E.3.3.



=Recognize the role of economic institutions, such as labor unions and nonprofit organizations in market economics.=

//**Focus Question: What is the role of economic institutions in market economics?**//
//**See Special Topic Page on Roles of Labor Unions in the US**//

//An economic institution is a broad term meaning any establishment or structure that has an economic bearing on society, of which labor unions and non-profit organizations are just two examples. Both these structures play a role in market economics.//
 * // The overall role of labor unions is often disputed, but generally, unions advocate for a higher wage and benefits for members. //
 * // This improves the standard of living for members and increases their consumption, stimulating the economy. //
 * // This also increases the cost of labor for the business which owns the means of production, which can increase the cost of goods. //
 * // Non-profit organizations function in the market to provide a greater supply of a good or service at lower cost to the consumer. //
 * // This is made possible because non-profits have a lower tax burden than many businesses and can rely on volunteer labor and donations and grants. //

**Economic Institutions and Market Economics**
Economic institutions in this context refers to arrangements and structures that are well-established parts of the culture or society, or "any establishment whose activities have a bearing on society, whether these institutions are businesses or not," (whatiseconomics.org). This includes manufacturers, traders, consumers and well as regulators of an economy. Labor unions and non-profits are two examples of economic institutions.

This is not to be confused with another definition of the term that can be used interchangeably with "financial institutions." These are government or private agencies and foundations that are devoted to collecting and studying economic data.

A market economy is one in which decisions are based on the principles of supply and demand, without intervention in the form of rationing, price-fixing, or other coercion (Johnson 2005).



//Focus Question: How do labor unions affect market economics?//
A **labor union** is an organized collection of workers, usually bonded by a trade or occupation, which uses collective bargaining to protect their rights and fight for fair wages, working hours, benefits, etc. Most labor unions in the United State belong under an umbrella institution, the AFL-CIO.

For a brief history of Unions across the globe, not just in America, [|click here].

A timeline of the labor movement according to the AFL-CIO here is a timeline of American Labor Movement including pictures and videos

Click here for a brief history of Labor Unions in 19th and 20th century United States from the History Channel

An interview with U.S. Senator Bernie Sanders on why he believes Labor Unions are important

Click here for an article from The Atlantic on the decreasing influence of labor unions in the U.S.

Link **for historical background on the formation and goals of labor unions during the Industrial era.**

Labor unions function to protect the health and safety of workers, which provides for a reliable labor force to meet product demand. Unions also function by bargaining on behalf of members for fair living wages and benefits. As unions generally represent those in blue-collar occupations, labor unions have been integral in growing the middle class.

A lesson plan from PBS on the history of Labor Unions and their roles today

The overall effects of labor unions on the economy are disputed by economists.


 * Positive Effects:**
 * Unions provide workers with higher wages, which encourages spending, which fuels the economy.
 * As wage increases, productivity increases. Unionization rewards workers who are more productive.
 * Unions mostly represent blue-collar workers, and by increasing their wage, the inequality gap decreases.
 * Unions provide safety and health, which translates to more productivity.




 * Negative Effects:**
 * Unions create wage demands above competitive levels, and in doing so, employers purchase less labor, creating unemployment
 * Unions are anti-competition and detrimental to capitalism
 * Unions demand unrealistically high wages which leads to outsourcing.
 * High wage demands lead to inflated prices.

Unions and Strikes
To attempt to force change in their fields, labor unions can organize strikes. To learn more about labor strikes, such as the basic information and a few examples, [|click here.]

See **United States History II.29 f**or efforts by President Ronald Reagan to replace striking air traffic controllers with non-union personnel.

See Dramatic Event Page: **The Pullman Strike**

An article leaning anti-union

An article leaning pro-union

A TIME article with video outlining labor strikes in France over Labor Law Reforms. Strikes are very common in France, and are culturally accepted as a necessary evil to combat labor law issues and improve workers' rights

====What Unions Do: How Labor Unions Affect Jobs and the Economy, article by the Heritage Foundation, a conservative think tank====

Click here for an article on African Americans and the Americans Labor Movement from the National Archives

A timeline with photos of women's roles in labor movements, including the efforts of African-American women

Page from the University of Maryland comparing women's rights movements and labor movements, unions, and strikes

Lesson plan from the Library of Congress on Labor Unions

Lesson plan of an interactive game that shows a competitive labor market

Pride at work mission statement, a global advocate for LGBT rights in the workplace

The Labor Movement and the Gay Rights Movement have a long-intertwined history of supporting each other either coincidentally or purposefully, as both types of organizations strive to achieve civil rights in the workplace.

Human Rights Campaign, LGBTQ+ rights, and Labor Unions

An article from Pacific Standard Magazine comparing the Labor Movement to the Gay Rights Movement

//Focus Question: How do nonprofit organizations affect market economics?//
A **non-profit organization** is one in which surplus revenues remain in the organization for its self-preservation or growth, instead of being dispersed as profit. The goal is not to be profitable, but to disperse any revenue accrued to those being served by the non-profits. Non-profits can be charities, service organizations, and cooperatives. They have access to volunteer labor, grants, and other benefits which for-profit organizations and businesses cannot access.

Click here for an article outlining the history, characteristics, and influence of nonprofit organizations

Explore Stanford University's Project on the Evolution of the Nonprofit Sector, which sampled and analyzed 200 nonprofit organizations

The non-profit sector is growing and contributes greatly to the economy, employing 10% of Americans,contributing 8% of the GNP, and collecting billions of dollars in charitable donations (Egger, Robert).

Non-profits are important in terms of the services they provide, which can often be essential services like affordable housing or healthcare. Non-profit organizations can provide these services at a lower cost by relying on donations, volunteerism, tax exemptions, grants and other benefits.

Click here for another article on how nonprofits can help boost the economy




 * A lesson plan encompassing many ideas, but including the a discussion of a Food Bank and how it provides the services it does



An excerpt from a book by Steve Rothschild on how non-profits create economic capital.

Sources: 1. Johnson, Paul M. "A Glossary of Political Economy Terms." 2005. Retrieved 20 April 2013. 2. Reynolds, Morgan O. "Labor Unions." //Library of Economics and Liberty,// 2008. Retrieved 20 April 2013. 3. Madland, David and Karla Walter. "Unions are Good for the American Economy." //Center for American Progress Action Fund,//18 Feb 2009. Retrieved 20 April 2013. 4. Egger, Robert. "Non-profit Community Plays Key Role in our Economy." //The Hill,// 8 Feb 2010. Retrieved 20 April 2013.