L A B O RLabor Market Trends

Chapter 9 Section 1

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What is the fastest growing occupation in 2008?

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Computer related occupations

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The labor force is being transformed right before our eyes.

Each month the Bureau of Labor Statistics of the United States Department of Labor surveys households to assemble information on the labor force.

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Labor Force – all nonmilitary people who are employed or unemployed.

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People to be employed if they are 16 years or older and meet at least one requirement:

They worked at least one hour for pay within the last week.

They work 15 or more hours without pay in a family business – such as a farm.

They held jobs but did not work due to illnesses, vacations, labor disputes, or bad weather.

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People who don’t meet these criteria are counted as unemployed– You have to work lined up for the future or– You are actively searching for a job.

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Those people outside the labor force include…

Full-Time Students. Parents who stay at home to raise children. Retirees Military personnel

These people are not considered unemployed and are not counted.

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Historically, the percentage of US population in the labor force has increased steadily – 1950 59.2%– 1999 67.1%

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In 2000, the unemployment rate was 4% - lowest it had been since 1960.

Labor force = 141,489,000 people.

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Occupational Trends– At its founding the US was a nation of agricultural

people.

1. A Changing Economy……– There were very few jobs outside of this area at

the time.– Corn, Wheat, Tobacco, and Cotton were the

major crops of the day.

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In 1800s – The North started to gradually yield from the Agricultural occupations to the Industrial Occupations.

The coming of the machine age energized the economy.

New jobs were created in the textile mills, shoe factories, and other manufacturing enterprises.

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In the 1900s – heavy manufacturing became the power house of the US economy.

Corporate names like– John D. Rockefeller – Standard Oil – Andrew Carnegie – U.S. Steel– Henry Ford – Ford Automobile

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In the 1950s – Radio and Television boom came into being and produced a new surge in the employment growth.

In the 1980s – Personal Computer Revolution came to be.– This became known as the “Information Age”

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2. Fewer Goods and More Services US economy has shifted from a

manufacturing economy to a information management economy.

Our production of services is increasing faster than our producing of goods.

Jobs include…Banking, Advertising, Research, health care, consulting, & etc

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3. Effects of International Competition

* As service jobs increase, Americans are losing manufacturing jobs.

* Much factory work done in the US by American firms is now being done overseas, where labor costs are often lower.

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As less-skilled manufacturing jobs move overseas, there is less and less demand for the services of unskilled American workers.

There is a shift in demand for workers are another example of supply and demand in operation.

L A B O R Demand for skilled labor is rising, so wages

for skilled workers go up, and the supply of skilled workers increases to meet the demand.

As the demand for low-skilled labor drops off, there is a surplus of less-skilled workers who find that they must become more skilled in order to compete in the job market.

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Changing Labor Force– In the 1950s – American workers with high school

diploma could get a good job.– He would hope to stay with that company until he

retired at age 65.– TODAY – someone entering the work force can

expect to have 4 or 5 different jobs during his/her career

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To get a good job – people have to have human capital. (Education, Training, and Experience)

A high school diploma today does nothing for the average worker. It does not prepare them for the financial success they want.

Getting a good education is costly!

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Fewer workers are highly educated – this smaller supply of workers leads to higher compensation.

Learning Effect – the theory that education increases productivity and results in higher wages.

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College educated workers make a lot more than high school educated workers.

Screening Effect – the theory that the completion of college indicates to employers that a job applicant is intelligent and hard-working.

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Changing face of the labor force – more women entering the labor force.

1960 – 38% of women worked in the labor force .

1995 – over 58% of women work in the labor force.

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This increase is due to such factors:a. Women are encouraged to get a higher

education and add to their human capital.

b. As more and more jobs become service oriented, it involves less physical strength, these jobs entice women to join the labor force.

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Temporary Workers– Another trend in the US, more and more

businesses are replacing permanent, full-time workers with part-time and temporary workers.

– Are part of the contingent employment (part-time job or temporary)

Lawyers Software engineers are hired as contract workers – let go when job is done.

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Reasons to use temporary workers:1. Flexible work arrangements allow a firm to

easily adjust its work force to changing demand for their product.

2. Discharging temporary workers is much easier than discharging regular, permanent employees. No severance payments!

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Reasons to use temporary workers:

3. Temporary workers in many industries are paid less and given fewer benefits.

4. Some workers actually prefer these flexible arrangements to traditional jobs

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Trends in Wages and Benefits:– American workers are well paid compared to their

counterparts in other parts of the world.– Average weekly earnings is about $ 271.00 in

1999.– It has decreased from $ 281.00.week in 1980– This is due to foreign competition and other

benefits that are being paid to workers.

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Major cost of the employer is the Health Insurance – This has increased some 28% since the mid-

1990s.– Social Security payments have been increasing

as well, but not as much.– Increased benefit costs are cutting into the

employer’s profits.