Labor

Glossary
TERM DEFINITION
an organization of workers formed to protect and advance the workers’ rights
labor union
and interests
strikes

minimum wage

collective bargaining

unemployed

the supply of people who are able and willing to work in relation to the
labor market
employers who are willing to hire them at a given wage
price floor

surplus

market value

productivity

outsource

an investment made by a company based in one country into a company based

foreign direct investment (FDI)
in another country

Objective
In this lesson, you will

Why Organize?
In an economy, the forces of demand and supply __________________ the prices of goods and services.
Labor is a ______________ that households supply to firms in exchange for payment, or _______________.
When laborers join with other workers to __________________ better pay and working _________________,
it is an example of how labor unions work. These _________________ represent workers’ interests on the job.

Employers usually do do not suggest that labor unions form because unions _______________ wages
that are above the minimum wage, which is an ____________________ cost to the company.

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Labor unions use __________________ bargaining to present their demands. Collective bargaining is a process
where _______________________ of the union and the company meet to ____________________
employment terms, working conditions, and any other _______________________ demands.

Union Influence on Companies

Unions can have a _________________ influence in some industries. They can be a __________ factor in
deciding wage rates in a company. They also ____________________ overtime rates, raises, and other
___________________ with the company.

Union Influence on Public Policies

Policies Protecting Labor Rights
Fair Labor Standards Act (FLSA) establishes a __________________ wage

Occupational Safety and Health Act (OSHA) led to a series of __________________ for worker
______________ in different jobs and professions

regulates ____________________ plans and

Employment Retirement Income Security Act (ERISA)
______________ benefit plans

The government also pays __________________________ insurance (UI) to workers who are unemployed
through no ________________ of their own. UI is ________________ that the ____________ government
pays unemployed individuals.
Labor unions also _______________ that trade and immigration policies have a ______________
impact on the labor market. When two countries enter into a _____________ agreement, it’s possible
that people in _______________ country will lose their jobs because _______________ labor is available in
the other country.

Benefits of Unions to Workers

The efforts of labor unions led to the establishment of state and federal laws that set the minimum age of
workers at ______.
Union workers are also more likely to receive other benefits.
• 93% of union workers receive ____________________ benefits
• 82% of union workers receive paid ________ leave

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Wages

Identify the parts of the

supply and demand graph by
price
filling in the green boxes.

Labor Demand and Supply

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The _____________ supply curve shows the _________________ of people who are able and willing to work
at different wages. This curve has a ___________________ slope because when wages ______________,
more people are willing to ____________.
The labor demand curve shows the number of workers that _______________ are willing and _____________
to hire at different wages. This curve has a ___________________ slope because as wage rates
________________, firms hire _______________ workers to keep production costs down.

Notice that the demand and supply curves _______________ when the wage rate is $15 per hour. This is the

equilibrium wage. At this point, the _______________ of workers willing to work is the ____________ as the number of

workers the __________________ is willing to hire. At this point, there is no _____________ supply or demand for labor.

In the case of labor, the price floor is the ____________________ wage that an employer has to pay its workers.

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As the minimum wage _________________, the employers’ wage costs ____________ and employers cannot
afford to keep the ________________ number of workers they initially had. So, the quantity demanded for
labor _____________________ from 50 to __________.

However, 75 people are willing to work for $20, compared with the initial 50 who were willing to work for $10.
Employers cannot __________________ to hire all of them.
Therefore, __________ surplus workers are unemployed: they are ______________ and able to work but
______________ to find a job.

Employers Determine Employee Wages

according to the market value of the good or service the ______________________

Market ___________________
value
a worker produces goods worth __________, the worker’s wage will be __________

based on worker ________________________

in a factory, _______________ is _______________ and the final good is the output
Productivity
Worker B has __________________ productivity than worker A, the employer would
pay a _________________ wage to worker B than to worker A

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Trade and Jobs
Recent _____________________ in communications and technology have led many US
firms to ___________________ their business operations to other countries.

Outsourcing is an ______________________ where a company transfers

either a portion of or its entire operation to another company to
________________ costs. This approach enables the _______________ company to focus on core activities,
such as research, while saving on ___________________________ and labor costs.

Foreign direct investment (FDI) also __________________ the _____________ market. A merger—
two or more companies __________________ to become a _________________ company—is one
type of FDI. In addition, FDI can occur through ______________________ or partnerships.

Careers
The US economy has shifted its focus from _______________________ to the service sector.
The ________________ sector includes jobs in banking, insurance, hospitality, and retail.
These jobs require ______________ that are more ___________________. As a result, there
has been _______________ in the demand for educated and ___________________ labor.
In more recent years, the rapid growth of information ______________________ has led to
the use of computers in every walk of life. Most jobs in the United States—from minimum
_____________ positions to company presidents—require the use of _____________________ in some way.

Summary
How is the wage rate determined through the forces of demand and supply of labor?

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