Employment Employment Trends and Trends and

IssuesIssuesChapter 8, Section 4Chapter 8, Section 4

Decline of Union InfluenceDecline of Union Influence(pg. 212, Figure 8.7)(pg. 212, Figure 8.7)

Decline of both union membership Decline of both union membership and influenceand influence

Union MembershipUnion Membership 1945 – 35.5% of non-agricultural workers1945 – 35.5% of non-agricultural workers 1980 – 21.9% of non-agricultural workers1980 – 21.9% of non-agricultural workers 2002 – 13% of non-agricultural workers2002 – 13% of non-agricultural workers

What is the reason for the decline?What is the reason for the decline?

Reasons for DeclineReasons for Decline

1.1. Employers want to keep unions out Employers want to keep unions out of their businessof their business

2.2. Additions to the labor forceAdditions to the labor force

3.3. Unions are the victims of their own Unions are the victims of their own successsuccess

Renegotiated Union Renegotiated Union WagesWages

Employers want to lower union wages:Employers want to lower union wages:

1.1. GivebackGiveback – wage, fringe benefit, or – wage, fringe benefit, or work rule given up when a labor work rule given up when a labor contract is renegotiatedcontract is renegotiated

2.2. Companies declare bankruptcy to get Companies declare bankruptcy to get rid of labor contractsrid of labor contracts

3.3. Two-tier wage systemTwo-tier wage system: keep high : keep high wages for current workers, but a much wages for current workers, but a much lower wage for newly hired workerslower wage for newly hired workers

Lower Pay for WomenLower Pay for Women(pg. 213, Figure 8.8 (pg. 213, Figure 8.8

and pg. 214, Figure 8.9)and pg. 214, Figure 8.9) Human Capital DifferencesHuman Capital Differences::

Differences between skills and experience Differences between skills and experience (raise families, lower levels of education)(raise families, lower levels of education)

Gender and OccupationGender and Occupation:: uneven distribution of men and women in uneven distribution of men and women in

various occupations various occupations

DiscriminationDiscrimination:: Glass ceilingGlass ceiling – invisible barrier that prevents – invisible barrier that prevents

advancement up the corporate ladderadvancement up the corporate ladder

Lower Pay for Women:Lower Pay for Women:Solutions – Legal RemediesSolutions – Legal Remedies

Equal Pay Act of 1963Equal Pay Act of 1963 Applies to men and women that work at the same jobApplies to men and women that work at the same job Requires equal pay for jobs that require equal skillsRequires equal pay for jobs that require equal skills

Civil Rights Act of 1964Civil Rights Act of 1964:: Title VIITitle VII – prohibits discrimination in all areas of – prohibits discrimination in all areas of

employment based on the basis of gender, race, employment based on the basis of gender, race, color, religion, and national origin.color, religion, and national origin.

Equal Employment Opportunity Commission (EEOC)Equal Employment Opportunity Commission (EEOC) – investigates charges of discrimination, issues – investigates charges of discrimination, issues guidelines and regulations, conducts hearing and guidelines and regulations, conducts hearing and gathers statisticsgathers statistics

Lower Pay for Women:Lower Pay for Women:Solutions – Comparable Solutions – Comparable

WorthWorth The idea that people should receive The idea that people should receive

equal pay for equal work that is equal pay for equal work that is different, but just as demanding as, different, but just as demanding as, other types of workother types of work

Factors:Factors: Occupational hazardsOccupational hazards Educational requirementsEducational requirements Degree of physical difficultyDegree of physical difficulty

Lower Pay for Women:Lower Pay for Women:Solutions – Comparable Solutions – Comparable

WorthWorth Most economists believe that fair and Most economists believe that fair and

unbiased comparisons of occupations are unbiased comparisons of occupations are almost impossible to makealmost impossible to make Comparable worth is not necessary as long as Comparable worth is not necessary as long as

people are free to obtain training and enter people are free to obtain training and enter the profession of their choicethe profession of their choice

Others believe that comparable worth is Others believe that comparable worth is necessary to remove gender necessary to remove gender discrimination in the workplacediscrimination in the workplace

Lower Pay for Women:Lower Pay for Women:Solutions – Set-Aside Solutions – Set-Aside

ContractContract Guaranteed contract reserved for a targeted Guaranteed contract reserved for a targeted

groupgroup Certain number of defense contracts be reserved Certain number of defense contracts be reserved

exclusively for minority-owned businessesexclusively for minority-owned businesses 1988 – CA required 5% of state’s bond contracts 1988 – CA required 5% of state’s bond contracts

reserved for women lawyers, bankers, and reserved for women lawyers, bankers, and women who place bonds with other investorswomen who place bonds with other investors

Intent of these programs is to “boost” and Intent of these programs is to “boost” and not provide a permanent subsidynot provide a permanent subsidy ““graduation” clausegraduation” clause

Part-Time WorkersPart-Time Workers

Workers who regularly work less Workers who regularly work less than 35 hours/weekthan 35 hours/week

1 out of 5 jobs in the U.S. Economy 1 out of 5 jobs in the U.S. Economy are part-time jobsare part-time jobs

Part-Time Workers:Part-Time Workers:Reasons for GrowthReasons for Growth

Retail positions are helpful addition family Retail positions are helpful addition family incomesincomes

Allow additional activities (college courses, Allow additional activities (college courses, time with family)time with family)

Flexible schedules (lunch rush, seasonal)Flexible schedules (lunch rush, seasonal)

Lower cost to businesses (low health, Lower cost to businesses (low health, retirement and other benefits)retirement and other benefits)

Part-Time Workers:Part-Time Workers:CriticismsCriticisms

Wages are too low and hours are too few to Wages are too low and hours are too few to earn a decent livingearn a decent living

Some part-time workers think they are abused Some part-time workers think they are abused by the system and forced to work inconvenient by the system and forced to work inconvenient schedulesschedules

Others believe the system denies full-time Others believe the system denies full-time employment to a large number of capable employment to a large number of capable workersworkers

Unions are opposed to part-time workersUnions are opposed to part-time workers 1997 – UPS strike1997 – UPS strike

Minimum Wage DebateMinimum Wage Debate(pg. 217, Figure 8.10A)(pg. 217, Figure 8.10A)

Lowest wage than can be paid by law to most Lowest wage than can be paid by law to most workersworkers

Original intent was to prevent exploitation of Original intent was to prevent exploitation of workers and provide equity and security to workers and provide equity and security to unskilled workersunskilled workers

SupportersSupporters Equity and security consistent with U.S. economic Equity and security consistent with U.S. economic

goalsgoals

OpponentsOpponents Object on the grounds of economic freedomObject on the grounds of economic freedom Wage discriminates against young peopleWage discriminates against young people

Minimum Wage: Measured in Minimum Wage: Measured in Current DollarsCurrent Dollars

(pg. 217, Figure 8.10A)(pg. 217, Figure 8.10A) Current dollars are dollars that are Current dollars are dollars that are

not adjusted for inflationnot adjusted for inflation

Viewed in this manner, it seems as Viewed in this manner, it seems as though minimum wage increased though minimum wage increased dramaticallydramatically Does not take into account inflationDoes not take into account inflation

Minimum Wage: Adjusted for Minimum Wage: Adjusted for InflationInflation

(pg. 217, Figure 8.10B)(pg. 217, Figure 8.10B) Real or constant dollarsReal or constant dollars – economists – economists

use dollars that are adjusted in a way that use dollars that are adjusted in a way that removes distortion of inflationremoves distortion of inflation

Base yearBase year – year that serves as a – year that serves as a comparison for all other yearscomparison for all other years

Panel B shows minimum wage had more Panel B shows minimum wage had more purchasing power in 1968purchasing power in 1968

Panel B also shows minimum wage Panel B also shows minimum wage increases whenever it increases faster increases whenever it increases faster than inflation (1997)than inflation (1997)

Minimum Wage: Compared to Minimum Wage: Compared to Manufacturing WagesManufacturing Wages(pg. 217, Figure 8.10C)(pg. 217, Figure 8.10C)

Panel C – minimum wage as a Panel C – minimum wage as a percent of average manufacturing percent of average manufacturing wagewage