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Employment, Labor, Wages Chapter 8 Goals & Objectives 1. 2. 3. 4. 5. 6. 7. Development & importance of labor unions. Great Depression & Post WWII labor laws. Kinds of union arrangements. Collective Bargaining & Right-to-work laws. 4 main categories of labor. Wage determination. Causes & Effects. Equal Pay Act laws & regulations. The Labor Movement ► Macroeconomics: Employment, GDP, inflation, income distribution, monetary policy, fiscal & supply-side policies. 1. 2. 3. 4. GDP: inflation (federal reserve) economic growth distribution of income Civilian Labor Force ► 16 years or older working or “looking” for work ► Excludes: Military, prisoners, mentally disabled, unemployment benefits, SSI benefits welfare. ► Unemployment Rate vs. Underemployed Rate Unemployment Rate Underemployment Rate Early Union Development • 1778-1820’s Farmers, small business, self-employed – Trade or Craft Unions: • Early Unions: comprised of “skilled” labor with good collective bargaining power. – Trade or Craft Unions: Early Unions • Immigrants? Unskilled, cheap labor posed a threat to the existing wages. • Anti-Immigrant feelings – Competition and Wages? – Competition and Supply? • Chinese Exclusion Act: Gentleman’s Agreement, Anti-Irish, Anti-Black, Scabs: Civil War to 1930’s Attitudes toward unions changed: • 1. Why? A. higher prices B. shortage of workers C. greater demand for goods and services D. United Labor Force of newly arrived immigrants. Types of Unions 1. Craft unions: (trade unions) skilled workers who perform the same task. AMA ABA NEA ?? Why not?? Writers Guild Types of Unions 2. Industrial Unions: organization of workers in the same union regardless of job performed. Goodyear: Engineers, Operators, Line workers, fork lift operators, janitors all in the same union. Union Activities • 1. Strike: Can the federal government prevent you from striking or force you to work? • 2. Picket: Can the federal government prevent you from picketing? • 3. Boycott: Can the federal government prevent you from boycotting? Strikes, Boycotts & Pickets Employer Resistance ► 1. Lockouts: must have “scabs”; must have access to a supply of labor at a cheap cost to the company ► 2. Company Unions: Human Resources are company unions…. File a complaint and what happens? ► 3. 1902-1914: Boycotts illegal ► Sherman Antitrust Act 1890: Anti-union/monopoly ► Clayton Antitrust Act 1914: Exempted unions Lockouts & Labor Union Decline Labor Union Great Depression Pro-Union Laws 1. Norris LaGuardia Act of 1932: ended court involvement against unions in peaceable pickets and boycotts. 2. National Labor Relations Act: 1935, right of unions to collectively bargain. 3. Fair Labor Standards Act: 1938, interstate commerce an minimum wage requirements, overtime, time-and-a-half Labor since WWII Anti-Union Laws 1. Taft-Hartley Act: 1947, employers right to sue unions for breaking contract. 80 day cooling off period? What? 2. Right-to-work laws: eliminated the requirement that forced workers to join the unions. Right-to-work States American Federation of Labor/ Committee for Industrial AFL/CIO: Organization AFL:1886 CIO: 1935 AFL/CIO: 1955 2006 split apart: Why? Teachers (NEA) union joined Labor Unions & Bankruptcy Kinds of union arrangements 1. closed shop: pg.200 hire only union members. 2. union shop: employees must join union after being hired. 3. modified union shop: no requirement to join, but can not quit union if joined 4. agency shops: requires workers to pay union dues even if not a member Collective Bargaining ► Labor and Management compromise. grievance procedure: issues arriving before contract renewal. 1. Mediation: 3rd person into collective bargaining procedure. Court mandated in Alabama before filing a civil lawsuit. 2. Arbitration: 3rd party decision maker which will be final decision. BBB? Arbitration & th 13 Amendment Collective Bargaining ► 3. Fact-Finding: neutral 3rd party finds facts outside of management and labor…example. DHR department of human resources ► 4. Injunction-Seizure: court order not to act (forced labor). 1995 baseball, 1982 airline pilots, Seizure: gov’t takeover of operations (AYP in public schools) Presidential Intervention ► 1981: Air traffic controllers (FAA) R.Reagan ► 1997: Air line pilots B.Clinton, 1926 federal law Railway Labor Relations Act Professional Baseball: Ordered baseball players back to work: Why? ►Interstate Commerce-jurisdiction ►Interstate Costs to a baseball strike: Municipal, State, and Federal losses due to a strike? Categories of Labor • 1. unskilled labor: ditch diggers, fruit pickers, custodians = equal low wages • 2. semiskilled labor: machine operators, electric dishwashers, floor polishers, lawnmowers. • 3. skilled labor: carpenters, typists, computers, chefs, programmers • 4. professional labor: high level of education, managerial skills, doctors, scientists, lawyers, dentists. Wage Determination • 1. Traditional Theory of Wages: • Supply and Demand for a worker’s skills and services determine wages • How can government protect the traditional theory of wages? Supply of labor • Equilibrium wage rate: no shortage, no surplus of workers….how has illegal immigration effected this theory? Market Wage Rate vs. Minimum Wage Requirement & Prices Wage Determination • 2. Theory of Negotiated Wages: • organized labor’s collective bargaining strength, strong unions, – Seniority: how it affects wages and productivity? – Signaling theory: merit, certificates, specific skills bring higher wages Minimum Wage Requirements & Unemployment/Underemployment Rates Regional Wage Differences • Labor Mobility: moving to higher paying jobs. • Location, Location, Location: – North Dakota oil fields and wage rates • Federal Entitlements & Labor immobility Decline of Union Influence 1. Keep unions out of business. Wal-Mart 2. Profit sharing plans (401k’s) 3. Management teams 4. Women and Teens who are less loyal to unions. 5. Unions are victims of their own success. Inflation=less production=fewer jobs=fewer union members=outsourcing. Renegotiating Union Wages 1. Givebacks: Wages, fringe benefits, or rules given up by union to employers. UAW: the big 3 2. two-tier wage system: high wages for older workers lower wages for new workers. Lower Pay for Women 1. Human Capital Differences: skills, experience, less education. Traditionalism vs. Feminism 2. Gender and Occupation: uneven distribution of professionals 3. Discrimination: glass ceiling: Equal Pay Act 1963 Jobs requiring equivalent skills and responsibilities must be uniform in public sector. 1. Civil Rights Act 1964: prohibits discrimination….EEOC “the government can sue without a complaint from anyone”? The 10% quota rule (Affirmative Action). Comparable Worth Highway workers vs. Nurses (Illinois) Federal Contracts (Public): $10.10 minimum wage requirement Worth/Value decided by the State. Set-Aside Contracts Guaranteed government contract for a targeted minority group. – Affirmative Action: White males excluded. Price-Wage Spiral ► 1939: ► 1986: ► 1997: ► 2009: ► 2014: .25 hour $3.15 hour $5.15 hour $7.25 hour $7.25 hour ► Price-Wage Spiral: As wages increase so do prices. ► 1939: .05 milk gallon ► 1986: .96 milk gallon ► 1997: $2.67 milk gal. ► 2009: $3.58 milk gal. ► 2014: $4.29 milk gal. ► What will happen to the price of a gallon of milk with an increase in the minimum wage?