Introduction
This paper gives the results and an analysis of an informal study conducted on labor economy. The study was conducted in New York. Participants are 18 years and above and their participation was on voluntary basis. Participants are people who work in the labor market as wage earners. Thirty participants were interviewed.
Data Collection
Demographic Information
Participants were requested to highlight their age, ethnic group, gender and marital status. Participants were also requested to indicate whether they have children or not.
Work Related Information
In this section, participants were asked to indicate their education level, the industry in which they work and their job title, employment status, hours worked per week, monthly income, and aspects they consider dangerous or risky in their places of work. In addition, participants were asked to name aspects in their work place which they consider desirable. Participants were asked to indicate whether they are covered by workers union, if they are trained to work in their field of work, years of experience, if they are satisfied with their current pay, and if there are opportunities for promotion or wage increase. The table below highlights the demographic results.
Table 1: Demographic Results
The table below highlights racial ethnic statistics.
Table 2: Racial ethnic statistics
The Pie chart below represents participants by age group
A majority of the participants belong to the Asian ethnic group. They represented 60 per cent of the total number of participants. On the other hand, 20 per cent of the participants were Whites. The pie chart below represents participants in terms of race.
Out of the 30 participants interviewed, only three had their jobs covered with a union covered. Fourteen participants had no formal training in their current jobs. Some participants indicated that in their place of work, promotions are based on experience and the level of education. In addition, a number of participants indicated that in their place of work, outstanding employees were given managerial positions. Most of the participants indicated that they prefer to work for fewer hours and earn more income. In addition, a few of them indicated that they would prefer to work for long hours in order to increase their income.
Participants with and without Unions
On average, the participants spend 30 hours per week at their places of work. A majority of them indicated that they are satisfied with their pay but would prefer to work for fewer hours. Most participants indicate that they admire working for few hours so as to have enough time to spend with their family members or do other personal activities.
Discussion
This survey sought to analyze various theories of labor market which include human capital, labor unions, incentive pay, labor market discrimination, and compensating wage differentials. Labor economics is the study of the markets in which labor services are exchanged for wages. The exchange of labor economics is justified by the fact that, in the industrialized countries, income earned by working represents the largest component of the total income. The remaining one third is made up of income from invested capital. In addition, a large part of the population is made up of wage earners or those aspiring to be wage earners if they have not yet left the education system or are looking for work. More generally, labor economics covers a very large field, and shades light on economic and social problems of the greatest importance. It embraces topics as varied as wages, employment, unemployment, the cost of labor, the number of hours worked per week, how hard the work is, employees being fired, employees being hired, workplace injuries, decisions by individuals to participate in the labor market, unions, strikes, the impact of mandatory contributions, and many other subjects on which public debate frequently turns in modern society. Workers’ skills must be viewed as assets that enhance the functionality and performance of employees or workers. Such skills are essential for the realization of an organization’s set goals (Borjas 45). Therefore, organizations need to appreciate and motivate their workers in case they intend to realize timely development. Labor economics spells out clearly what organizations or employers need to do in order to win the trust of their workers. Employers need to develop incentive pay schemes, which reward and appreciate outstanding employees or workers. Such incentive schemes should cover all employees in the workplace so as to eliminate cases of favoritism. Employers also need to eliminate aspects of labor discrimination in their place of work and provide equal opportunity to all (Borjas 45).
Labor markets evolve over the course of time. To hold a job, one must decide to do so. According to the neoclassical theory, this is the starting point of labor supply. This theory posits that each individual disposes off a limited amount of time, which he or she chooses to allocate between paid work and leisure. Evidently, the wage an individual can demand constitutes an important factor in the choice of the quantity of labor supplied. However, this is not the only factor that is taken into account. Personal wealth, income derived from sources outside the labor market, and even the familial environment also play a decisive role.
In reality, the allocation of one’s time depends on trade offs more complex than a simple choice between work and leisure. In the first place, the counterpart of paid work is not simply leisure in the usual sense, for much of it consists of time devoted to household production, the result of which substitutes for products available in the consumer goods market. This means that the supply of wage labor takes into accounts the costs and benefits of this household production, and that most often it is the result of planning, and even actual negotiation, within the family. The family situation, the number of children, the income a person enjoys apart from any wage labor, all weigh heavily in this choice. Decisions concerning labor supply also depend on trade offs over the course of time that make the analysis of the decisions of agents richer and more complex.
Labor Unions
According Borjas, labor unions are organizations that represent people at work. Their purpose is to protect and improve the paying and conditions of employees. They also campaign for laws and policies from which the working population will benefit. By joining together as workers, there is more chance of having a voice and influence. In the study that was conducted, only three employees had work unions in their workplace. These findings indicate how the US labor market has not embraced the use of labor unions. Unions in the US gained power during World War I because of the low unemployment and the governments’ pursuit of uninterrupted production. Union world standards were enforced in government contracts and labor representatives were appointed to war time labor boards created to prevent work stoppages and reduce bargaining impasses. The number of unions declined significantly in the US at the turn of the 20 century. However, in the last two decades, there has been a resurgence of trade unions in the US, which are more organized than those which existed in the past.
Wage Incentives and Wage Differentials
Another aspect of labor economics that was examined in this study is wage incentives. Incentive system is related with wage payment plans which tie wages directly or indirectly to standards of productivity or to the profitability of the organization or to both criteria. So, the incentive plan refers to all the plans that provide extra pay for extra performance in addition to regular wages of the job. This approach motivates the employees to work hard which in turn contribute to higher returns. In the long run, both the organization and the employee benefit. The incentive plan should be installed with the cooperation of workers and the trade unions. There must be climate of mutual trust between the employer and the employee for successful implementation of the incentive plan.
Although there are man types of incentive plans, they all link reward with performance. Performance is often, but not always, measured by standards of productivity and direct indexes of individuals, groups, or organizations, By contrast, merit plans generally use less direct measures of performance, such as ratings or rankings made by supervisors. Another aspect of many incentive pay plans is that the major portion of an individual’s compensation is from incentive pay. Since the level of compensation varies with performance, the level of an individual’s compensation can vary greatly. Merit pay plans, on the other hand, affect a relatively small percentage of an individual’s total salary, because merit pay is generally used only to move an individual’s compensation within a rate range. Traditionally, incentive plans have used only money as a reward. More recently, such nonmonetary rewards as praise, participation, and feedback are also being tied to performance. To sum up, incentive pay plans are methods of monetary and nonmonetary compensation related to direct indexes of performance of the individual, group, or organization and generally represent a substantial proportion of an individual’s direct compensation, but they must be administered within legal regulations.
The incentive plan should also be based on scientific work measurement. This plan calls for the support of top management. There is a need for careful and detailed planning for the installation of an incentive scheme. Such plans should cover all employees and standards once fixed should not be frequently changed except where there are changes in methods, materials or equipment, used in the production process. According to the study results, most of the participants are given free gym access, employee discounts, health insurance, pension schemes, tax waivers, phone call discounts, retirement plans, and vacations. The most common incentive is health insurance. Various factors are taken into account by employers when formulating incentive plans. According to the results of this study, some participants indicated that in their place of work, promotions are based on experience and the level of education. In addition, a number of participants indicated that in their place of work, outstanding employees were given managerial positions. There was no pattern of wage differentials in the sample. However, most participants noted that they receive incentives. This is the only theory that explains wage differentials in the sample. The other theories failed to explain wage differentials in the sample.
Human Capital
On the other hand, human capital is used to calculate the indirect cost that arises as a result of productivity loss. The value of human capital is approximated by the value of an individual’s average of future earnings.
Experience and training were the main factors which affect labor supply decision. The respondents are paid according to the level of education and experience. There are no aspects of labor discrimination in the sample. Furthermore, most of the participants do not have labor unions.
Labor Discrimination
Labor discrimination is another labor economy aspect that was investigated. The resistance of organized labor is far more complex. For example, because of his race, the White worker historically has enjoyed certain benefits in employment which, in turn, have created a highly exploited class of black labor that is rigidly blocked from advancing into the all white occupations. Thus, white workers have the expectation of both the opportunity for employment and opportunity for earnings and promotion which are based in varying degrees on the denial of equal opportunity to blacks. The elimination of racial disadvantages in employment often affects white workers, since it compels competition with black workers and other minority group members where none previously existed. White workers, therefore, feel directly victimized by legislation, administrative action, and court orders that provide not only for equal job opportunity, but also measures that attempt to compensate for the present effects of past discrimination. What the white male worker believes to be at stake is his likelihood of getting a job, his status in the job, his promotion, seniority, and susceptibility to layoff, the entire constellation of expectations which he tactically assumes are his rights.
The enactment of civil rights laws, especially those prohibiting racial discrimination in employment, in conjunction with a variety of social programs begun in the past two decades, promised a new and better future for black Americans and all other minority groups. Because the hope is so great, the promise becomes all the more vivid. But and the promise and hope fail to materialize, the despair and alienation become more profound. This alienation is rooted in the most significant source of identity for western men and women; work. Globalization has broken overcome barriers in the labor market and people from all races, especially in the US have almost equal opportunity for employment. This is evidenced by the results of this study. Out of the 30 participants, 18 were of Asian origin, 4 were from Mexican and Caucasian origins, 1 was from Arab origin. This is an indication of how globalization has enhanced job access to all races in the US.
Summary
This paper has noted that labor economics covers a very large field, and shades light on economic and social problems of the greatest importance. Labor markets evolve over the course of time. It embraces topics as varied as wages, employment, unemployment, the cost of labor, the number of hours worked per week, how hard the work is, employees being fired, employees being hired, workplace injuries, decisions by individuals to participate in the labor market, unions, strikes, the impact of mandatory contributions, and many other subjects on which public debate frequently turns in modern society. Evidently, the wage an individual can demand constitutes an important factor in the choice of the quantity of labor supplied. However, this is not the only factor that is taken into account. Personal wealth, income derived from sources outside the labor market, and even the familial environment also play a decisive role. The last two decades, there has been a resurgence of trade unions in the US, which are more organized than those which existed in the past. Incentive system is related with wage payment plans which tie wages directly or indirectly to standards of productivity or to the profitability of the organization or to both criteria. To sum up, incentive pay plans are methods of monetary and nonmonetary compensation related to direct indexes of performance of the individual, group, or organization and generally represent a substantial proportion of an individual’s direct compensation, but they must be administered within legal regulations. The enactment of civil rights laws, especially those prohibiting racial discrimination in employment, in conjunction with a variety of social programs begun in the past two decades, promised a new and better future for black Americans and all other minority groups.
References
Borjas, George. Labor Economics. New York: McGraw Hill Press, 2009. Print.