ECONOMICS TOPIC 5 LESSON 6

TOPIC 5 LESSON 6

Labor and Wages

Essential Question

• How can businesses and labor best achieve their goals?

Learning Objectives

• Analyze how supply and demand in the labor market affect wage levels.

  
  

• Describe how skill levels and education affect wages.

  
  

• Explain how laws against wage discrimination affect wage levels.

  
  

• Identify other factors affecting wage levels, such as minimum wage and workplace safety laws

Supply, Demand, and the Labor Market

• •Labor Demand

  
  

• •Labor Supply

  
  

• •Equilibrium Wage

Derived demand

• a type of demand that is set by the demand for another good or service

Productivity of labor

the quantity of output produced by a unit of labor

Supply, Demand, and the Labor Market

A highly skilled neurosurgeon can earn over $500,000 per year. Neurosurgeons must complete four years of medical school and several more years of residency training.

Types of Labor

• •Unskilled labor

• •Semi-skilled labor

• •Skilled labor

• •Professional labor

Supply, Demand, and the Labor Market

Analyze Information Based on the information, what do you predict is likely to happen to the number of workers if customer demand for the toy decreases?

Open Ended

Analyze Information Based on the information, what do you predict is likely to happen to the number of workers if customer demand for the toy decreases?

Equilibrium wage

• the wage rate, or price of labor services, that is set when the supply of workers meets the demand for workers in the labor market

The graph shows a demand curve for restaurant cooks. Analyze Graphs If each cook works a 40-hour workweek, how many cooks will be hired at $12 an hour and at $16 an hour?

Open Ended

The graph shows a demand curve for restaurant cooks. Analyze Graphs If each cook works a 40-hour workweek, how many cooks will be hired at $12 an hour and at $16 an hour?

Multiple Choice

What determines the equilibrium wage of labor?

• A. The demand for workers in a labor market is less than the supply.

• B. The supply of workers in a labor market meets the demand for workers.

• C. The supply of workers in a labor market exceeds the demand for workers.

• D. The demand for workers in a labor market exceeds the supply.

Labor and Skills

Why do lawyers earn more money than carpenters, and carpenters more than cashiers? Wages vary according to workers’ skill levels and education, as well as according to supply and demand. Jobs are often categorized into four skill levels:

Labor and Skills

Auto mechanics like this one are part of the skilled labor force. Prospective auto mechanics often attend a technical college for specialized training and then gain experience on the job.

Labor and Skills

The graphs show how wages compare for similar jobs with different degrees of risk. Analyze Graphs How do the demand curves in the two graphs compare? What can you conclude?

featherbedding

the practice of negotiating labor contracts that keep unnecessary workers on the company’s payroll

Open Ended

The graphs show how wages compare for similar jobs with different degrees of risk. Analyze Graphs How do the demand curves in the two graphs compare? What can you conclude?

Multiple Choice

Which is an example of a semi-skilled laborer?

• A. a worker in a food-processing plant

• B. an auto mechanic

• C. a hotel manager

• D. a dishwasher

Discrimination in the Labor Market

As we have seen, wages for a particular job should end up at the equilibrium price of labor for that job. However, some people are paid less because of the social group they belong to. For instance, in the past, women and members of minority groups often received lower wages than white male workers for the same work. This practice is wage discrimination.

glass ceiling

an unofficial barrier that sometimes prevents some women and minorities from advancing to the top rank of organizations dominated by men

Discrimination in the Labor Market

• •Laws Against Wage Discrimination

  
  

• •Pay Levels for Women

  
  

• •Pay Levels Across Society

Discrimination in the Labor Market

Analyze Graphs How did the gap in earnings between men and women change between 1980 and 2012?

Open Ended

Analyze Graphs How did the gap in earnings between men and women change between 1980 and 2012?

Multiple Choice

Which law requires that men and women performing the same job receive the same pay?

• A. Civil Rights Act of 1964

• B. Fair Labor Standards Act of 1938

• C. Equal Pay Act of 1963

• D. Federal Employees’ Compensation Act

Additional Factors Affecting Wages

In addition to laws forbidding discrimination, several other factors can affect wages. These include minimum wage laws, workplace safety laws, employer actions, and labor unions.

Additional Factors Affecting Wages

• •Minimum Wage Laws

• •Safety Laws

• •Employers Respond to Wage Levels

• •Unions

Multiple Select

Which of these describes an action an employer may take to reduce the cost of wages?

• A. hiring permanent, rather than temporary, workers

• B. including featherbedding jobs in union contracts

• C. substituting workers for machines

• D. outsourcing jobs to another country

Additional Factors Affecting Wages

In 1938, unionized garment workers in San Francisco went on a strike that resulted in their obtaining higher wages, better hours, and improved working conditions.

Open Ended

How can businesses and labor best achieve their goals?