning in 1886 the modern labor movement started with a loose association of craft unions organized as the American Federation of Labor (AFL) under the leadership of Samuel Gompers They concentrated on higher wages and better working conditions and did not include social issues which proved to be the downfall of the Knights of Labor
Samuel Gompers Connection Samuel Gompers died in San Antonio in 1924 He was returning from a trip to Mexico and had to be hospitalized here
Samuel Gompers Connection A statue of Gompers is in downtown San Antonio on Market Street (River City Mall and Marriott Hotel are to the right)
Decline of Organized Labor Antiunion sentiment rose in the 1920 s as unions were supporting radical platforms and actions Our federal government grew to be antiunion during the 1920 s and union membership plummeted The Great Depression of the 1930 s decreased union membership heavily Workers were just glad to have a job
Open v Closed Shops Open shops were supported by business owners In an open shop workers have the option, but were not required to join a union Unions preferred closed shops which allowed businesses to only hire workers that had already joined the union Internal disputes over the inclusion of unskilled workers seriously hurt the AFL in the 1930 s
Some states have Rightto-Work Laws which prohibit workplaces that are closed to non-union workers Right-to Work Laws
Congress of Industrial Organizations In 1937 a new labor organization called the Congress of Industrial Organizations (CIO) organized to include both skilled and unskilled workers and women and minorities from a variety of industries John L. Lewis was President of the CIO Soon other large industrial unions merged with the CIO-United Steel Workers, United Automobile Workers
Union Organizations Local Unions are made up of people who work for a particular company or in a particular area National Unions are larger in size and provide local chapters with leadership on national issues The AFL joined with the CIO in 1955 to form the AFL-CIO, the nations largest union
Challenges to Labor Unions In recent years union membership in the US has declined dramatically The three main reasons for the decline of unions are employer opposition changes in employment patterns negative public opinion
Union Membership Percentages United States @ 11.3% Highest State New York @ 23.2% Lowest State North Carolina @ 2.9% Texas @ 5.7%
Union Membership in Texas
Employer Opposition Some companies have opposed the development of unions because increased wages for workers mean lower profits for owners To lessen the influence of unions, companies have included workers on management teams placed a worker on their boards moved to other locations or out of the US where pay is less & labor unions are not strong
Changes In Employment Patterns The US economy has shifted from a manufacturing based economy where union membership has been stronger to a service based economy where union membership has been weaker The workforce now includes larger numbers of women and teens who have traditionally not been as attracted to union membership
Negative Public Opinion Negative public opinions have included the feeling that union demands for higher wages and increased benefits have encouraged many companies to move their companies outside the US union wages are too high for the skill level demanded for performing the work union leaders have accepted political favors to get lowered union demands opposition to violence and offensive tactics used by unions (Jimmy Hoffa)
Union Responses The drop in union membership has caused unions to change some of the ways they do things become more cooperative with management agreed to wage and benefit reductions to allow companies to remain competitive concentrated more on quality of life issues such as skill training, help with day care, etc. developed programs available to members such as life and health plans, retirement accounts, low interest credit card programs & legal services
Government and Unions The federal government has at times been both favorable and unfavorable toward unions Recent years have see legislation that limits the powers of unions Let s look at labor related legislation
Major Labor Legislation
Sect. 3: Unions & Management Unions have traditionally negotiated with management in 5 major areas wages and fringe benefits working conditions job security union security grievance procedures
Wages & Fringe Benefits Wage concerns higher wages for more experienced workers overtime pay for hours worked over 40 cost-of-living adjustments (COLA) Fringe Benefits (non-wage payments) paid sick days, holidays, vacation days, health/life insurance, savings/retirement, profit sharing, etc employee stock ownership plans (ESOP)
How Does a COLA work?
Working Conditions Unions want to insure that workers have clean workplaces safe workplaces clearly defined work responsibilities
Job Security Encourage greater job security through a seniority system, the system of the holding of privileges based on the number of years a worker has been employed by a firm When there are cutbacks those who have been with a company the least amount of time will be laid off first and those who have been with a company longer will remain employed
Union Security The Wagner Act of 1934 gives employees the right to organize and join unions and the right is enforced by the National Labor Relations Board (NLRB) 30% or more of a companies employees must sign a petition to hold an election about whether to unionize The election to unionize is then conducted by secret ballot
Grievance Procedures When work related disputes arise, either labor or management may try to resolve the issue through pre-set procedures Grievances, or formal complaints are usually resolved by committees made up of both the union and management Sometimes a NLRB sanctioned negotiator has to be used to resolve a problem The negotiator decides the outcome of the problem
Contract Negotiation Procedures Collective bargaining is used to negotiate new contracts between management and labor Representatives from both sides meet to discuss their goals and to find solutions Sometimes collective bargaining negotiations break down They may have to call in a neutral third party, called a mediator, to suggest ways to compromise In mediation the neutral third party listens to arguments of both sides and then suggests ways to reach an agreement Neither side is bound by suggestions of the mediator
Who is the mediator? Mediation services can be obtained from private citizens or a government representative The Taft-Hartley Act of 1947 gives the government the power to regulate relations between labor and management Taft-Hartley also established the Federal Mediation and Conciliation Service which mediates thousands of disputes every year
Mediation v Arbitration When agreements cannot be negotiated by using a mediator the next step is to bring in an arbitrator Arbitration brings in a neutral third party who listens to the arguments of both sides and then makes a decision to end the dispute The decision made during arbitration are binding on both management and labor
Union Tactics When negotiations completely break down between labor and management, unions will sometimes resort to a strike A strike is when unions call for their members to stop working until contract demands are met Strikes often involve more than the stoppage of work. They may also involve picketing boycotting coordinated campaigning
Picketing Picketing involves parading in front of a business while carrying signs which explain their grievances Picketing has 3 purposes informs the public a strike is in progress uses signs to state grievances in hopes of getting public support discourages non-strikers from entering the business to work
Boycotts Two kinds of boycotts a primary boycott is an organized effort to stop purchases of a firm s products a secondary boycott is a refusal to buy the goods or services of any firm that does business with the company whose employees are on strike Taft-Hartley makes secondary boycotts illegal if workers are attempting to get workers of the other companies to join their boycott
Coordinated Campaigning Coordinated campaigning combines the use of picketing and boycotts Coordinated campaigning might also involve the distribution of leaflets to the community or to other unions to try to gain support for their demands
Management Responses Management might respond in a variety of ways to a strike. Three common management actions are hiring replacement workers introducing a lockout asking for an injunction
Management Responses, cont. Finding replacement workers may be difficult because picketing workers will try to intimidate strikebreakers as they attempt to go to work Companies sometimes use a lockout, where a company closes it s doors until a contract agreement is reached Lockouts are difficult for businesses because production stops and they lose money Businesses sometimes ask the government to issue an injunction which is a court order prohibiting striking
References Economics: Texas Edition: 2016. McGraw Hill Education Holt Economics; Texas Edition: 2003, Holt, Rinehart and Winston