University:
Bradley University
Course:
ECO 310 | Labor Economics
Academic year:

2024
Views:

40

Pages:

30
Author:

segolhandworked

Chapter 9: Labor Section 1: Labor Market Trends Tracking the Labor Force • Each month the Bureau of Labor Statistics of the US Department of Labor surveys households to assemble information on the labor force –Labor force- all nonmilitary people who are employed or unemployed Employment • People are considered employed if they are 16 years or older & meet at least one of the following requirements: –They worked a least one hour for pay within the last week –They worked 15 or more hours without pay in a family business –They held jobs but did not work due to illness, vacations, labor disputes, or bad weather. Unemployment • People are considered unemployed if they are 16 years or older & meet the following criteria: • They do not have a job • They have actively looked for work in the prior 4 weeks • They are currently available for work. • Not considered unemployed –Stay at home parents, students, or retirees –“Discouraged workers” The Bureau of Labor Statistics • Provides an answer to two important questions –How many people are in the labor force? –How many people are employed & unemployed? • Provides information about historical trends • Reports unemployment rates each month Occupational Trends A Changing Economy • The economy of the United States has transformed from a mainly agricultural economy in the 1800s, to an industrial giant in the 1900s. • The computer chip has revolutionized the economy since its introduction in the late 1900s. Fewer Goods, More Services • Overall, the United States is shifting from a manufacturing economy to a service economy. • As service jobs increase, the nation is losing manufacturing jobs. • Demand for skilled labor is rising, & the supply of skilled workers is increasing to meet the demand. Effects of International Competition • US is losing manufacturing jobs –Many workers have been laid off due to plant closings or moves, too little work, or the eliminating of their positions • American companies build factories & hire workers in countries where costs are lower • Less demand for the services of unskilled workers –Pushes workers to go back to school or enter job training programs to gain new skills • Demand for skilled labor is rising so wages for skilled workers goes up & the supply of skilled workers increases to meet the demand • Demand for low skilled labor drops off & there’s a surplus of workers who must become more skilled to compete in the job market The Changing Labor Force • Today someone entering the work force can expect to have 4 or 5 jobs during their life & retire at 62 or earlier College Graduates at Work • Must have human capital • Education, training, & experience • Education is expensive, fewer people become highly educated & higher earnings compensate these workers for their high training costs • The learning effect is the theory that education increases productivity & results in higher wages. • The screening effect theory suggests that the completion of college indicates to employers that a job applicant is intelligent & hardworking. –Skills & determination necessary to complete college may also be useful qualities for employees • College degree does not increase productivity, just identifies people who may be good employees because of their innate skills Women at Work • Overall, the number of women in the work force has increased from about 38% of all women in 1960 to about 58% in 1995. • 2000 about 60% • Increased because –Women are encouraged to get a higher education & add to their human capital • Jobs require brain power & personal skills Education & Income Potential earnings increase with increased educational attainment. Education and Earnings (Median by group) • High school dropout $20,176 • High school graduate $27,768 • Some college $32,396 • College graduate $46,384 • Advanced degree holder $57,408 Superstars! What do these people have in common? How does technology allow them to leverage their labor time and raise their income? How much would Tiger have made before TV? Why are sponsors willing to pay so much more now than they used to? How does branding help him to “re-sell” himself? $647 Million Lesson from the Superstars: Work at a job you enjoy, but if you can use technology to leverage your time, you’ll be more productive and have a higher income. Temporary Workers • Hired for a specific period of time or to complete a certain task • Contingent employment is temporary or part-time employment. • Becoming more common Why the Shift? Temporary employees offer firms some of the following benefits: 1. Flexible work arrangements allow a firm to easily adjust its workforce to changing demand for its output 2. Easy discharge due to the lack of severance pay for temporary workers. -Have fewer rights 3. Temporary workers are often paid less & receive fewer benefits than their fulltime counterparts. 4. Some employees prefer temporary arrangements. Trends in Wages & Benefits Earnings Up for Some, Down for Others • Earnings for college graduates have increased, while earnings for workers without college degrees have decreased. –Due to greater competition overseas & deregulation has forced firms to cut wages • Average weekly earnings in the U.S. decreased from $275 in 1980 to $271 in 1999, as measured in inflation-adjusted dollars. –Today added benefits include health insurance, retirement funds, stock options, & bonuses mean that earnings are much higher Cost of Benefits Rises • Pensions & Health insurance –Benefits now make up about 28 percent of total compensation in the economy. • For employers, rising benefits costs raise the cost of doing business and decrease profits. –Many firms are turning to contingent employment to curb benefits costs.

Section 1: Labor Market

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