CHAPTER 8 EMPLOYMENT, LABOR,AND WAGES

1. CHAPTER 8 EMPLOYMENT, LABOR,AND WAGES

2. I. THE LABOR MARKET • The stock market crash on October 29, 1929, signaled the start of the Great Depression. In that year, national income was more than $87 billion. By 1933, just four years later, national income had plummeted by more than 50 percent, to just over $40 billion. More than 80,000 businesses had failed, and nine million savings accounts had been cleaned out.

3. A. EARLY UNION DEVELOPMENT 1. The nation’s first unions were comprised of skilled workers. 2. After the Civil War, as industry expanded, the labor force became more unified. 3. Two types of unions developed—the trade union and the industrial union.

4. A. EARLY UNION DEVELOPMENTcontinued 4. Unions used strikes, pickets, and boycotts to help members get better pay, better hours, and job security. 5. Employers resisted unions through lockouts, firings, and even setting up company unions. 6. Historically, the courts have viewed unions with hostility.

5. B. LABOR DURING THE GREAT DEPRESSION 1. Unemployment and cut wages marked the decade of the Great Depression and encouraged unions to organize workers. 2. The government began to pass laws protecting unions.

6. C. LABOR SINCE WORLD WAR II 1. After World War II, new laws began to limit union activity. 2. The AFL-CIO was created when two powerful unions joined forces. 3. Independent unions are those that do not belong to the AFL-CIO.

7. II. RESOLVING UNION AND MANAGEMENT DIFFERENCES • The National Labor Relations Act of 1935 guaranteed U.S. workers the right to form unions and to participate in collective bargaining. In 1998, about nine million people in the private sector worked under 100,000 contracts, each one a result of collective bargaining agreements.

8. A. KINDS OF UNION ARRANGEMENTS 1. In a closed shop, the employer agrees to hire only union members. 2. In a union shop, most workers belong to a union. 3. In a modified union shop, workers cannot be made to join the union. 4. In an agency shop, workers must pay union dues, whether or not they are union members.

9. B. COLLECTIVE BARGAINING 1. When labor and management agree to mediation, a neutral person helps settle the dispute. 2. With arbitration, labor and management agree to abide by a third party’s decision. 3. Disputes also can be resolved through fact-finding, in which a neutral third party presents non-binding recommendations.

10. B. COLLECTIVE BARGAININGcontinued 4. The government also can get involved in labor disputes by issuing injunctions or resorting to seizures. 5. The president can intervene by publicly appealing to both parties to resolve their differences, by firing federal workers who have broken their oath not to strike (1981 air traffic controllers), and in some cases by using emergency powers (1997 American Airline pilots).

11. III. LABOR AND WAGES • In the first quarter of 1997, full-time U.S. workers in the bottom 10 percent of the wage range actually made an average of $6.48 an hour, despite the fact that the federal minimum wage was set at $4.75 an hour. In fact, during that time of low unemployment rates, wages for those lowest-paid workers actually increased at a faster rate than the wages of workers in the middle wage range.

12. A. CATEGORIES OF LABOR 1. Unskilled laborers make some of the lowest wages. 2. Semiskilled workers do jobs that require a minimum amount of training. 3. Skilled workers hold jobs that require experience and training. 4. Professional workers do jobs that require a high level of knowledge-based education and managerial skills.

13. B. NONCOMPETING LABOR GRADES 1. People must have the ability, the initiative, and the money to obtain additional education and training. 2. Sometimes people are faced with a lack of opportunity for additional training and education. 3. Sometimes people lack the initiative they need to get ahead.

14. C. WAGE DETERMINATION 1. The traditional theory of wage determination says that supply and demand together will determine the equilibrium wage rate. 2. The theory of negotiated wages uses organized labor’s bargaining strength to help explain wage differentials. 3. According to the signaling theory, employers are willing to pay more for those people with certain indicators of superior ability.

15. D. REGIONAL WAGE DIFFERENCES 1.Wages can vary when demand for certain skilled positions exceeds supply. 2. Employers tend to offer higher wages in areas where the cost of living is higher than normal. 3. People sometimes are willing to accept lower wages if the location of the job is attractive to them.

16. IV. EMPLOYMENT TRENDS AND ISSUES • In 1991 Congress established the Glass Ceiling Commission. In 1995, the Commission observed that 95 to 97 percent of all big businesses’ top management were men. Although women held almost half the nation’s management and professional positions, they were usually in government, health care, or social welfare—fields that traditionally pay lower wages than jobs found in the private sector.

17. A. DECLINE OF UNION INFLUENCE 1. Union membership has declined because of unfriendly businesses, new workers with little loyalty to organized labor, and cutbacks in production by unionized companies. 2. Businesses are using givebacks, bankruptcy claims, and two-tier wage systems to lower union-negotiated wages.

18. B. LOWER PAY FOR WOMEN 1.Women, on the whole, have less experience and education to bring to the working world then their male counterparts. 2. Some higher paying jobs have a larger percentage of male workers, while some lower paying jobs have a larger percentage of female workers. 3. The glass ceiling is an example of the discrimination women face in the workplace.

19. B. LOWER PAY FOR WOMENcontinued 4. The Equal Pay Act and the Civil Rights Act both work to prevent wage and salary discrimination. 5. Some states hope to close the gender income gap by defining jobs of comparable worth (equal pay for equal work). 6. Set-aside contracts are contracts that will be made only with a specific group.

20. C. PART-TIME WORKERS 1. Part-time workers cost employers less in benefits. 2. Critics say part-time employment’s low wages and lack of benefits make it difficult for workers to earn a decent living.

21. D. THE MINIMUM WAGE 1. Opponents claim the minimum wage does not promote economic freedom. 2. In current dollars, the minimum wage appears to have risen over time. 3. Measurements in real dollars take inflation into account. 4. The ratio of minimum wage to manufacturing wage has been steadily decreasing for the past 30 years.