Labor and Unions

Macroeconomics

The branch of economics that deals with the

economy as a whole, including employment,

Gross Domestic Product, and other more

large-scale components.

Labor Force

Men and women between the ages of 16 to

65 that are working or actively looking for

work.

National Labor Relations Act of 1935

• Guaranteed U.S. workers the right to form unions and participate in collective bargaining.

Right to work vs. non-Right to work states

ALF-CIO

• Largest Labor Union in the United States.

• Most smaller labor unions belong to this.

• Strength in numbers.

Kind of Union Arrangements

Closed Shop- The employer agrees to hire

only union members.

Collective Bargaining

You as an employee would be represented by union leadership and your contract would be negotiated with all other employees.• When labor and management agree to mediation, a

neutral person helps settle the dispute.• In arbitration, labor and management agree to abide by a

third party’s decision.• In fact-finding, a neutral party presents non-binding

recommendations• The President of the United States can get involved.

Categories of labor

• Unskilled workers-make some of the lowest wages

• Semiskilled workers- Do jobs that require minimum training.

• Skilled workers-Hold jobs that require experience and training.

• Professional workers- Do jobs that require a high level of knowledge based education and managerial skills.

Wage determination

• Traditional theory of wage determination says that supply and demand together determine the equilibrium wage rate.

• Theory of negotiated wages uses organized labor’s bargaining strength to help explain wage differentials.

• Signal theory says that employers are willing to pay more for those people with certain indicators of superior ability.

Regional Wage Differences

• Wages can vary when demand for certain skilled positions exceeds supply

• Employers tend to offer higher wages in areas where the cost of living is higher than normal.

• People sometimes are willing to accept lower wages if the location of the job is attractive to them.