Reading: Lesson 1 - Human Resources

4.1.A - Human Resources

1. CHARACTERISTICS OF THE WORKERS

1. Since its establishment more than 240 years ago, the United States has become the world’s leading economic, technical, and political power. The United States has the world’s largest single country economy and relies on highly sophisticated and modern means of production, transportation, and communication. Americans enjoy a very high standard of living. All these achievements can be attributed to the enormous resources that the country possesses: the ingenuity of its people, a democratic form of government, a social system that rewards individual initiative, and public policies that encourage innovation.
   
2. Despite the many successes, however, problems persist with regard to discrimination, crime and violence, environmental protection, ethical conduct, and social responsibility. Because businesses are a part of the total society in which they operate, social changes affect how they operate. Similarly, businesses affect society in different ways, as Tyler Eastman from the opening scenario will soon discover. Thus, one cannot study business principles and management without also having an understanding of the social forces that shape business.
3. People are a firm’s most important resource. A recent study of top managers found that finding and retaining qualified workers was more important than finance, technology, product innovation, or international business. The workers help businesses achieve their organizational goals. The challenges faced by businesses are closely interwoven with those experienced by the workers. In particular, such issues as those caused by changes in population and lifestyles have a direct bearing on business operations and on the well-being of the nation.
   
4. The gross domestic product (GDP) of a country cannot increase unless there are enough people to provide the necessary labor and to purchase the goods and services produced. Population statistics enable businesses to plan how much and what kinds of goods and services to offer. However, the GDP of a country must grow at a faster rate than its population in order to improve living standards. Both the size and the characteristics of the population are important in business planning. Information about the size and characteristics of the American population can be found at the website of the U.S. Census Bureau.
   
5. The population of the United States has grown steadily over the years, as shown in the Figure below. The growth rate is largely determined by the birth rate, the death rate, and the level of immigration into the country. Generally, as the standard of living increases, the birth rate falls, and this has been the case in the United States. At the same time, because of better health care and an improved public health system, people are living much longer. Much of the population increase takes place through immigration. The United States annually accepts more legal immigrants than any other country in the world, with large numbers coming from Asian and Latin American nations. Many immigrants also enter the country illegally to seek a better life. 
   

   
   

6. The number of people living in the United States has more than doubled between 1940 and 2010. The fluctuation in birth rate contributes to the percent of change in the population as illustrated by the line connecting the data points in the Figure above. By 2030, the population will increase 21% over 2010. Even with this growth, the percentage of population growth remains stable. The high birth rate between 1945 and 1964 created a group called the baby boom generation. The low birth-rate period between 1965 and 1980 is called the baby bust. People born during this period are Generation X. The higher birth rate between 1981 and 1997, toward the end of the millennium, resulted in Generation Y, or the millennials.
   

7. Fluctuations in population growth create bubbles and busts. The baby boomer bubble created a large pool of workers who are now facing retirement. The baby bust period, between baby boomers and the millennials, created a shortage of workers. The larger number of millennials represents a larger pool of potential employees. The United States experienced a new baby bust as a result of the 2007 recession and families delaying children. In 1960, there were 127 births for every 1,000 women. In 2007, this was down to 69 births, and by 2014, it dropped to 62.5 births for every 1,000 women, a record low. Slow population growth means that there are fewer future workers, which can slow economic growth and provide fewer taxes to support the older populations. This trend also exists in a number of developed countries, including Germany and Japan.
   

8. The nature of the population has been changing too. The U.S. Census Bureau changed racial categories for the 2000 census, allowing respondents the option of selecting one or more race categories. U.S. federal agencies use a minimum of five race categories: White, Black or African American, American Indian or Alaska Native, Asian, and Native Hawaiian or Other Pacific Islander. Hispanic origin is viewed as an ethnicity that could include the five race categories. So there are options for White Hispanic, Black Hispanic, etc. Individuals could also indicate a mixed race parentage in their census response.
   

9. The Figure below shows the U.S. racial categories as a percentage of the U.S. population from the 2010 Census. This data is not necessarily comparable to census data before the 2000 Census because different racial categories were used. The Figure below shows the diversity of the U.S. workforce. Currently, over 35 percent of Americans can be racially classified as Hispanic or other non-white categories. Because of higher birth rates among Hispanics and African-Americans, and recent immigration, their proportions in the population have been growing. This growing diversity of the workforce increases the need for better cross-cultural communication and sensitivity to the interests and concerns of various groups. 
   

   
   

10. Managers must deal with workers from multiple generations. These workers are influenced by the time in which they were raised. Baby boomers grew up in a time of limited technology and narrow global perspective. Millennials, who are children of the baby boomers and baby busters, do not know a world without the Internet and global competition.
    

11. Americans are people on the move. Every year, on average, one out of seven Americans changes his or her address. People move short distances, often from cities to suburbs. They also move long distances, such as from the Frost Belt, the colder states in the north and northeast, to the Sun Belt, the warmer states in the south and southwest. As businesses relocate to where customers are located, they affect where other people move in order to find jobs. For example, factories have relocated to the southeastern states, where wage rates are lower than in the Rust Belt—the north central and northeastern states where major manufacturing firms once dominated. As illustrated at the beginning of this chapter, the Quest Company decided to move from Ohio to Georgia to lower its labor and other costs.
    

12. The continuing movement of people from the city to the suburbs and from the north to the south has led to many unintended consequences. When families and businesses leave cities in large numbers, the cities lose the financial ability to provide high-quality services. As a result, crime and poverty have increased in some large cities. Many southern states such as Georgia and Florida have experienced rapid economic and industrial growth. When businesses move from the Rust Belt, they leave behind unemployed workers, closed factories, decaying towns, and homeless people. However, in recent years, political and business leaders have taken bold steps to revitalize cities and communities in the northern states.
    

2. LABOR FORCE

1. As the population grows, so does the labor force. The labor force includes most people aged 16 or over who are available for work, whether employed or unemployed. People who are actively looking for work are included in the labor force. Full-time students, full-time homemakers, and retirees are not part of the labor force. The Figure below shows the growth of the labor force from 2005 to 2015. 
   

   
   

2. The labor participation rate is the percentage of the adult population that is in the labor force. The labor participation rate is calculated by dividing the labor force by the adult population. The labor participation rate for 2005 to 2015 is shown in the Figure above.
   

3. While the current overall labor participation rate hovers around 62 percent, the participation rate is higher for men than for women. However, the gap between men and women participating in the labor force has narrowed over time, as shown in the Figure below. In 1950, around 35 percent of women worked outside the home. By 2015, the figure had risen to nearly 57 percent. Some reasons for the increase are that women have been choosing not to marry, to delay marriage, or to marry and pursue careers before or while raising children. The Figure below shows the trend in the labor participation rates for males and females. 
   

   
   

4. The expansion of the economy from the mid 1980s until 2001 coaxed many people, such as retirees, people with disabilities, and homemakers, to enter the labor force. As the economy slowed and entered a recessionary period in 2007, some workers left the workforce. The job market is influenced by fluctuations in the economy, changes in the population and where people live, and technological advances. One of the great strengths of the American economy is the flexibility of the workforce and an entrepreneurial culture allowing for the creation of new jobs. Most of these new jobs have been in service industries, such as computer services, banking and insurance, leisure, food services, and health care.
   

5. In the United States, workers are free to travel across the country to pursue new opportunities. A loss of a job can be an opportunity for a career change. New technologies are allowing workers the flexibility of maintaining contact with an office from any location, including working from home. For the millennial generation, the use of technology and multiple changes in careers may come easier than it has for their parents. Many of the new jobs require more skills, which means workers have to be educated. As a result, more people are going to college or getting training to acquire new skills. As technology changes and old jobs disappear, many workers need retraining. At the same time, technology has simplified jobs, such as short order cook or bank teller. These jobs now require little training and therefore pay low wages. Some jobs, such as telephone operator, have been eliminated since the work has been automated. A large number of workers are in dead-end jobs and are not earning an adequate income to maintain a reasonable standard of living.
   

6. For various reasons, including lack of financial resources, public schools in many areas are failing to provide the quality of education historically expected of high school graduates. High school graduates are particularly deficient in math, computer, social, and communication skills. Businesses are sometimes forced to provide remedial education in basic skills for newly hired workers. 
   

7. The prosperity of Americans is not equally distributed among the population. According to the Bureau of the Census, between 13 and 15 percent of the population in any given year live in poverty. This means that these people are poorly housed, clothed, and fed. Many live in inner-city slums or in rural areas. Census data show that the wealthiest 20 percent of American families have continued to earn more over the past 45 years, whereas the income of the lowest 8 percent has decreased. Thus, the gap between the wealthy and the rest of the population is widening.
   

8. Due to such programs as Social Security, poverty among elderly people is much lower today than previously. However, many children live in poverty because they reside in households where one or more parents do not have the education and skills to hold high-paying jobs. Many parents cannot participate fully in the labor force because they don’t have access to good-quality, affordable child care. The strongest influence on increased income is increased education. The government has several programs to reduce poverty. Minimum wage rates, unemployment benefits, financial or food aid, and subsidized medical care provide a basic safety net for the economically disadvantaged. Businesses increasingly offer training programs to provide skills that enable people to find and hold jobs.
   

9. Equality for all is one of the basic principles on which the United States was founded. Yet, some groups of Americans have found it difficult to obtain jobs or be promoted on an equal basis. Several laws have been passed to outlaw discrimination on the basis of race, gender, national origin, color, religion, age, physical disability, and other characteristics.
   

10. In many occupations, the numbers of women and racial minorities are few. Even when they find jobs, people in these groups may encounter difficulties in being promoted above a certain level. This has come to be known as the glass ceiling—an invisible barrier to job advancement. The barriers are often difficult to detect. For example, if employees expressed discomfort with having a female or African-American supervisor, this may make promotion of women and African-Americans less likely. Employers are now legally obligated to provide equal employment opportunities for all.
    

11. Many women and members of racial minority groups are employed in entry- level positions with little hope for career advancement. These are low-paying jobs requiring little skill and education, such as restaurant server, sales clerk, or nurse’s aide. The inability of these workers to move up from these jobs is referred to as the sticky floor syndrome. Higher education and redesigning the jobs offer the best opportunities for workers to escape from this situation.
    

12. Studies show that men tend to earn more than women. It is not clear if this difference is due to discrimination against women or to the nature of the jobs women do. There are a few professions in which women predominate. Wages tend to be lower in jobs that employ lots of women than in jobs held primarily by men. For instance, most dental hygienists are women, whereas most airline pilots are men. Pilots tend to earn more money than dental hygienists.
    

13. But what happens when the jobs are not the same but require similar levels of training and responsibility? Comparable worth means paying workers equally for jobs with similar but not identical job requirements. The concept is also called “equal pay for comparable work.” Jobs compared may be distinctly different, such as legal secretary and carpenter. However, if it can be determined that the two jobs require about the same level of training and responsibility, the pay scale for the two jobs should be the same. That is, legal secretaries should be paid more than what they currently earn to bring their pay up to that of carpenters. To determine whether work is of equal value, analysts compare factors such as special skills, physical strength, job dangers, responsibility, and education.
    

14. However, it is not easy to determine the specific factors that measure the worth of jobs. Should physical strength, for instance, be used to compare the worth of a legal secretary to a carpenter? And if few applicants are available for the carpenter’s position and many are available for legal secretaries, is it fair to pay legal secretaries more than carpenters? These and other factors make it difficult for employers to design and implement comparable worth plans. But businesses are trying. Many states have passed laws that promote using comparable worth for determining wages in government jobs.