Wages The price of labor Payments workers receive in return for work Governed by the forces of supply & demand .

WAGES IN LABOR

Wages

The price of labor Payments workers receive in return

for work Governed by the forces of supply &

demand

http://www.classzone.com/cz/books/econ_cnc/resources/htmls/animated_economics/ec09_anim_labor.html

3 4 5 6 7 8 9 100

5

10

15

20

25

Demand Curve

Demand Curve

The restaurant is willing to hire more chefs if the hourly wage is

lower.

Number of workers

Hou

rly w

ag

e (

in d

olla

rs)

1 2 3 4 5 6 7 8 90

5

10

15

20

25

Supply Curve

Supply CurveLinear (Supply Curve)

As the wage increases, so does the number of workers willing to work as

fast food chefs.

Equilibrium Wage

The wage at which the quantity of workers demanded equals the quantity of workers supplied; the market price for labor

3 4 5 6 7 8 9 1005

10152025

Equilibrium Wage

Demand CurveSupply Curve

Why Do Wage Rates Differ?

The rates of pay for specific jobs or work performed

Human Capital

Unskilled Workers No training needed. House

cleaners & Sanitation workers

Semi-skilled Workers Received some training

(Construction & Clerical workers)

Skilled Workers Significant investment in training

(Plumbers, electricians, mechanics )

Professional Workers Doctors, lawyers Jobs with intensive specialized

training

Working Conditions

Higher wages are often paid to workers in dangerous and unpleasant occupations in order to attract qualified people

Discrimination in the Workplace

Glass Ceiling – Women can see the top but never attain the top levels of

management.

http://mediamatters.org/blog/2012/09/27/fox-news-women-earning-less-than-men-is-not-a-n/190161

http://www.bloomberg.com/news/2013-08-13/best-paid-women-in-s-p-500-settle-for-less-with-18-gender-gap.html

Government Actions

Minimum wage – the lowest wage legally allowed for one hour of work

Minimum wage acts like a price floor, designed to boost wages for low – income workers

http://www.dol.gov/whd/minwage/america.htm

Civilian Labor Force

People 16 & up who are employed or actively looking for and available for work

DOES NOT include military, prison, or people in mental hospitals.

Three Economic Sectors

Primary Sector Made up of jobs related directly to

natural resources Examples: Farming, forestry,

fishing, mining

Secondary Sector

Jobs related to the production of goods, including the materials and energy needed to produce them

Examples: welders, truck drivers, & construction workers

Tertiary Sector

Made up of service – related jobs Examples: Banking, insurance, retail,

education

14%

35%

53%

Employment in 1950

Primary SectorSecondary SectorTertiary Sector

3%

18%

79%

Employment in 2000

Primary SectorSecondary SectorTertiary Sector

http://www.bls.gov/news.release/empsit.nr0.htm

WHAT IS HAPPENING TO AMERICAN JOBS DUE TO

GLOBALIZATION?

Changes in Labor

Telecommuting Doing office work somewhere other

than a traditional office

Contingent Employment Temporary or part-time work

Independent Contractors People who sell their services to

businesses on a contract basis

OUTSOURCING:The practice of contracting with an outside company, often in a foreign country, to provide goods or services

There are many reasons this is done:1. Many other countries have much cheaper labor

available.2. If corporations want to expand into other

markets, sometimes it helps to do business in those markets.

3. You can cut down on shipping costs if you have a business located where the goods are going to be sold.

http://abcnews.go.com/WNT/video/world-news-fact-checks-outsourcing-overseas-jobs-steal-stolen-US-workers-12092146

Insourcing

The practice of foreign companies establishing operations in, and therefore bringing jobs to the U.S.

http://www.youtube.com/watch?v=LGIgJWvt6fw

http://abcnews.go.com/WNT/video/jobs-call-centers-back-us-14243481?playlist=1363932&section=1206834&tab=9482931

8/5/11

IIT – Imported from India