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