MGMT104 Final Study Guide
Define what a bargaining unit is and why it is important
A bargaining unit is a group of workers within a plant, firm, occupation, or industry that, on the basis of commonality of interest or production process; is determined by the NLRB to be the appropriate unit for collective bargaining purposes It is important because the union is the exclusive representative of a bargaining unit. This forces firms to deal with employees as a group
In standard economic models of the demand for labor, which of the following factors determines a firm's total output and decisions on how to combine labor and capital? a. Amount of labor and capital available at a given price b. Choice of technologies available c. Unionization rates in the industry
Amount of labor and capital available at a given price and choice of technologies available
What is statistical discrimination and some remedies for it?
Based on group differences in mean or variance in productivity and reliability of screening devices (education quality) Based on treating an individual on the basis of membership in a group and knowledge of that group's history
Define what income inequality is and why (some people think) it is an important phenomenon to understand
Captures the distribution of income across participants in a collective, be it an organization, a region, or a country. Measured in simple ratios, range ratios, and full distribution measures It impacts economic mobility, educational attainment, life expectancies and health outcome, bank failures, taking on debt
The National Labor Relations Board (NLRB) serves two primary functions. List one. (1 point)
Conduct elections to organize (or dissolve) labor unions Investigate and adjudicate charges of unfair labor practices
In class, I stated there are three broad types of explanations for the development and maintenance of internal labor markets (ILMs). Briefly describe two of them (1 point)
Efficiency - Skill specificity increases recruitment/screening and training costs. Once learned, skills not easily transferable. Complex firm-specific technologies are difficult to document => the internal labor force uniquely possesses necessary skills Control - ILMs provide managers ability to exert control over workers. Reduces worker ability to find alternative employment outside the firm Institutional - 1930s ILMs spread with rise in influence of industrial unions. WWII government supports ILMs as part of wartime planning. 1960s firm responses to EEO legislation. ILMs were more effective response to curbing discrimination
Holding everything else constant, if the wage rate decreases, firms will likely respond by doing one or both of these two things
Expand production (scale effect) Substitute capital for labor (substitution effect)
What is the wage gap and the factors that lead it to exist?
Factors: educational disparities, geographic inequalities, occupational and industry distribution disparities
Why did the employment system present in the early 20th century, characterized by long hours and brutal working conditions, emerge? List three rationales discussed in class.
Factory work displaced agrarian and craft-based work immigration provided large supply of low-skilled workers little government intervention ideology of times (individualism, social darwinism)
Reflecting back to Norma Rae and what we learned in class about labor organizing in class, what are two factors that might motivate workers to vote against labor representation?
Fear (layoffs), ideological (unions filled with communists), uncertainty of how it will help
How do organizations and organizational practices allow the wage gap to exist?
Firms determine who gets hired and how much they get paid. External hiring may increase descrimination
What tactics did the company use to avoid unionization?
Gave Norma Rae supervisor promotion to turn her friends against her, didn't put bulletin posts where people could see them, stretch out, intimidation, placing statements to inflame racial tensions, firing Norma Rae
Samantha recently received her MBA degree and has been struggling to find a new job. She recently interviewed for a position and was offered $65,000/year to work in the marketing department of a mid-size firm. All other features of the job (e.g. hours, working conditions, etc.) are agreeable to Samantha. Despite wanting to work, Samantha declines the position. What economic explanation best explains her decision to NOT take the job?
Her reservation wage was not met
Standard economic models predict that when the supply of labor increases (or demand decreases), wages will drop. However, in reality we often see that wages in the primary labor market are "sticky" (i.e. they do not drop). What is one tactic firms utilize in such a situation to equilibrate the labor market in response to changes in supply and demand for workers? Choose the best answer(s) a. Substitute capital for labor b. Increase the hiring standards for a position making jobs more competitive for applicants c. Lower the wages for new hires but not current employees
Increase the hiring standards for a position making jobs more competitive for applicants
Explain why internal labor markets do not follow orthodox economic models
Jobs are filled inside the firm by promotion and transfer and therefore are shielded from the direct influences of competitive forces through a "closed" employment relationship. Administrative rules and bureaucratic processes and procedures are utilized to determine pricing, allocation, and training of labor. Wages attached to jobs. In the external market wages are attached to people. Instead of lowered wages or layoffs like in an external market, an internal labor market would shield workers from those forces. Internal labor markets came to be determined by efficiency, control, and institutional factors.
In the year 2267, 400,000 individuals between the ages of 16 and 65 populate the earth's moon. Half of them (50%) are female. 150,000 females are members of the labor force and 100,000 males. 10,000 males are actively looking for jobs but are unable to find them. (2 points) 1. What is the female labor force participation rate? (include the formula) 2. What is the male unemployment rate? (include the formula)
Labor force/population; 150,000/200,000 = 75% Unemployment/labor force; 10,000/100,000 = 10%
Examine low wage work from the side of the employer - what practices are used and to what effect? Are there alternatives?
Low pay, few benefits, involuntary part-time hours, time-skimming, lack of set schedule, monitor communication with coworkers, withhold first weeks pay. Cause high turnover, lowers productivity
Over the past four years, the unemployment rate has been consistently higher for men than for women. What is/are possible explanation(s) for this trend?
Male-dominated industries have been more negatively impacted than other industries during the recession
What impact can unions have on both firms and workers
On workers they can lead to higher wages and benefits, setting standards of pay that non-union employers follow, safer and healthier working conditions, removing management's ability to make unilateral decisions about aspects of a job, protecting the interests of the senior worker. However, overall employment may be constrained by unionization because higher wages lower demand for labor and will lead firms to replace capital for labor. On firms, the evidence is mixed as some suggests negative impact of profitability and expected stock returns because of the decrease in their operating flexibility. However, there is not much large-scale evidence that unions hurt productivity or quality or the rate of innovation. Unions make a firms ability to adapt to changing economic conditions more complex
What factors might have influenced the employees of O.P. Henley to vote for union representation?
Poor working conditions (death, mother going deaf), addressed children and grandchildren and making things better for family, low wages/lack of opportunity, unfair treatment
Calculate different measures of employment/unemployment
Population is everyone over 16, non inmates of institutions, and not on active duty in the armed forced Employed is the population who did any work as a paid employee, worked in their own business, worked 15+ hours unpaid in a family business, or only temporarily absent from working Unemployed is the population who had no employment during the survey week, were available for work, and made an effort to find employment during the previous 4 weeks. Those who were underemployed and discouraged workers were not included in unemployment calculations. Labor force = employed + unemployed. Doesn't include retired, students, non-wage labor, and discouraged workers Labor force participation rate = labor force/population Employment population ratio = employment / population Unemployed rate = unemployment / labor force Unemployment, marginally attached, and underemployed rate = unemployment + marginally attached + part-time for economic reasons not choice / labor force + marginally attached
What is the difference between primary/secondary and external/internal labor markets
Primary labor market considered good jobs. High skill jobs that require higher education and lead to better jobs down the road. Workers are more likely to be protected by internal labor markets. Secondary considered low wage, low skill jobs, few opportunities for upward mobility. Less likely to be able to advance in career, dead-end and part-time jobs fit into this category. Turnover is high and wages are low; often part-time work. Standard economic models are more useful in studying the secondary labor market
What are some of the steps of the labor organizing process evident in the film Norma Rae? What tactics did the union (and the character Reuben) use to organize the workers at the O.P. Henley Textile Mill?
Reuben passing out information, attending social events, holding meetings in public areas Flyering and yelling in front of workplace, bulletin board to get out information, partnering with "black" church in outskirts as meeting place after "white" church in established community said no, telling people to come to his room to sign the card, going to their homes, button, NR takes Reuben around town and introduces him to her friends, he goes to baseball game to speak with people.
Articulate the Davis and Cobb (2010) explanation for rising income inequality
See changes in corporate organization, primarily driven by finance, and these link directly to what human resources utilize See equity ownership increasingly become concentrated in the hands of institutional investors, they own more firm shares and start pressuring firms to maximize share price, perform better, increase dividends Corporations making argument that they are devoted to maximizing shareholder value Favored orientation towards share price which induced massive restructuring
Describe some of the market-based explanations for its rise and some of the issues with those explanations
Skill-biased technological change - income inequality reflects changes in relative supply of skilled labor and technological change. Issues: comparable levels of income inequality have not been observed in countries despite the heavy adoption of computer technology. Rates of inequality began climbing before the widespread introduction of computer technology and stabilized in the 90s while they were diffusing more widely Globalization - as less developed countries integrate into the world economy, the demand for and returns to unskilled labor increase in those countries, reducing income disparities. Conversely, the demand for skilled labor in developed countries increases while the demand for low-skilled labor declines, exacerbating disparities. Issues: not much evidence that globalization affected income inequality in the US prior to 2001, affects some countries more than others
In France, unionization rates are even lower than they are in the U.S.; however, the labor movement in that country wields considerably more influence than in this country. For example, unions will strike to pressure the government into raising the minimum wage. What piece of legislation made "political strikes" in the US illegal?
Taft-Harley Act (Labor Management Relations Act of 1947)
Describe the "employment decision" and "hours of work decision"
The firm maximizes profits by choosing how many workers to hire (labor) and how much plant and equipment to invest (capital). Profit maximization implies cost minimization Profit maximization implied cost minimization. If costs are increasing some of that cost it transferred to consumers Goal is find optimal mix of profit and labor. Keeping the output constant, the firm chooses a least cost combination of capital labor.
What is an explanation given for why in the present day U.S., levels of employment in unionized firms might be lower than in non-union firms?
The substitution effect due to higher wages
Describe some of the recent trends in US income inequality
The top 1% have up to 25% of the income. Top 20% have over 80% of the wealth in America
List some of the consequences to individuals working in low wage jobs
They're not typically offered employee benefits, health outcomes have been linked to jobs, can fall into the scarcity trap (make decisions that help manage scarcity in short run but increases it in future) A person preoccupied with money problems exhibit drops in cognitive functioning
Provide some details about low wage work: who has these jobs, what sectors of the economy are they in
Those who earn $12/hr or less Retail, restaurant, direct-care workers (salespeople and cashiers are the 2nd fastest growing occupation)
Which of the following represents a union suppression technique? a. Threats to close a plant b. Discharge (i.e. fire) workers who try to organize c. Implement HR practices similar to or better than those found at unionized firms
Threats to close a plant and discharge workers who try to organize
In class, I discussed how the AFL-CIO union is taking initial steps to become a general membership organization. What is the primary reason I gave for why they are taking on this new strategy?
To appeal more to the broader working class
Describe some of the institutional explanations for its rise and some of the issues with those explanations
Unionization decline - union rates are associated with higher wages, better benefits, and longer employment tenure. Issues: union coverage peaked in the US during the mid 1950s and abated at a mostly monotomic rate through the next four decade. Cross-national comparisons (data suggests that high an increasing levels of union density have to necessarily prevented increases in inequality public policy - min wage rates, tax rates. Issues: min wage cannot explain dynamic changes throughout income distribution, many countries with low income inequality have no or low min wage rates, must make some assumptions that tax law impacts gross income to explain much of the increase in income inequality, tax law is difficult to compare across countries
Describe Wal-Mart's situation as it entered into China and dealt with the major union in that country
Wal-Mart entered the Chinese market in 2006 Wal-Mart prevented unions in China ACFTU publicly criticized Wal-Mart for refusing to set up a labor union in 2004 a month later Wal-Mart stated that it hasn't prevented workers The first labor union within Wal-Mart was formed in 2006 Wal-Mart allowed all stored to set up a labor union and established a trade union in Shenzhen They said the union in China was different from the west because its goal is to work with employers, not promote confrontation
The income effect can best be described as
When the wage rate increases workers work less hours
In the U.S., the popularity of unions is relatively low. However, in class we learned that unions can potentially lead to some positive outcomes. List one potentially positive outcome for workers and one for firms.
Workers: Higher wages and benefits for members (wage premium - 10-20% high than nonunion), strong unions help set standards of pay, safer and healthier working conditions, removes from management the ability to make unilateral decisions about aspects of job, protect the interests of the average worker (good if you've got seniority) Firms: contract provides greater predictability, voice effects can enhance performance, build employee trust in disciplinary processes (provide safer channel of communication
What factors might have influenced the employees of O.P Henley to oppose union representation?
anti-union ideology (anti-american, anti-capitalist), fear and intimidation (layoffs, firing, physical harm)
Why do you think employers are willing to commit unfair labor practices during an organizing campaign?
takes years for litigations, there aren't many other jobs so not afraid employees will leave, management would low discretions, firm profitability would be lower, workers don't know their rights.