Chapter 9 Labor Section 2 Labor and Wages

Chapter 9: Labor Section 2 Labor and Wages Mr. Ruiz El Dorado HS Spring 2015

Objectives: Students will understand the relationship between supply and demand in the labor market. Students will explain the connection between wages and skill levels Students will analyze how laws against wage discrimination affect wage levels. Students will evaluate other factors affecting wages, such as minimum wage and workplace safety laws.

Something to Think About: What motivates you in pursuing your future career? Job satisfaction or Money. Do you think most people today get paid fairly according to the job that the have? Give examples. What are some reasons that may determine how much someone will get paid for the job that they do?

Supply and Demand for Labor Employment/unemployment in a labor market dependents on how closely the demand for workers meets the supply of workers seeking jobs. Labor Demand In a competitive market, workers are usually paid according to the value of what they produce. Productivity is the value of output. The higher the price of labor, the smaller the quantity of labor demanded. Labor Supply In a competitive market, people provide labor in exchange for wages. The basic law of supply states: The higher the wage, the larger the quantity of labor supplied. i. e. , The higher the pay, the greater the number of people that will be attracted to the job.

Equilibrium Wage: The wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market. Labor Demand: This line representing the demand for labor is negatively sloped (the higher the price of labor, the smaller the quantity of labor demanded) Equilibrium: This intersection between the demand & supply lines represents equilibrium wage( i. e. , there is neither an excess supply of workers nor an excess demand for workers in the labor market) Labor Supply: This line representing the supply for labor is positively sloped( the higher the wage, the larger the quantity of labor supplied) H o u r ly w a g e s $12 $8 $4 0 20 40 60 Worker hours per week

Wages and Skill Levels Unskilled labor: (¢) Requiring no specialized skills, education, or training. Workers in these jobs usually earn an hourly wage. (Ex. Dishwashers, factory and farm workers) Skilled labor: ($$) Professional labor: ($$$) Semi-skilled labor: ($) Requires minimal special skills and education. Workers usually earn hourly wages. (Ex. Lifeguards, word processors, and construction workers) Requires specialized abilities and trainings. Skilled workers need little supervision. Usually earn hourly wage rather than a salary. (Ex. Plumbers, chefs, and firefighters) Demands advanced skills and education. Usually receive a salary. (Ex. Bankers, doctors, teachers, and computer programmers) Note: Salary level will not always match-up with educational levels. Keep in mind that other factors such as private/ public employment practices may influence pay levels. Example: government agencies may offer higher wages than private sector jobs as a matter of national cost of living trends and predetermined wage increases.

What is discrimination? Why do some people make more money than others for doing the same job? In today’s world, is job/wage discrimination still a problem? How may this affect some of you in the future? How about now?

Wage Discrimination Occurs when people with the same job, skills, education, job performance, and same seniority receive unequal pay. (Example: Some companies pay lower wages for women and minority employees) The Men vs Women Arguments Some defenses for wage inequality between men and women offered by employers: ▪ ▪ ▪ Men need the money to support families Women simply work to earn extra cash Women cannot do the same jobs as men Women will leave work to raise children Women are not interested in career advancement

Wage Discrimination, cont. The Minority Pay Issue Pay inequality for a minority group can focus on ethnic, racial, and gender differences. Minorities tend to earn lower pay than whites do. Why? Productivity differences are factors: Access Education Work experience

Steps to Equalize Pay Federal and State law makers have recognized that the creation of laws to prohibit wage discrimination can effect some change. 1. The Pay Act of 1963: 2. Civil Rights Act of 1964, (Title VII): prohibited job discrimination on the basis of race, sex, color, religion, or nationality. These efforts have been put forth by our legislative leaders to close the earnings gap that exists. Required that male and female employees in the same workplace performing the same job receive the same pay. The Civil Right Act of 1964 also created the Equal Employment Opportunity Commission (EEOC) to enforce the provisions of the law and handle job discrimination complaints.

Steps to Equalize Pay (cont. ) Fair Labor Standard Act (1938) This law established the federal minimum wage ( lowest amount employers could pay for most types of work). Support for this Act revolved around the idea that poorer citizens would have an opportunity to earn living wages. Opponents argued that employers would simply hire less people and expand employee responsibilities.

Steps to Equalize Pay (cont. ) Employers responses to wage levels Labor Unions Employers will seek to cut their labor costs by employing some or all of the following measures: A labor union is an organization of workers that seeks to improve working conditions, wages, and benefits for it members. Replace human labor with machinery. Establish production plants in other parts of the world where labor is plentiful and cheaper. Union supporters claim that the fact that unionized labor tends to get higher wages than non-unionized labor shows a clear indication that unionization is a positive situation for the employee. Seek to lobby and establish labor laws that impede the creation of labor unions Union detractors, on the other hand, claim that unions depress the wages of nonunion workers and that some union’s practice of featherbedding(keeping surplus/unnecessary workers on the payroll) impact a companies profit and re-investment potential.