Labor Economics And Labor Relations

John Kerrington

Economics 330

Reaction Paper #3

Reaction Paper # 3 is based on the Article, “Labor Economics and Labor Relations”, by Loyd Reynolds, Stanley Masters, & Colletta Moser.

This article offers a number of economical viewpoints, which although justifiable and scientifically proven, are still subject to debate. The first disagreeable point made by the author’s was their belief that an employee seeks an overall “employment package”, apart from wage, in determining their future employer. According to the article, the employee does not seek the highest wage available in their particular market. Instead, they search for the job that will offer the greatest net advantage such as fringe benefits and a pleasant working environment. This is not necessarily true because many potential employees, particularly those in the working class, don’t necessarily know the type of working environment in which they will be placed. They may be made aware of the benefits that is granted them but the “overall package” is not necessarily discussed during an interview process. A potential employee doesn’t have the feel for the job until he/she is ON the job. This may explain the employee turnover, which is allotted for in the labor market and fuels the competition of a free labor market. For many high-risk jobs, workers must decide for themselves whether or not the compensation is worth the additional risks involved. Government intervention in Safety and Health standards has been establish in an effort to protect the worker. Yet workers are not given the overall spectrum of the risks involved, particularly hazardous chemicals used, until they are employed. It is not until the worker’s training period that he/she is handed the Material Safety Data Sheets (MSDS) for the potentially hazardous material he/she may be handling. This supports my disagreement with the author’s viewpoint that employees look for an “overall package” when considering employment. It is virtually impossible for a potential employee to be fully aware of the "overall package” prior to employment. Because of this disadvantage, most workers, particularly those in the market for blue-collar jobs, tend to be attracted, almost exclusively, to those employers who offer the highest wages. At least until the “overall package” is evaluated by the employee. There are several ways in which the government can increase it’s effectiveness in providing the labor market with informative material. One strategy would be to require employers to provide the applicant with the OSHA regulations imposed on that particular industry prior to employment, not after. Another strategy would be to give the employee greater bargaining power by allowing an observation period in which the worker may decide whether or not the job is suitable to his/her needs. Such a system is in place but it is set to benefit the employer in which it decides whether or not the employee suits him/her.

Another point made in this article was the idea that Unions serve the purpose of depressing wages for nonunion jobs. The belief is that the surplus of applicants kept out by imposed union restrictions will go out and seek alternative nonunion employment for lower pay. This is highly debatable. The surplus of applicants is too insignificant a number to have any sort of impact on a labor market and causing wage rates to drop. Particularly this day in age where the number of unionized labor has dropped over the years and more and more employers are anti-union. It is also safe to assume that unionized labor is set to maintain a competitive wage for employees in a particular field or occupation. Workers who apply for such jobs are skilled in their own right and are well aware of their worth when it comes to employment. If they are turned down by one employer, they will likely demand a competitive wage from another based on their level of skill. The labor market IS in fact an effective tool for determining relative wage rates, but unlike the “ceteris parabus” presumed in such calculations is misleading. Particularly because we live in a highly fluid and pliable economy. Far from the Utopia that these calculations epitomize.

Word Count: 680

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