Labor Unions - Association of workers organized to improve wages and working conditions for its members. - A group has more power than an individual. Development - Poor working conditions in factories in the 1800’s. - Workers were fired for no reason. - Workers were often blacklisted. Knights of Labor - Founded in 1869. Attempted to organize all laboring people. - Terrence V. Powderly became their leader after 1879. - Membership increased to 700,000 between the years 1885-1886. - Began to decline and ended in 1900. American Federation of Labor - Organized in 1886. - Accepted only skilled workers. Women, African-Americans, and immigrants were not accepted. - AFL had separate unions for different crafts. - Samuel Gompers was president of the union. He wanted higher wages, shorter hours, and benefits for disabled workers. - Between 1890-1900, membership reached 500,000. Union membership policies - Closed Shop: Companies hire only union members. - Union Shop: Worker must join the union after a specific time period. - Agency Shop: Not required to join the union, but must pay dues. - Open Shop: Companies may hire workers regardless of membership. Collective Bargaining - Process where union leaders and employers discuss employment terms. - Compromise is the main issue. - Three steps: Negotiation, mediation, and arbitration. - Negotiation: Labor and management meet to discuss contract issues. - Mediation: A neutral person helps both sides reach agreements. The Federal Mediation and Conciliation Service will provide a mediator. - Arbitration: Two sides submit issues to a third party for a final decision. When Collective Bargaining Fails - Strike: Workers refuse to work. o Picketing: Discourage workers from working. o Boycott: Refuse to purchase goods or services from the company. o Scab: Worker willing to work on company terms. - Lockout: Management prevents workers from working. Credit - Receiving something with the promise of payment at a later time. - Principle: Actual cost of the good or service. - Interest: Fee paid for the use of money. Charge Accounts - Buy goods and services at individual stores and pay for them later. - Credit limit: Maximum amount a person can buy with the promise of payment at a later time. - Three types of accounts are installment, regular, and revolving. 1. Installment Account - Repaid with equal payments over a certain period of time. - Mortgage: Payment owed on property. - Part of payment goes to interest and part goes to principle. 2. Regular Account - At the end of the billing cycle, a bill is sent to the account holder. - No interest is charged, but the entire bill must be paid. - The account can not be used again until the balance is paid off. - Interest is charged on the balance not paid. 3. Revolving Account - At the end of the billing cycle, a bill is sent. - Interest is charged on the portion not paid. - The account can still be used until the credit limit is reached. Credit and Debit cards - Debit Cards: Transfer funds electronically. o Popular use in Automated Teller Machines (ATM’s) o Now can be tied directly to checking accounts (check cards) - Credit cards: Make purchases without cash. o Used to purchase items and receive loans. o Charge high interest rates (Avg. 18%) in the 1990’s. o Lower interest rates if the customer is “reliable”. Applying for credit - Fill out an application. - Credit Bureau will do a credit check. Creditor will ask for references. - This check shows your income, debt, and ability to pay debts in the past. Credit Rating - Rating of risk: Excellent, good, average, or poor. - This gives the lender an idea of reliability. - They also look at capacity to pay, character, and collateral. - A secured loan is a loan based on collateral, something the borrower is willing to give up if the loan is not paid back. - An unsecured loan is one based on reputation. Government Regulations - Equal Credit Opportunity Act: A person can not be denied credit because of race, religion, national origin, gender, marital status, or age. - Usury laws: Restrict the amount of interest companies can charge. Bankruptcy - When debts are so large, that they can not be repaid. - Most of what debtors own is given to creditors. - It is very hard to re-establish credit. Finance Charges and Annual Percentage Rate (APR) - Finance Charges: Cost of credit expressed in dollars. - APR: Cost of credit as a percentage. May differ from place to place. Financial Institutions - Commercial banks: Main functions are accepting deposits, lending money, and transferring funds. - Savings and loan: Very much like commercial banks. Normally smaller banks. - Savings banks: Original purpose was to help those overlooked by large banks. Sometimes charge higher interest rates. - Credit Unions: Offer high interest on saving and low interest on loans. Must be a member to use their services. - Finance Companies: Charge high interest rates. Used by those with bad credit history.