Ch. 22 Section 2

Labor Unions

Ch. 22Section 2

In a complete sentence, write a statement describing each of the following (Do not just copy the definition!)–Labor UnionsTrade UnionsIndustrial Unions

Right to work law

Closed shopUnion shop

StrikesInjunctionNational Labor Relations Board

MediationArbitrationboycott

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.

Organized Labor

The First UnionsDevelopment

1800sPoor working conditionsWorkers fired for no

reasonWorkers blacklisted

Knights of Labor1st major union founded

in 1869Organized all laborers -

men, women, African-Americans

Terrence V. Powderly1886 peak of

membership at 700,000Ended in 1900

American Federation of Labor (AFL)Organized in 1886Denied unskilled

workers, women, African Americans & immigrants

Samuel GompersFought for higher

wages, shorter hours & benefits for disabled

By 1900 membership reached 500,000 Samuel Gompers

There are two types of unions:1. Trade unions – workers who perform the

same skills2. Industrial unions – bring workers together

who belong to the same industry

Organized labor has a three level hierarchy: local unions national unions federations

Organized Labor (cont.)

Union Guessing Game

Amer. Federation of Federal Employees

United American Nurses

Airline Pilots Assoc.

Amer. Federation of Teachers

American Postal Workers Union

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

Organized Labor (cont.)

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

Organized Labor (cont.)

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.

Organized Labor (cont.)

Closed Shop – Companies hire only union 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

Union Membership Policies

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

Stopped the practice of closed shops

Organized Labor

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

Organized Labor

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

Organized Labor

Process where union leaders & employers discuss employment terms

Once workers choose to be represented by a union, the union is responsible for carrying out collective bargaining.

Union and company representatives meet to discuss conditions of employment such as:

1. Wages2. Work hours3. Working conditions4. Grievance procedures5. Benefits6. Work rules and responsibilities

Collective Bargaining

Compromise is the issue3 steps

Negotiation – Labor & management meet to discuss contract issuesMediation – 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.

1. Traditional Economies2. Command Economies3. Market Economies4. Laser Taser Watches

Many African countries have:

Worker/Union Strikes – workers refuse to workPicketing – used to discourage other

workers from workingBoycott – Refuse to purchase goods

or services from the companyScab – Worker willing to work on

company terms

When Collective Bargaining Fails

Business/ManagementLockout - 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

Labor-Management Conflict (cont.)

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

Labor-Management Conflict (cont.)

Strike Picketing

ViolenceScabs/Strikebreakers

1869 – Knights of Labor founded1882 – First Labor Day parade1886 – AFL founded1892 – Homestead Strike1911 – Triangle Shirtwaist factory fire1912 – Bread and Roses strike; Dept. Labor founded1914 – Ludlow Massacre1920 – Women get right to vote in US1946 – Largest strike wave in US history1947 – Taft-Hartley Act1955 – AFL and CIO merge1970 – Occupational Safety and Health Act passed (OSHA)1981 – President Reagan breaks air traffic controllers strike2013 – Union membership hits 97 year low (14.3 million

union members, 11.3% of population)

Major Events in Union History

1. Complimentary2. Mr. Freeze3. Inelastic4. Elastic

If an item has competing brands it is defined as:

Unions TodayRight to Work States

Prevents unions from forcing workers to join

Movement of Human CapitalRust belt – the North Sun belt – the SouthFactories & businesses moved from the

rustbelt to the sunbelt Weather was betterCheaper laborNo existing unions

White collar vs. Blue collar jobsWhite 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

Blue Collar Workers

Right to Work States in Blue

Right to Work States – Why it matters?

1. Rust Belt2. Sun Belt3. White Collar4. Blue Collar

What are the type of jobs that usually occur in manufacturing sectors called?

Ch. 20

Money, Banking,Credit & Consumer

Rights

MoneyReplaced the barter system in traditional economiesFunctions

Medium of ExchangeUsed to trade/purchase goods/services

Store of ValueAbility to store or save

Medium/Measure of ValueCan be divisible Each one must be equal to the otherNot easy to counterfeit

Standard of Deferred PaymentUsed 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 movie3.Melissa promised to repay next month a loan

Emily gave her4.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.

Different types of Money

1. Law of Diminishing Returns2. Anti-Pizza disease3. Full Stomach syndrome 4. Diminishing Marginal Utility

What is it called when you get less satisfaction from eating your 2nd piece of pizza?

1. Unions2. Labor3. Natural Resources4. Capital

What is not a factor of production?

1. Traditional2. Market3. Mixed4. Command

What type of economy is the U.S.?

BankingBrings savers (sellers) &

borrowers (buyers) together in the market

Savers = depositsBorrowers = loansBanks are a business and

have profit motiveMake money off of fees and

interest on loansReserve Requirements –

banks want more deposits so they can loan more money

1. Roosevelt’s Fireside Chats2. Bank Holiday3. Stock Market Crash4. Hoovervilles

What signaled the start of the Great Depression?

1. The Federal Reserve Act of 19132. National Banking Act of 18633. The Gramm-Leach-Bliley Act

What Banking Act created a national currency backed by U.S. government bonds?

1. 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 electronicallyTied directly to checking accounts

Types of Deposit Accounts

Checking Accounts

2. Savings Account Banks pay interest to customers

based on how much money is deposited

Money remains untouched for longer periods of time

Types of Deposit Accounts cont.

Savings Account

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

Types of Deposit Accounts cont.

1. Commercial Banks – full service to individuals & businesses (Most common)

2. Savings & Loan Associations – traditionally loaned money to people buying homes & issued only savings accounts

3. Credit Unions – non-profit – sponsored by large businesses, labor unions or government institutions – offer full services at usually lower prices

Types of Banks

Commercial Banks

Credit Unions

Federal Deposit Insurance CorporationInsures deposited money in the bank up to

$250,000Most banks are FDIC insured

FDIC

1. 9/112. Bombing of Pearl Harbor3. The stock market crash and bank runs

during the Great Depression

What US event caused the formation of the FDIC?

Agreement for borrowing money with repayment plus interest

Used to make expensive purchasesBanks make money on the interest paid for a

loanIn order to make loans, banks have to have

moneyTo have the money, banks must attract deposit

customersCan increase the supply of moneyPrinciple – amount borrowedInterest – cost of borrowingInterest Rate – rate of cost to borrow

Loans

1. Fixed – interest is set & can’t be changed

2. Variable – Changes when interest rates change

Types of Loans

How do bank loans increase the supply of money?

1. Not enough goods for everyone 2. The amount that people want 3. Lack of desire to produce enough

resources 4. Not enough resources to provide for

every desire

Which of the following best describes scarcity?

Buy goods & services at individual stores & pay for them later

Credit limit: maximum amount a person can buy with the promise of payment

Charge Accounts

1. 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.

Types of Charge Accounts

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

Types of Charge Accounts cont

1. Set price control 2. Own the means of production 3. Absolutely no role4. Set production quotas

What is the government’s role in a market economy?

Make purchases without having the money

Charge high interest rates Lower interest rates if the customer is

reliableFinance Charges – Cost of credit

(interest) expressed in dollars APR – Cost of credit (interest)

expressed as a percentage

Credit Cards

Fill out applicationCredit Bureau does a credit checkCreditor may ask for referencesCredit checks show your income, debt

and ability to pay debts in the past

Applying for Credit

1. Trade-off2. Scarcity3. Opportunity cost4. Comparative advantage

Which economic term best explains a consumer’s choice of buying a new car instead of opening a savings account?

Rating of risk: Excellent, Good, Average or Poor

Ratings have a number associated with them

3 Credit Bureaus: Experian, Transunion & Equifax

Gives lenders an idea of reliability when issuing loansHigher Credit Score = less interest you

are charged on a loan = saving moneyUnsecured loans – loan based on reputationSecured loans – have collateral to back up

the loan

Credit Rating

Credit Bureaus

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 chargeIn North Carolina, it is 8%. If you

lend a neighbor $100, you can only receive $8 in interest

Government Regulations

1. Utility2. Public Goods3. Personality4. Externality

What is the unintended side effect of an action?

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 creditStates can become bankrupt to

o

Bankruptcy

Consumer – someone who buys a product or service

Types of IncomeDisposable Income – money after

taxes taken out. Money to pay for house, car, etc.

Discretionary Income – money remaining after paying for necessitiesEither save or spend it

Consumer Rights

Consumerism – a movement to educate buyers on purchases and to make sure products are safeCongressional laws – Pure Food and Drug Act

in 1906Private groups – Better Business Bureau

(BBB)

Consumer Bill of RightsConsumers have…

Right to a safe productRight to be informedRight to chooseRight to be heardRight to redress

Consumer Rights cont.

Smart Buying Strategies Get info on productsWatch out for advertisingComparison shopping – find out

prices on product from different stores/internetBrand Name vs. Generic

When product failsReport itCheck the warrantyKeep a copy of the receiptBe calm

Make Fair complaints

Consumer Responsibilities