Labor Unions
 Labor Unions
 Strikes
 Trade Unions
 Injunction
 Industrial Unions
 National Labor
 Right to work law
Relations Board
 Mediation
 Arbitration
 boycott
 Closed shop
 Union shop
 Labor Unions are groups of workers who band
together to have a better chance to obtain higher
pay, benefits and better working conditions
 Out of the 151 million in the civilian labor force,
only 14% of American workers belong to a union.
 That number has been falling since the 1980’s as
we have transformed our economy from
manufacturing to a service based economy.
 Development
 1800s
 Poor working conditions
 Workers fired for no reason
 Workers blacklisted
 Knights of Labor
 1st major union founded in
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1869
Organized all laborers men, women, AfricanAmericans
Terrence V. Powderly
1886 peak of membership at
700,000
Ended in 1900
 American Federation of
Labor (AFL)
 Organized in 1886
 Denied unskilled
workers, women,
African Americans &
immigrants
 Samuel Gompers
 Fought for higher
wages, shorter hours &
benefits for disabled
 By 1900 membership
reached 500,000
Samuel Gompers
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There are two types of unions:
Trade unions – workers who perform the same
skills
Industrial unions – bring workers together
who belong to the same industry
Organized labor has a three level hierarchy:
 local unions
 national unions
 federations
Union Guessing Game
Amer. Federation of
Federal Employees
Amer. Federation of
Teachers
United American Nurses
American Postal
Workers Union
Airline Pilots Assoc.
 Local unions are made up of workers in a factory,
company or geographic area.
 Usually identified with #s
 Negotiates a contract with a company and
monitors the contract terms
 Represents the National unions agenda, while at
the same time representing the desires of their
constituents
 National unions are the individual craft or
industrial unions that represent local unions
nationwide
 Help employees set up local unions and negotiate
contracts
 In certain industries, the national union negotiates
the contracts for the entire industry
 At the Federation level is the AFL-CIO
 Represents 13 million workers nationwide
 From 1955-2005, represented virtually all
unionized workers in the U.S.
 Closed Shop – Companies hire only union
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members
Union Shop – Workers must join the union
after a specified time
Agency Shop – Not required to join a union,
but must pay dues
Open Shop – Companies may hire workers
regardless of membership
Modified Union Shop – Workers given an
option to join a union after hiring
 In the past, some labor unions supported closed
shops, when a worker would have to first belong
to a union to be hired by a company.
 This was banned by the Taft-Hartley Act 1947
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Stopped the practice
of closed shops
 A common arrangement today is the union
shop, which allows companies to hire anyone
as long as they join the union shortly after
they begin working
 One part of the Taft-Hartley Act banned this
practice as well.
 22 states have passed right-to-work laws,
which prevent mandatory union membership
required by union shops
 What we see in the South are modified union
shops, in which workers do not have to join a
union, but if they do join have to remain a
member for the duration of their employment.
 A majority of workers must vote in favor of a
union before one can be formed.
 The National Labor Relations Board makes
sure union votes are carried out honestly
 Process where union leaders & employers discuss
employment terms
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Once workers choose to be represented by a union,
the union is responsible for carrying out collective
bargaining.
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Union and company representatives meet to
discuss conditions of employment such as:
Wages
Work hours
Working conditions
Grievance procedures
Benefits
Work rules and responsibilities
Compromise is the issue
3 steps
Negotiation – Labor & management
meet to discuss contract issues
Mediation – A neutral 3rd party hears
both sides
Federal Mediation & Conciliation
Service provides a mediator
Arbitration – 3rd party makes a final
decision for a compromise. Has the
power of a judge and both sides agree to
accept the arbitrators decision.
Many African countries have:
1. Traditional Economies
2. Command Economies
3. Market Economies
4. Laser Taser Watches
 Worker/Union
 Strikes – workers refuse to work
 Picketing – used to discourage other
workers from working
 Boycott – Refuse to purchase goods or
services from the company
 Scab – Worker willing to work on company
terms
 Business/Management
 Lockout - in which the company blocks workers from
entering the workplace until they accept their contract
terms.
 Blacklist – A list of people who are denied employment
 Businesses hope the loss in income will convince
workers to accept the companies position.
 Can ask the courts to issue an injunction, a legal order
from the court preventing some activity (strike)
Ex. 1995 MLB season
 In severe or extreme labor-management dispute,
government may get involved.
 Can seize operations of an industry until conflict is
settled.
Ex. 1946 U.S. seized the coal industry because of
the countries need for this energy source.
Operation of the mines continued, until labor and
management came to an amicable agreement
Strike
Scabs/Strikebreakers
Picketing
Violence
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1869 – Knights of Labor founded
1882 – First Labor Day parade
1886 – AFL founded
1892 – Homestead Strike
1911 – Triangle Shirtwaist factory fire
1912 – Bread and Roses strike; Dept. Labor founded
1914 – Ludlow Massacre
1920 – Women get right to vote in US
1946 – Largest strike wave in US history
1947 – Taft-Hartley Act
1955 – AFL and CIO merge
1970 – Occupational Safety and Health Act passed (OSHA)
1981 – President Reagan breaks air traffic controllers strike
2013 – Union membership hits 97 year low (14.3 million union
members, 11.3% of population)
If an item has competing brands it
is defined as:
1. Complimentary
2. Mr. Freeze
3. Inelastic
4. Elastic
 Right to Work States
 Prevents unions from forcing workers to join
 Movement of Human Capital
 Rust belt – the North
 Sun belt – the South
 Factories & businesses moved from the rustbelt
to the sunbelt
 Weather was better
 Cheaper labor
 No existing unions
 White collar vs. Blue collar jobs
 White Collar = upper management
 Lot of news on white collar crime in big
business. Example: Enron, Merrill Lynch
 Blue Collar = working class, usually doing
manual labor
Right to Work States in Blue
Blue Collar Workers
Right to Work States – Why it matters?
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Rust Belt
Sun Belt
White Collar
Blue Collar
Ch. 20
Replaced the barter system in traditional economies
 Functions
 Medium of Exchange
 Used to trade/purchase goods/services
 Store of Value
 Ability to store or save
 Medium/Measure of Value
 Can be divisible
 Each one must be equal to the other
 Not easy to counterfeit
 Standard of Deferred Payment
 Used to buy on credit
1. Joyce wants to buy a new coffee mug for $5, but decides to
wait until payday.
2. Ben bought 2 tickets for a movie
3. Melissa promised to repay next month a loan Emily gave
her
4. Ken was trying to decide whether to buy 3 candy bars for
$.50 each or 1 chocolate Sunday for $1.65
5. Joanne purchased a new hat as a present for her sister
6. Tyrone puts $20 into his savings account. He hopes to save
enough money to buy a new dirt bike.
7. Henry has to pay the bank $187.50 a month for the next 4
years on his new car loan.
8. Kim decided to take the $.75 bus ride rather than an $8
cab ride.
9. The manager of Apex Stores gave Maria her paycheck
10.George always likes to keep a $20 bill stashed away in his
wallet for emergencies.
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Law of Diminishing Returns
Anti-Pizza disease
Full Stomach syndrome
Diminishing Marginal Utility
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Unions
Labor
Natural Resources
Capital
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Traditional
Market
Mixed
Command
 Brings savers (sellers) &
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borrowers (buyers) together in
the market
Savers = deposits
Borrowers = loans
Banks are a business and have
profit motive
Make money off of fees and
interest on loans
Reserve Requirements – banks
want more deposits so they can
loan more money
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Roosevelt’s Fireside Chats
Bank Holiday
Stock Market Crash
Hoovervilles
 1. The Federal Reserve Act of 1913
 2. National Banking Act of 1863
 3. The Gramm-Leach-Bliley Act
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Checking Account
 Allows customers to write checks, use debit
cards or withdraw money from an ATM
(Automated Teller Machine)
 Money transactions are quick and efficient
 Money does not stay in the account for long
 Depositor usually receives no interest
 Checking/Debit Cards
 Transfer of funds electronically
 Tied directly to checking accounts
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Savings Account
 Banks pay interest to customers based
on how much money is deposited
 Money remains untouched for longer
periods of time
Sample Bank Book
3.
Certificate of Deposit (CDs)
 Customers loan a certain amount to the
bank for a certain amount of time
 Ex. I bought a $1,000 CD for 1 year at 4%
 Higher rates of interest than savings
 Customers can’t withdraw their money
without a penalty
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Commercial Banks – full service to individuals &
businesses (Most common)
Savings & Loan Associations – traditionally
loaned money to people buying homes & issued
only savings accounts
Credit Unions – non-profit – sponsored by large
businesses, labor unions or government
institutions – offer full services at usually lower
prices
 Federal Deposit Insurance Corporation
 Insures deposited money in the bank up to
$250,000
 Most banks are FDIC insured
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9/11
Bombing of Pearl Harbor
The stock market crash and bank runs during
the Great Depression
 Agreement for borrowing money with repayment
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plus interest
Used to make expensive purchases
Banks make money on the interest paid for a loan
In order to make loans, banks have to have money
To have the money, banks must attract deposit
customers
Can increase the supply of money
Principle – amount borrowed
Interest – cost of borrowing
Interest Rate – rate of cost to borrow
Fixed – interest is set & can’t be changed
2. Variable – Changes when interest rates
change
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 How do bank loans increase the supply
of money?
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Not enough goods for everyone
The amount that people want
Lack of desire to produce enough resources
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Not enough resources to provide for every desire
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 Buy goods & services at individual stores & pay for
them later
 Credit limit: maximum amount a person can buy
with the promise of payment
Installment Account
 Repaid with equal payments over a certain period
of time
 Part of the payment goes towards interest & part
towards the principle
 Car loan or mortgage
2. Regular Account
 Billing cycles where a bill is sent at the end
 No interest is charged if entire bill is paid
 Account can’t be used again until the balance is
paid
 Interest is charged on the balance not paid
 Furniture Stores usually do this. Pay by 2010,
certain amount each month, but with no
interest.
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3. Revolving Account
 Billing cycles where a bill is sent at the
end
 Interest charged on portion not paid
 Account can still be used until credit
limit is reached
 Example: Credit Cards
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Set price control
Own the means of production
Absolutely no role
Set production quotas
 Make purchases without having the money
 Charge high interest rates
 Lower interest rates if the customer is reliable
 Finance Charges – Cost of credit (interest)
expressed in dollars
 APR – Cost of credit (interest) expressed as a
percentage
 Fill out application
 Credit Bureau does a credit check
 Creditor may ask for references
 Credit checks show your income, debt and
ability to pay debts in the past
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Trade-off
Scarcity
Opportunity cost
Comparative advantage
 Rating of risk: Excellent, Good, Average or
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Poor
Ratings have a number associated with them
3 Credit Bureaus: Experian, Transunion &
Equifax
Gives lenders an idea of reliability when
issuing loans
 Higher Credit Score = less interest you are
charged on a loan = saving money
Unsecured loans – loan based on reputation
Secured loans – have collateral to back up the
loan
 Equal Credit Opportunity Act: a person can’t
be denied credit because of race, religion,
national origin, gender, marital status or age
 Usury Laws: Restrict the amount of interest
companies, not banks, can charge
 In North Carolina, it is 8%. If you lend a
neighbor $100, you can only receive $8 in
interest
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Utility
Public Goods
Personality
Externality
 Debts are so large they can’t be paid back
 Most of what a debtor owns is sold or
given to creditors
 Takes 10 years to reestablish credit
 States can become bankrupt too
 Consumer – someone who buys a product or
service
 Types of Income
 Disposable Income – money after taxes
taken out.
 Money to pay for house, car, etc.
 Discretionary Income – money remaining
after paying for necessities
 Either save or spend it
 Consumerism – a movement to educate buyers on
purchases and to make sure products are safe
 Congressional laws – Pure Food and Drug Act in
1906
 Private groups – Better Business Bureau (BBB)
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 Consumer Bill of Rights
 Consumers have…
 Right to a safe product
 Right to be informed
 Right to choose
 Right to be heard
 Right to redress
 Smart Buying Strategies
 Get info on products
 Watch out for advertising
 Comparison shopping – find out prices on
product from different stores/internet
 Brand Name vs. Generic
 When product fails
 Report it
 Check the warranty
 Keep a copy of the receipt
 Be calm
 Make Fair complaints