E C O N O M I C S S T U D Y G U I D E , C H A P T E R N I N E : L A B O R
KEY TERMS arbitration a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides (p.
234) blue-collar worker someone who works in an industrial job, often in manufacturing, and who receives wages (p. 231) collective bargaining the process in which union and company representatives meet to negotiate a new labor contract (p. 233) contingent employment temporary jobs or part-time jobs (p. 215) discouraged workers people who have sought employment but have given up looking equilibrium wage the wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market (p. 220) featherbedding the practice of negotiating labor contracts that keep unnecessary workers on a company’s payroll (p. 225) glass ceiling an unofficial, invisible barrier that prevents women and minorities from advancing in businesses dominated by white men
(p. 224) labor force (sometimes called the civilian labor force) all nonmilitary people who are employed or unemployed (p. 211) labor union an organization of workers that tries to improve working conditions, wages, and benefits for its members (p. 225) learning effect the theory that education increases productivity and results in higher wages (p. 214) mediation a settlement technique in which a neutral mediator meets with each side to try to find a solution that both sides will accept (p.
234) productivity value of output produced (p. 219) professional labor labor that requires advanced skills and education (p. 221) right-to-work law a measure that bans mandatory union membership (p. 231) screening effect the theory that the completion of college indicates to employers that a job applicant is intelligent and hard-working (p.
214) semi-skilled labor labor that requires minimal specialized skills and education (p. 221) skilled labor labor that requires specialized skills and training (p
221) strike an organized work stoppage intended to force an employer to address union demands (p. 229) unskilled labor labor that requires no specialized skills, education, or training (p. 221) white-collar worker someone in a professional or clerical job who usually earns a salary (p. 232)
KEY IDEAS AND CONCEPTS
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Employment : To be considered employed by the Bureau of Labor Statistics, you must be 16 years of age or older; and either o
(a) worked at least one hour for pay in the last week, or o
(b) worked 15 or more hours without pay in a family business, such as a farm, or o
(c) held a job but did not work due to illness, vacation, labor dispute, or bad weather
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Labor and Wages o
What is the Equilibrium Wage concept? o
How are labor, wages and Equilibrium Wage represented on a curve?
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Unemployment : To be considered unemployed, you must be without work or are not working but have looked for a job within the last 4 weeks (thus, have future work lined up or are actively searching for a job) o
This does not include full-time students, parents who stay at home to raise children, and retirees o
This does not include discouraged workers (people who have sought employment but have given up looking)
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The labor force is the sum of employed and unemployed persons. Those not classified as employed or unemployed are not in the labor force. The unemployment rate is the number unemployed as a percent of the labor force.
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Four Types of Wage and Skill Levels:
Unskilled Labor None
Minimal
Hourly
Wage
“blue collar” day laborers (urban and rural); messengers, dishwashers, janitors, et al.
Clerical, cooks, construction, et al. Semi-skilled
Labor
Skilled Labor Specialized; often technical school, apprenticeship, or some post-secondary
Hourly
Wage
Hourly
Wage
Mechanics, chefs, plumbers, carpenters, bank tellers
Professional
Labor
Advanced: usu. college and graduate or professional degrees required
Salary “white collar” Teachers, physicians, attorneys, engineers
Basics of Labor Union History in the United States
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Important Labor Unions: Knights of Labor, AF of L-CIO, ILGWU, United Mine Workers, United Farm Workers
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Important Labor Leaders o
Samuel Gompers , the first president of the American Federation of Labor (AFL). He forged AFL into an industrial union by bringing in craft unions from former Knights of Labor, focused on wages, benefits and working conditions.
He carefully avoided politics and positioned himself and union apart from accusations of radicalism and Communism. o
John L. Lewis, president of United Mine Workers of America (UMW), 1920 to 1960. He fought to improve wages, working conditions, and health care for the nation’s miners and helped organize American industrial unions into a unified federation: the Congress of Industrial Organizations (CIO). o
A. Philip Randolph , president of the Brotherhood of Sleeping Car Porters (BSCP). He threatned march on
Washington which was averted when Franklin Roosevelt agreed to desegregate military production plants. Later carried out a 1963 March on Washington at which Dr. Martin Luther King, Jr. delivered his “I Have A Dream” speech o
Cesar Chavez : chief organizer of the United Farm Workers union
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Goals of Labor Unions: 1. Better Pay and BENEFITS; 2. Better Working Conditions; Increased Job Security

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Important Labor Laws/Legislation: o
The Norris-LaGuardia Act of 1932 removed a number of barriers against labor organization. It proclaimed “freedom of association” of labor organizations, outlawed federal court orders to end strikes, picketing, or boycotts (in most cases) and outlawed “yellow-dog” labor contracts (those preventing employees from joining unions while employed.) o
The National Labor Relations Act (aka Wagner Act ) of 1935 prevents employers from interfering in the organization of workers into unions and promotes collective bargaining . It also set up the National Labor Relations Board
(NLRB), which has the power to enforce this law and ensure workers’ rights under this law. o
The Fair Labor Standards Act of 1938 established a minimum wage and limit to non-overtime hours worked. o
The Taft-Hartley Act of 1947 (aka Labor–Management Relations Act) was a Second Red Scare-era reaction to the
Wagner Act that outlawed closed shops, required 60 day notice of union strikes and union officers to deny under oath any Communist affiliations, and allowed federal court injunctions in cases of national security or health threats. The act also introduced a number of other provisions many view as anti-labor regulations.
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Current State of Labor Unions in the U.S.
: Membership has declined as the economy shifted from manufacturing to service
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Wage Discrimination, Glass Ceiling and Related Legislation (inc. 1963 Equal Pay Act, 1964 Civil Rights Act, and The
Equal Opportunity Commission (EEOC) (formed as part of the Civil Rights Act)
S
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Compare and contrast arbitration with mediation.
S AMPLE E SSAY Q UESTIONS
1. What requirements must people meet to be counted as unemployed?
2. Why do more women work today than 25 years ago?
3. What are the various requirements that people can meet to be considered employed?