Labor Unions Discrimination and Immigration “In the making of the wages contract the individual...

Labor Unions Discriminatio

n and Immigration

“In the making of the wages contract the individual laborer is always at a disadvantage. He has something which he is obliged to sell and which his employer is not obliged to take, since he [that is, the employer] can reject single men with impunity.”

John Bates Clark (1847–1938)

1. U.S. laws to create a more equal balance of power

between workers and employers a. Setting minimum hourly wages b. Setting maximum hours of work (at least before

employers pay overtime rates)c. Prohibiting child labor d. Regulating health and safety conditions in the

workplace e. Preventing discrimination on the basis of race,

ethnicity, gender, sexual orientation, and agef. Requiring employers to provide family leaveg. Requiring employers to give advance notice of

layoffsh. Covering workers with unemployment insurancei. Setting a limit on the number of immigrant

workers from other countries

2. Prominent U.S. Workplace Protection Laws

a. National Labor- Management Relations Act of 1935

b. Social Security Act of 1935

c. Fair Labor Standards Act of 1938.d. Taft-Hartley Act of 1947

e. Civil Rights Act of 1964

f. Occupational Health and Safety Act of 1970

g. Employee Retirement and Income Security Act of 1974

h. Pregnancy Discrimination Act of 1978

i. Immigration Reform and Control Act of 1986

j. Worker Adjustment and Retraining Notification Act of 1988

k. Americans with Disabilities Act of 1990

l. Family and Medical Leave Act of 1993

m . Pension Protection Act of 2006

n. Lilly Ledbetter Fair Pay Act of 2009

Labor Unions

+ the workers’ primary line of defense against efforts by profit-seeking firms to hold down wages?

- grab as much as they can in the short term, even if it means injuring workers in the long run by driving firms intobankruptcy or by blocking the new technologies and production methods that lead to economic growth

Union Statistics1. 11.3% of all U.S. workers belong to unions.

2. 12.0% of U.S. male workers belong to unions; 10.5% of female workers do

Incidence of Union Membership – by sex

Union members as a share of group, 2000

Men

Women

15.2 %

11.5 %

Incidence of Union Membership – by sex


Men

Women

12.0 %

10.5 %

Union Statistics3. 11.1% of white workers, 13.4 % of black workers, 9.8 % of Hispanic workers belong to unions

Incidence of Union Membership – by race


White

Black

Hispanic 11.4 %

17.1 %

13.0 %

Incidence of Union Membership – by race


White

Black

Hispanic 9.8 %

13.4 %

11.1 %

Union Statistics4. 12.5% of full-time workers and 6.0% of part-

time workers are union members

Incidence of Union Membership – full time/part time


Full time

Part time 6.0 %

12.5 %

Union Statistics

5. 4.2% of workers ages 16–24 belong to unions, and

14% of workers ages 45-54

Incidence of Union Membership – age group


16 - 24

45 - 45 14.0 %

4.2 %

high percentages of unionized workers: - the federal government (26.9%), - state government (31.3%), - local government (41.7%); - transportation and utilities (20.6%); - natural resources, construction, and maintenance (16.3%); - production, transportation, and material moving (14.7%)

low percentages of unionized workers: - agricultural workers (1.4%), - financial services (1.1%), - professional and business services (2.4%), - leisure and hospitality (2.7%), - wholesale and retail trade (4.7%)

The Largest American Unions in

2013Union Membership

National Education Association (NEA) 3.2 million

Service Employees International Union (SEIU) 2.1 million

American Federation of Teachers (AFT) 1.5 million

International Brotherhood of Teamsters (IBT) 1.4 million

The American Federation of State, County, and Municipal Workers (AFSCME)

1.3 million

United Food and Commercial Workers International Union 1.3 million

United Steelworkers 1.2 million

International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)

990,00

International Association of Machinists and Aerospace Workers 720,000

International Brotherhood of Electrical Workers (IBEW) 675,000

Union Membership Trend

Since the mid-1950s, union membership has declined.

30 %

35 %

20 %

15 %

10 %

5 %

1910 1920 1930 1940 1950 1960 1970 1980 20131990

Union Membership As A Share Of Nonagricultural Employment

11.3 %

w0

DE0

S0

Employment

Price(wage)

SupplyRestriction

E1

1. Supply Restrictions

Before union restriction - E0 and w0

w1

After W1 E1 and an excess supply of labor.

S1

Excess supply

Higher Wages for Union Workers

Employment

Price(wage)

w0

E0

S0

BargainingPower

w0

E1

D

E0

S0

2. Bargaining Power

After employing bargaining techniques, a new higher wage level W1 with a lower level of employment, E1 results.

Again, an excess supply of labor results.

Employment

Price(wage)

w1

E1

w1

SupplyRestriction Excess supply

S1

Excess supply

D

3. Increase Demand

a. If a union is to be strong, the demand for union labor must be inelastic.

This will enable the union to obtain large wage increases while suffering only modest reductions in employment.

b. Demand for union labor is inelastic when:There is an absence of good substitutes for the services of union employees.

The demand for the product produced by the union labor is highly inelastic.The union labor input is a small share of the total cost of production.

The supply of available substitutes is inelastic.

4. Increased Productivity from Unions?a. If yes, a firm can afford to pay higher wages.

1) Higher wages may encourage more productivity.

2) Union workers tend to stay longer, decreasing training costs.

3) Firms may use more capital and less labor.

b. If no, lower profits and losses for the firms1) Firms may purchase inputs from non-

union producers rather than produce their own.

2) Firms may move.

Three Production Choices

Hours ofLabor

Number ofMachines

Cost of Labor + Machine $16/hour



30 3 $480 + $600 = $1,080

$600 + $600 = $1,200

$720 + $600 = $1,320

40 2 $640 + $400 = $1,040

$800 + $400 = $1,200

$960 + $400 = $1,360

50 1 $800 + $200 = $1,000

$1000 + $200 = $1,200

$1200 + $200 = $2,400

Causes of Union Decline

1. Employment growth where unions have been weak.1. Small firms2. Sunbelt3. Services


2. Foreign Competition

3. Workplace protection laws


4. More difficult for unions to organize in the US

International Comparisons of Union Membership and Coverage in 2012

Country Union Density: Workers Belonging to a Union (%)

Union Coverage: Workers Whose Wages Are Determined by Union Bargaining (%)

Austria 37 99

France 9 95

Germany 26 63

Japan 22 23

The Netherlands 25 82

Spain 11.3 81

Sweden 82 92

United Kingdom 29 35

United States 11.3 12.5

in many countries, the wages of many workers who do not officially belong to a union are still determined by collective bargaining between unions and firms.

1950-54 1955-58 1967-70 1971-75 1976-79 1980-82 1983-89 1990-00

Wage Premium of Union Workers Relative to Similar Non-Union Workers

Sources: Lewis, H.G. Unionism and Relative Wages in the United States: An Empirical Inquiry (Chicago: University of Chicago Press, 1963); and Lewis, H.G. Union Relative Wage Effects: A Survey (Chicago: University of Chicago Press, 1986). The 1983-1989 and 1990-2000 figures are from Hirsch, B.T. and MacPherson, D.A. Union Membership and Earnings Data Book: Compilations from the Current Population Study, 2001 edition (Washington D.C.: The Bureau of National Affairs, 2001).

Results

11 %

15 %

12 %

15 %18 %

20 % 19 %17 %

Studies indicate that the wages of union workers have been between 18% and 20% higher than those of similar non-union workers during the past two decades.

Which is slightly higher than during the 1950’s and 1960’s.

1. Since 1970, union membership, as a percent of the labor force, hasa. remained virtually unchanged.b. increased slightly.c. declined steadily.d. increased significantly.

2. Which of the following is true?a. Women are more highly unionized than men.b. A higher percent of white workers belong to unions than do

African-American workers.c. The proportion of government employees belonging to a union is

substantially higher than the proportion of private-sector workers who are union members.d. There is little difference in incidence of unionization among

occupational categories.

3. How does competition from nonunion firms and foreign producers affect the ability of a union to increase the wages of its members?

a. Such competition reduces the ability of a union to achieve wage increases.

b. Such competition does not affect the ability of a union to achieve wage increases.

c. Such competition will increase the strength of a union if it produces a product sold in the domestic market but reduce the strength of the union if it produces an export product.

d. The effect of this type of competition will be entirely dependent on the elasticity of demand for labor in the domestic market.

4. Most studies indicate that during the last two decades, the wages of union members have been approximately

a. 5 percent higher than the wages of similar nonunion workers.b. 14 to 19 percent higher than the wages of similar nonunion workers.c. 34 to 39 percent higher than the wages of similar nonunion workers.d. 64 to 69 percent higher than the wages of similar nonunion workers.

5. Which of the following factors will make it easier for a labor union to increase the wages of its members?

a. a highly inelastic demand for the products produced by the union labor

b. a readily available supply of similar products produced by nonunion labor

c. low tariffs and strong competition from foreign firms producing the products supplied by the union labor

d. a reduction in the demand for the products produced by the union labor

2. Wage Discrimination

Discrimination

1. Employment Discrimination

Lower wages for minorities

Fewer jobs available for minorities

Employment Discrimination

1. Race and gender:•Discrimination - if workers with the same skill levels—as measured by education, experience, and expertise—receive different pay receive different pay or have different job opportunities because of their race or gender.

Is Discrimination Responsible for the Earnings Differences

Between Men and Women?

Less than9th grade

HighSchool

Some college

Bachelor’sdegree

Master’sdegree

Doctoraldegree

• The earnings of both men and women increase with education.

• Note, though, that women’s earnings were only about 2/3 those of similarly educated men.

Level of Education and Earnings (and Discrimination)

24,595

35,121

42,946

62,543

75,411

107,988

23,498

29,500

49,635

69,085

40,263

18,578 Women

Men

Mean earnings ($) ofyear-round-full-time workers (2000)

56% of men’s

Less thanhigh school

Highschool

Some college

Bachelor’sdegree

Master’sdegree

Doctoraldegree

• Both still increase with education.

• Updated in 2001

• Women’s earnings still about 2/3 those of similarly

educated men.

Level of Education and Earnings

27,190

37,362

45,271

70,253

87,022

118,853

26,660

32,511

57,770

71,608

45,290

22,361 Women

Men

Mean earnings ($) ofyear-round-full-time workers (2001)

10% above 2000

14% above 200066% of men’s

•Less thanhigh school

•Highschool

•Some college

•Bachelor’sdegree

•Master’sdegree

•Doctoraldegree


•28,415

•40,112

•49,537

•75,130

•95,794

•136,567

•28,657

•35,521

•59,569

•92,650

•49,326

•20,508 •Women

•Men

•Mean earnings ($) ofyear-round-full-time workers (2005)

• Both still increase with education.

• Updated in 2005

• Women’s earnings still about 2/3 those of similarly

educated men.

14.9% from 200114.9% from 200147% of men’s

•Less thanhigh school

•Highschool

•Some college

•Bachelor’sdegree

•Master’sdegree

•Doctoraldegree

• The earnings of

both men & women

increase with education.

• Updated in 2007

Women’s earnings

still only about 2/3

those of similarly

educated men.


•30,602

•42,042

•50,103

•77,536

•94,763

•132,706

•30,657

•38,396

•63,156

•85,190

•52,857

•21,906 •Women

•Men

•2000

2005

2007

• Bachelor’s Degree

•Comparison over time

77,536

52,857

•Women

•Men62,543

40,263

2001 70,253

45,290

75,130

49,326

Employment Discrimination and Earnings of Women

The labor force participation rate of women has steadily increased for several decades.

Since 1980 the earnings of women have been rising relative to men.

The earnings of women remained around 60 % that of men during the 1960’s and 1970’s.

Share of females age 20 and over in the

labor force (right scale)

Female/male annual earnings, full-time workers (left scale)

1965 1970 1975 1980 19851960 1990 199550

55

60

65

70

35

45

55

75

85

77.0

60.4

2000

65

75

2005

Employment Discrimination and Earnings of Women

The earnings of married female workers are about ½ those of married men. The earnings of single female workers are about 81 percent that of single men.

The earnings of full-time married female workers are 69 percent that of full-time married male workers.

69 %

Median female/male annual earnings ratio (%), 2005

Full-time, full-year workers:

100 %

58 %

81 %

76 %

69 %

Never Married

•otal

Married (spouse present)

Total

Married (spouse present)

Never Married

All workers:

In 2013, childless women with the same education and experience levels as men are typically paid comparably.

However, women with families and children are typically paid about 7% to 14% less than otherwomen of similar education and work experience

(Married men earn about 10% to 15% more than single men with comparable education and work experience.)

The career goals and educational choices of women have changed dramatically during the last 35 years.

The Changing Workforce Objectives of Women

1970–71

0.8 1.2 2.4 7.3

• 7.8 9.2

10.1 11.2 12.0 25.2

Engineering Dentistry Optometry Law Veterinary medicine Medicine Accounting Economics Architecture Pharmacy

Field of study 1987–88

15.326.134.340.450.033.052.632.838.759.7

2000–01

19.938.654.547.369.845.360.534.135.866.1

Women as a Proportion of PersonsEarning Selected Professional Degrees, Selected Years

2004–05

19.943.861.548.775.647.359.731.938.867.5

Progress by 2013

• 58.6% of adult women held jobs while

71.2% of adult men did.

In 1971, 44% of bachelor’s degrees went to women;

In 2013, 56% of bachelor’s degrees went to women.

In 1970, women received 5.4% of the law degrees, and 8.4% of the degrees from medical schools.

By 2013, women were receiving 47.2% of the law degrees 48.3% of the medical degrees

Women have constituted an increasing share of college graduates. Today, almost three of every five graduating seniors are women.Does this indicate that colleges discriminate against men?

Women as a Share of Persons Graduating from College: 1961-2006

Female Share of College Graduating Classes

1961 1970 1980 1990 2000

39 %43 %

49 %53 %

57 %

2006

58 % 56 %

2013

1. The labor force participation rate of women has risen from 37.6% in 1960 to 60.6% in 2002.

2. The hourly earnings of full-time working women were approximately 80% of those of men in 2002.

3. Until recently, more than ½ of all women were employed in just 4 occupations – clerical workers, teachers, nurses, and food service workers.

4. Women have tended to seek jobs with more flexible hours.

5. The male/female earnings differential was just as large between single males and females as between married males and females, strongly suggesting that employment discrimination is responsible for the earning difference.

TRUE or FALSE

6. By 1968, the majority of females 14 to 24 expected to be working at age 35.

7. Since 1970, the proportion of degrees in economics and engineering earned by women has fallen, while the proportion in veterinary medicine and accounting has risen.8. The 1962 equal pay legislation and the 1964 civil rights legislation resulted in a substantial increase in the earnings of females relative to males during the 60s and 70s.9. The earnings of women is expected to continue to rise relative to the earnings of men in the near future.10. When employment discrimination results from the personal prejudices of employers, economic theory suggests that employers who discriminate will have higher costs than employers who do not.

TRUE or FALSE

The Black/White Earnings Gap

1. Until the passage of the Civil Rights Act of 1964, it was legal in many states to refuse to hire a black worker, regardless of the credentials or experience of that worker.

2. Blacks were often denied access to educational opportunities, which in turn meant that they had lower levels of qualifications for many jobs.

3. the ratio of total earnings of black male workers to white male workers rose from 62% in 1964 to 75.3% in 2013 (BLS)

The Black/White Earnings Gap

4. the earnings gap between black and white workers has not changed as much as the earnings gap between men and women has in the last half century.

5. black women who have the same levels of education and experience as white women receive, on average, about the same level of pay.

6. white and black college graduates have identical salaries immediately after college; however, the racial wage gap widens over time

Educational Attainment by Race and Ethnicity, 2011

White Hispanic Black Asian

Completed four years of high school or more

87.6 % 62.9 % 84.2 % 88. 9 %

Completed four years of college or more

30.3 % 13.9 % 19.8 % 52.4 %

Employment Discrimination• Discriminated workers are restricted in the

types of jobs and occupations they enter.• Supply in the unrestricted jobs will increase,

causing wages to fall in these jobs.• When the supply (of minorities) to an

occupation is restricted, the wages (of white males) will rise.

Wages

Quantity

Du

Su

Wn

Wu

SuWages

Quantity

Du

Sr

Wr

Wn

Sr

Employment DiscriminationDiscrimination is costly to employers.

• When employers can hire equally productive minorities (or women) at a lower wage than whites (men), the profit motive gives them a strong incentive to do so.•Employers who ignore minority and gender

status when employing workers will have lower wage costs than employers who discriminate.

Public Policies to Reduce Discrimination

1. Equal Pay Act (1963) - said that men and women who do equal work at

a company must be paid the same2. The Civil Rights Act (1964)- prohibits employment discrimination based on

race, color, religion, sex, or national origin.3. The Age Discrimination in Employment Act (1967) - prohibited discrimination on the basis of age

against individuals who are 40 years of age or older

Public Policies to Reduce Discrimination

4. The Civil Rights Act (1991)-provides monetary damages in cases of intentional employment discrimination.5. The Pregnancy Discrimination Act (1978) - aimed at prohibiting discrimination against women in the workplace who are planning to get pregnant, are pregnant, or are returning after pregnancy

An Increasingly Diverse Workforce

The projected changes in the ethnic makeup of the U.S. population by 2060.

Note that “NHPI” stands for Native Hawaiian and Other Pacific Islander. “AIAN” stands for American Indian and Alaska Native. Source: US Department of Commerce

Immigration

View 1. Concern about immigration levels to the United States which shows total inflows of immigrants decade by decade through the twentieth century.

Immigration

View 2. the seemingly high levels in immigration in the 1990s and 2000s look relatively smaller when they are divided by the population.

Economic Effects of ImmigrationScenario 1: Immigrants matched the existing U.S. population in age range, education, skill levels, family size, and occupations.

1. Immigrants would be much better off, because their standard of living would be higher in the United States.

2. Immigrants would contribute to both increased production and increased consumption.

3. Given enough time for adjustment, the range of jobs

performed, income earned, taxes paid, and public services needed would not be much affected by

this kind of immigration.4. It would be as if the population simply increased a

little.

Economic Effects of ImmigrationReality: Immigrants are not identical to the rest of the U.S. population. About 1/3 of immigrants over the age of 25 lack a high school diploma.

1. many of the recent immigrants end up in jobs like restaurant and hotel work, lawn care, and janitorial work, which will lead to lower wages for these jobs.. 2. Competing low-skilled U.S. workers will tend to suffer from immigration. 3. the effects of immigration on taxes are generally positive at the federal level, 4. they are negative at the state and local levels in places where there are many low-skilled immigrants.

Proposals for Immigration Reform

1. The Congressional Jordan Commission of the 1990s

- proposed reducing overall levels of immigration and refocusing U.S. immigration policy to give priority to immigrants with a higher level of skills

2. “DREAM Act” (not yet passed by Congress) - would offer a path to citizenship for illegal

immigrants brought to the United States before the age of 16.

1. Since 1980, the female/male annual earnings ratio of full-time workers has been _____________, while the labor force participation rate of women has been _____________________ during this same period.

a. rising; decliningb. rising; increasingc. falling; increasingd. falling; declining

2. Which of the following is true?a. Employers who discriminate against women will have lower costs

than rival firms that hire employees strictly on the basis of merit (productivity).

b. If employers can hire equally productive female employees at a lower wage than males, the profit motive gives them a strong incentive to do so.

c. The female/male earnings ratio is higher for persons who are married than for those who remain single.

d. Both a and c are true.

3. (I) The female/male earnings ratio is lower for persons who are married than for those who remain single.

(II) Gender differences in household responsibilities are an important determinant of the earnings differential between men and women.

a. Both I and II are true.b. Both I and II are false.c. I is true; II is false.d. I is false; II is true.

4. Which of the following is true about those graduating with college degrees?

a. The proportion of college degrees earned by women has been declining in recent decades.

b. The proportion of college degrees earned by women has been virtually constant during the last four decades.

c. In 2002, only about 40 percent of those graduating from college were women.

d. In 2002, only about 40 percent of those graduating from college were men.

5. Which of the following factors are likely to lead to an increase in the female/male earnings ratio in the future?

a. As the labor force participation of women increases, their years of work experience will become more similar to men.

b.In recent years, a higher proportion of women have been preparing for careers in the professions.

c. As the proportion of families headed by a female parent increases, the average hours worked per week of female employees will decline.

d.Both a and b are correct.

6. Wages in the United States are higher than those in India primarily becausea. the weather is better in the United States.b. a larger proportion of the labor force is unionized in the US.c. less capital per employee is required in the United States.d. the human and physical capital of American workers exceeds that of their Indian counterparts.

7. When employment discrimination results from the personal prejudices of employers, economic theory suggests thata. it is costless for employers to discriminate against groups they do not like.b. the wages of employees who are discriminated against will actually rise.c. an employer who discriminates will experience higher costs.d. discrimination by an employer will reduce production costs since the employer can pay lower wages.

8. In a market economy, which of the following is most important if one is going to achieve high earnings?a. hard workb. provision of goods and/or services that others value highlyc. having a graduate degree in a field like history or sociologyd. membership in a labor union

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