Employment Labor and Wages Chapter 8 THE LABOR

Employment, Labor, and Wages Chapter 8

THE LABOR MOVEMENT

• Part of: MACROECONOMICS • CIVILIAN LABOR FORCE – • MEN AND WOMEN 16 YR AND OVER • WHO ARE EITHER WORKING OR ACTIVELY LOOKING FOR A JOB. • (EXCLUDES ARMED FORCES, PRISON POP. & INSTITUTIONALIZED PERSONS)

Labor Markets Local Market Service & Construction National Market Either Labor and/or Production are “footloose” International Market Labor exceeds transportation costs “out sourcing”

Internal labor market A firm uses an internal labor market if: • external hiring is used primarily for entrylevel jobs, and • higher level positions are filled by promotion from within the firm.

Internal labor markets exist because the use of such markets: • reduces hiring and training costs, • improves employee morale and motivation, and • reduces the effect of uncertainty.

unions Why are Unions Important? - first, they played an important role in promoting legislation that affects pay levels and working conditions today - second, unions are a force in the economy, with membership of over 16 million people

EARLY UNION DEVELOPMENT • COLONIAL TIMES TO THE CIVIL WAR – SMALL AMOUNT OF PEOPLE JOINED UNIONS – COMPRISED OF SKILLED WORKERS AND POSSESSED STRONG BARGAINING POWER – PUBLIC - AGAINST LABOR UNIONS

CIVIL WAR TO THE 1930 S • By end of civil war two types of labor unions had come into existence – Craft Union or Trade Union, an association of skilled workers who perform the same kind of work – Industrial Union – an association of all workers in the same industry, regardless of the job each worker performs

Union Activities • Collective Bargaining – Negotiate wages & conditions as a signal unit rather than as individuals. • STRIKE – REFUSE TO WORK • Picket – parade in front of the employer’s business carrying signs about the dispute • Boycott – a mass refusal to buy products from targeted employers or companies.

Employer resistance • Lockout – a refusal to let the employees work until management demands were met. • Company Unions – a union organized, supported, or run by employers – to head off efforts by others to organize workers • Hiring non-union workers to replace striking workers (Scabs)

Attitude of the courts • At the start of unions, the court historically favored businesses • Sherman Antitrust Act of 1890 – aimed at curbing monopolies, was used to keep labor unions in line (Danbury court case) • Clayton Antitrust Act 1914 - stated that labor unions could not be prosecuted under the Sherman Antitrust Act

Labor Union – Great Depression • Common problems united factory workers, and union promoters renewed their efforts to organize workers • Pro Union Legislation – Norris. La. Guardia Act 1932 – prevented courts from issuing rulings against unions engaged in peaceful strikes, picketing, or boycotts. – forcing companies to negotiate

• National Labor Relations Act (NLRA) or Wagner Act, 1935 – established the right of unions to collective bargaining. It also created the National Labor Relations Board – to police unfair labor practices • Fair Labor Standards Act 1938 – applies to interstate trade companies – fixes a federal minimum wage and establishes time-an-a-half pay and defines a work week as 40 hr.

Labor Since WWII • Antiunion Legislation – Labor Management Relations Act or Taft. Hartley Act – puts limits on what unions can do in labor/management disputes, companies can sue unions for breaking contracts, and prohibits unions from making union membership a condition for hiring – 80 day cooling off period to delay a strike – Right-to-work law – state law making it illegal to force workers to join a union as a condition of employment

• Labor-Management Reporting and Disclosure act or Landrum-Griffin Act, 1959 – requires unions to file regular financial reports with the government, and it limits the amount of money officials can borrow from the union

The AFL-CIO • American Federation of Labor – craft union • Committee for Industrial Organization – industry union • AFL – CIO joined forces in 1955 and is still a major force in society today • Independent Unions – a Union that does not belong to AFL - CIO

RESOLVING UNION AND MANAGEMENT DIFFERENCES • CLOSED SHOPS – A SITUATION IN WHICH THE EMPLOYER AGREES TO HIRE ONLY UNION MEMBERS • UNION SHOPS – AN EMPLOYMENT SITUATION WHERE WORKERS DO NOT HAVE TO BELONG TO THE UNION TO BE HIRED, BUT MUST JOIN SOON AFTER AND REMAIN A MEMBER FOR AS LONG AS THEY KEEP THEIR JOBS

• MODIFIED UNION SHOPS – WORKERS DO NOT HAVE TO BELONG TO A UNION TO BE HIRED AND CANNOT BE MADE TO JOIN ONE TO KEEP THEIR JOBS. IF WORKERS VOLUNTARILY JOIN THE UNION, HOWEVER, THEY MUST REMAIN MEMBERS FOR AS LONG AS THEY HOLD THEIR JOBS. • AGENCY SHOPS – AN AGREEMENT THAT DOES NOT REQUIRE A WORKER TO JOIN A UNION AS A CONDITION TO GET OR KEEP A JOB BUT DOES REQUIRE THE WORKER TO PAY DUES TO HELP PAY COLLECTIVE BARGAINING COSTS.

COLLECTIVE BARGAINING REPRESENTATIVES FROM BOTH SIDES MEET AND COMPROMISE ON THE MAJOR ISSUES GRIEVANCE PROCEDURE – A PROVISION FOR RESOLVING ISSUES THAT MAY COME UP LATER – MAY ALSO BE INCLUDED IN THE FINAL CONTRACT

If COLLECTIVE BARGAINING hits a deadend • MEDIATION – THE PROCESS OF BRINGING IN A NEUTRAL THIRD PERSON, OR PERSONS TO HELP SETTLE THE DISPUTE • ARBITRATION – A PROCESS IN WHICH BOTH SIDES AGREE TO PLACE THEIR DIFFERENCE BEFORE A THIRD PARTY WHOSE DECISION WILL BE ACCETED AS FINAL

• Fact – finding – an agreement between union and management to have a neutral third party collect facts about a dispute and present nonbinding recommendations • Injunction – a court order not to act - can be issued to the union or the company • Seizure – a temporary takeover of operation to allow the government to negotiate • Presidential Intervention – publicly appealing to both parties to resolve their differences

Labor and wages • Unskilled Labor – work with hands, lack training and skill – ex: dig ditches, pick fruit, mop floors • Semiskilled Labor – operate machines that require a minimum amount of training – ex: floor polishers, dishwashers, lawnmowers

• Skilled Labor – workers who are able to operate complex equipment and can perform their tasks with little supervision – ex: carpenters, typists, computer tech. , chefs, computer programmers • Professional Labor – individuals with the highest level of knowledge-based education (usually at least 4 years of college) and managerial skills – ex: doctors, lawyers, corporate executives

NONCOMPETING LABOR GRADES – broad categories of labor that do not directly compete with one another because of experience, training, education, and other human capital investments

Rostow’s Development Index

“The Collars” • Blue Collar- manual labor, work with hands • White Collar- intellectual labor, work with head, office jobs • Pink Collar- Traditionally female jobs, usually lower paying mostly White collar jobs.

• It is difficult to move from one category to another. Why? • Cost – people don’t have the money to gain the extra training • Lack of opportunity • Lack of initiative

Wage Determination • Wage Rate – a standard amount of pay given for work performed • Differences in wage rates can be explained in three ways. 1) Traditional tools of supply and demand 2) Influence of unions 3) Signaling Theory

Traditional Theory Of Wage determination • The theory states that the supply and demand for a worker’s skills and services determine the wage or salary.

Theory of Negotiated Wages • Unions bargain for better wages – Seniority – the length of time a person has been on the job – effects a persons wages

Signaling Theory • Employers are willing to pay more for people with certificates, diplomas, degrees, and other indicators or “signals” of superior ability

Regional Wage Differences • Labor mobility (the ability and willingness of workers to relocate in markets where wages are higher), cost of living differences, attractiveness of location can make a difference.

EMPLOYMENT TRENDS AND ISSUES • REASONS FOR DECLINE – MANY EMPLOYERS MADE A DETERMINED EFFORT TO KEEP UNIONS OUT OF THEIR BUSINESSES – NEW ADDITIONS TO THE LABOR FORCE – ESPECIALLY WOMEN AND TEENAGERS – TRADITIONALLY HAD LITTLE LOYALTY TO ORGANIZED LABOR – UNIONS ARE THE VICTIMS OF THEIR ON SUCCESS

RENEGOTIATING UNION WAGES • GIVE BACK – IS A WAGE, FRINGE BENEFIT, OR WORK RULE GIVEN UP WHEN LABOR CONTRACTS IS RENEGOTIATED • TWO-TIER WAGE SYSTEM – A SYSTEM THAT KEEPS HIGH WAGES FOR CURRENT WORKERS, BUT HAS A MUCH LOWER WAGE FOR NEWLY HIRED WORKERS.

• Even today – women struggle for equal pay – why? – Differences in skills and experience – Uneven distribution of men and women among the various occupations – Discrimination – glass ceiling – an invisible barrier that obstructs their advancement up the corporate ladder

Pay gap

• Legal Remedies – – Equal Pay Act of 1963 – Civil Rights Act of 1964, Title VII – prohibits discrimination in all areas of employment on the bases of gender, race, color, religion, and national origin and the Equal Employment Opportunity Commission (EEOC) investigates charges of discrimination

Comparable Worth – the principle stating that people should receive equal pay for work that is different from, but just as demanding as, other types of work. Set-Aside Contracts – a guaranteed contract reserved exclusively for a targeted group.

• part-time workers – work less than 35 hr. a week –reasons for growth – Change in economy – Gives employers more flexibility to schedule workers for peak periods – Receive few benefit Critics of Part-time employment – think that wages are low and hours are too few for workers to earn a decent living

• Minimum wage – the lowest wage that can be paid by law to most workers

The Pay Check Gross, Net, Deductions, FICA, YTD… (Health Insurance: 50 -200 a week)

What Factors Affect Your Income? • The Level of education, training, and experience that is required to do a particular job • Level of demand that exists for the type of labor you are skilled/trained/educated to provide • Number of others who have similar or better skills who can compete for the job • How good you are at what you do • How long you have been working-experience/seniority • Work habits, reliability • The state of the economy • Region in which you work and the labor market conditions in that region • Profitability and success of the organization for which you work • Chance-being at the right place at the right time or the wrong place at the wrong time