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Unit 5 business and labor academic

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Unit 5 business and labor academic

  1. 1. Unit 5 Labor and Business Unit
  2. 2. I. Labor Market
  3. 3. A. Labor Force <ul><li>Employed </li></ul><ul><li>unemployed </li></ul><ul><li>not </li></ul><ul><ul><li>young children </li></ul></ul><ul><ul><li>adults over 65 </li></ul></ul><ul><ul><li>Military </li></ul></ul><ul><ul><li>Prisoners </li></ul></ul><ul><ul><li>other institutionalized persons. </li></ul></ul>
  4. 4. B. Employed <ul><ul><ul><ul><li>Work at least one hour of pay within the past week </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Worked 15 hours or more without pay in family business. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Held jobs but did not work due to illness, vacations, labor disputes, or bad weather. </li></ul></ul></ul></ul>
  5. 5. C. Unemployed <ul><ul><ul><ul><ul><li>Without work, but has searched for job over the last four weeks. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Waiting to be called back to work from a job they have been laid off from. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Waiting to start a new job in thirty days. </li></ul></ul></ul></ul></ul>
  6. 6. D. Supply and Demand <ul><ul><ul><ul><li>Labor Supply – Households provide labor supply </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Labor Demand – Businesses and government provide labor demand. </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Productivity – value of output. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Many workers are paid by output, but this is hard to measure in some cases. </li></ul></ul></ul></ul></ul>
  7. 7. E. High Wages <ul><ul><ul><ul><ul><li>Firms respond by replacing workers with… </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cheaper labor elsewhere. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Machinery. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Employees respond by… </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Looking elsewhere for a job in a good economy. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Forming a union. </li></ul></ul></ul></ul></ul>
  8. 8. F. Equilibrium Wage
  9. 9. F. Levels of Skill <ul><ul><ul><ul><li>unskilled -no specialized training, work mainly with their hands </li></ul></ul></ul></ul><ul><ul><ul><ul><li>semi-skilled -operate electric machinery that requires minimum training </li></ul></ul></ul></ul><ul><ul><ul><ul><li>skilled- trained to operate complex equipment and can work without direct supervision </li></ul></ul></ul></ul><ul><ul><ul><ul><li>professional -high level skills, usually resulting from extensive education </li></ul></ul></ul></ul>
  10. 10. II. Unions
  11. 11. A. Why unions are important: <ul><ul><ul><li>Responsible for safety and pay laws. </li></ul></ul></ul><ul><ul><ul><li>Unions have presence in vital industries. </li></ul></ul></ul><ul><ul><ul><li>1993, = 19 million workers. </li></ul></ul></ul><ul><ul><ul><li>Becoming more diverse in service industry. </li></ul></ul></ul>
  12. 12. B. Early Union Development <ul><ul><ul><li>Immigrants and unskilled workers attempted unionization in mid-1800's. </li></ul></ul></ul><ul><ul><ul><li>Law and the public were against formation. </li></ul></ul></ul><ul><ul><ul><li>After Civil War, industry expanded </li></ul></ul></ul><ul><ul><ul><li>Immigrants assimilated. </li></ul></ul></ul><ul><ul><ul><li>Labor force became more unified. </li></ul></ul></ul>
  13. 13. 6. Types of Unions <ul><li>craft (trade) union - skilled workers who do same work (guilds) </li></ul><ul><li>industrial union -all workers in a given industry regardless </li></ul>
  14. 14. C. Union Activities <ul><li>Negotiated for: </li></ul><ul><ul><li>higher pay </li></ul></ul><ul><ul><li>better working conditions </li></ul></ul><ul><ul><li>job security </li></ul></ul><ul><li>strike -a refusal to work until demands are met </li></ul><ul><li>picket -parade in front of business with signs </li></ul><ul><li>boycott- refusal to buy products </li></ul>
  15. 15. D. Employer Resistance <ul><ul><li>lockout – don’t let employees in until work dispute is settled. </li></ul></ul><ul><ul><li>Scabs – Hired to replace those on strike </li></ul></ul><ul><ul><li>Company Unions –organized by employers </li></ul></ul>
  16. 16. E. Attitude of the Law <ul><li>Pre Great Depression – law is anti-union </li></ul><ul><li>Common misery among workers united them behind labor unions during Great Depression. </li></ul><ul><li>Pro-Union Legislation allowed peaceful strikes, pickets, and boycotts </li></ul><ul><li>Can bargain collectively </li></ul>
  17. 17. F. 1938- Fair Labor Standards Act <ul><ul><li>set minimum wage </li></ul></ul><ul><ul><li>set 40 hour work week </li></ul></ul><ul><ul><li>time and a half for overtime </li></ul></ul><ul><ul><li>ended child labor </li></ul></ul>
  18. 18. G. Post WWII <ul><li>Grows unpopular, too many strikes. </li></ul><ul><li>Taft-Hartley Act passed </li></ul><ul><ul><li>Unions can’t donate to parties </li></ul></ul><ul><ul><li>Right to work – can’t be forced to join unions. </li></ul></ul><ul><li>American Federation of Labor (trade) </li></ul><ul><li>Congress of Industrial Organizations (industrial) </li></ul><ul><li>Merged AFL-CIO </li></ul>
  19. 19. III. Resolving Union and Management Differences
  20. 20. A. Kinds of Union Arrangements <ul><li>1. Closed Shop - arrangement in which the employer agrees to hire only union members </li></ul>
  21. 21. <ul><li>2. Union shop –must join in 30 days </li></ul><ul><li>3. Modified Union Shop </li></ul><ul><li>a. Cannot be forced to join union </li></ul><ul><li>b. If the worker voluntarily joins, he must remain in the union </li></ul><ul><li>4. Agency Shop - Non-union members have to pay dues and are subject to the same contract </li></ul>
  22. 22. B. Collective Bargaining -a meeting between representatives from the union and management <ul><li>1. Can be a long process </li></ul><ul><li>2. Requires compromise </li></ul><ul><li>3. Contract may include </li></ul><ul><li>a. wages </li></ul><ul><li>b. benefits </li></ul><ul><li>c. work conditions </li></ul><ul><li>d. grievance </li></ul>
  23. 23. 4. No Agreement: <ul><li>a. Mediation - 3rd person offers compromise. </li></ul><ul><li>b. Arbitration -3 rd party determines final decision. </li></ul><ul><li>c. Fact finding – 3 rd party gathers info. </li></ul>
  24. 24. d. Government Involvement <ul><li>injunction -a court order to stop </li></ul><ul><li>seizure -when gov’t takes over and runs the business </li></ul><ul><li>usually only happens in vital industries -coal mines, police, etc. </li></ul>
  25. 25. C. Trends in Labor <ul><li>Union Membership has declined to 12% </li></ul><ul><li>Reasons for Decline: </li></ul><ul><li>Women & teenagers less likely to join. </li></ul><ul><li>New types of work -service industry and technology replaces manufacturing </li></ul>
  26. 26. III. Business Organizations
  27. 27. A. Sole Proprietorship- Description <ul><li>Form of business in which individual owns firm. </li></ul><ul><li>75% of all firms. </li></ul>
  28. 28. 3. Advantages <ul><li>Easy to start. </li></ul><ul><li>Little government involvement. </li></ul><ul><li>All profit goes to owner. </li></ul><ul><li>Complete control. </li></ul><ul><li>Taxes are generally lower. </li></ul>
  29. 29. 4. Disadvantages <ul><li>Unlimited Liability – Responsible for all debts. </li></ul><ul><li>Difficult to raise capital </li></ul><ul><li>Limited Managerial experience is necessary </li></ul><ul><li>Difficulty in finding qualified employees </li></ul>
  30. 30. B. Partnerships - Description <ul><li>1. A business jointly owned by two or more people. </li></ul>
  31. 31. 2. Advantages <ul><li>Simple to establish and manage </li></ul><ul><li>No special taxes </li></ul><ul><li>Easier to gain capital (bank loans) </li></ul><ul><li>Slightly larger size allows for better efficiency. </li></ul><ul><li>Easier to attract top talent (law firms, accounting firms). </li></ul>
  32. 32. 3. Disadvantages <ul><li>Liability </li></ul><ul><ul><li>General Partnership - Each partner is fully responsible for the acts of other partners. </li></ul></ul><ul><ul><li>Limited Partnership - Investing partner loses only the original investment if it fails, but cannot be involved indecisions </li></ul></ul><ul><li>All partners share the profits </li></ul><ul><li>Limited Life -If a partner dies, business ceases to exist. </li></ul>
  33. 33. C. Corporation <ul><li>A business organization recognized by law as a separate legal entity. </li></ul><ul><li>It can buy and sell property, enter into contracts, sue, and be sued. </li></ul><ul><li>20% of all businesses. </li></ul><ul><li>90% of all products sold in USA. </li></ul>
  34. 34. 5. Advantages <ul><li>Ease in raising capital through sale of stock. </li></ul><ul><li>Board of Directors (elected by stockholders) can hire the best management available to run the company </li></ul><ul><li>Limited Liability --If corporation goes bankrupt. Owners lose original investment. </li></ul><ul><li>Unlimited Life --The business continues to exist even when ownership changes. </li></ul>
  35. 35. 6. Disadvantages <ul><li>Corporate charter may be difficult or expensive to obtain. </li></ul><ul><ul><li>name of company </li></ul></ul><ul><ul><li>address purpose of the business </li></ul></ul><ul><li>Investors (owners) have little say in how the business is run. </li></ul><ul><li>It must pay taxes since it is a separate legal entity. </li></ul><ul><li>Subject to more government regulation—Securities and Exchange Commission </li></ul>
  36. 36. 7. Stock <ul><li>Preferred – No votes, but dividends (share of profits) first. </li></ul><ul><li>Common stock – with voting rights. </li></ul><ul><li>Stock exchange – market to trade stock </li></ul><ul><ul><li>NYSE – blue chips (stable companies) </li></ul></ul><ul><ul><li>National Association of Securities Dealers Automated Quotations – new companies </li></ul></ul><ul><li>Stock Broker – trades stock </li></ul><ul><li>Split Stock – price too high, price and stock is divided. </li></ul><ul><ul><li>Ex – 25 shares at $100, now 50 shares at $50 </li></ul></ul><ul><ul><li>Done to keep stock affordable </li></ul></ul>
  37. 37. 8. Criticisms <ul><li>Stockholders and management are separate, leaving low motivation. </li></ul><ul><li>Management incurs greed in positions, rewarded with little understanding from stockholders. </li></ul><ul><li>Easy for management to manipulate company reports, stock value. </li></ul><ul><li>Enron 2000=$90, 10/2001 = $15 </li></ul><ul><li>AIG = $400,000 spa/golf trip, $86,000 hunting trip </li></ul><ul><li>NYSE CEO had received $140 million despite being pushed out of the job. </li></ul><ul><li>Adam Smith criticized joint-stock companies. </li></ul>
  38. 38. 9. Franchise <ul><li>Entrepreneur purchases right to use brand name or trademark. </li></ul><ul><li>Good </li></ul><ul><ul><li>Receives name recognition </li></ul></ul><ul><ul><li>Employee training </li></ul></ul><ul><ul><li>Ease with startup </li></ul></ul><ul><ul><li>Range of products, ideas </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Broaden base </li></ul></ul><ul><ul><li>Less staff on the ground throughout the nation. </li></ul></ul><ul><ul><li>Distribute costs. </li></ul></ul><ul><li>Bad </li></ul><ul><ul><li>Stipulations from parent company. </li></ul></ul><ul><ul><li>Inventory purchases. </li></ul></ul><ul><ul><li>Little room for innovation. </li></ul></ul><ul><ul><li>Less control for parent. </li></ul></ul><ul><ul><li>Few with capital to cover startup costs </li></ul></ul>