Chapter 8

Labor Markets

Vocabulary:

Strike—workers agree to stop working as a group

Picket—carrying of signs outside a plant to bring attention to a strike

Boycott—refusal by union members to do business with a company

Lockout—employers shut down plant to force union to back down

Right-to-work law—illegal to force workers to join a union          

Closed shop—requires union membership before hiring

Union shop—requires union membership after hiring

Agency shop—requires dues for bargaining even if not in union

Collective Bargaining—formal negotiation process between union and management

Grievance—formal complaint by union or employee

Seniority—wages and layoffs determined by length of service

Conciliation—third party tries to get union and management together (solution made without third party)

Mediation—third party listens to both sides and makes recommendations for resolution

Arbitration—third party listens to both sides and makes a decision that is final and binding

Injunction—court orders to end strike

Seizure—temporary take over of operations by the government

Labor and Wages

    Civilian Labor Force: 139 million (over 16 and working or looking for work)

        Excludes: youths, imprisoned, institutionalized, those not looking for work

    Unskilled

    Semiskilled

    Skilled

    Professional

How are wages set? Why do they increase/decrease?

Traditional: Supply and demand combine to determine wages

If demand for labor increases faster than supply, wages increase.

 Overall, real wages have increased since 1960. This is true only for workers with skills in demand.

Changes in the Labor Market

Recently, union membership in private sector has declined;

membership in public sector has increased.

• Due to shift from manufacturing to service
• Increase in women working
• Union membership increases wage rates and decreases employment

Why do some workers earn more than others?

1. Primarily due to differences in supply and demand.
2. Also due to differences in ability, effort, experience, and education.
3. Also due to reluctance to relocate.
4. Also due to discrimination.
5. Also due to government legislation and labor unions.