Average Weekly Hours, Manufacturing

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1. Describe the elements of the tradeoff faced by a business with growing demand that is trying to choose between asking its existing workers to work more hours, or hiring additional workers. Under what conditions is the firm more likely to try to increase average hours worked per employee, and under what conditions is the firm more likely to hire additional workers?

2. There was a small recession in the U.S. that lasted from January to July 1980. Based on your reading of the material on this Internet site, what do you think happened to the average number of hours worked per manufacturing employee between September 1979 and April 1980? Write down your prediction, then go to the following Internet site (http://www.economagic.com/em-cgi/data.exe/BLSLF/LFU1231100100000) and plot the average number of hours worked per manufacturing employee for each month between September 1979 and March 1980. Briefly describe how well you prediction performed, and what you think might explain the data you plotted.

3. Explain why the average number of hours worked per manufacturing employee is considered a leading economic indicator. Why isn't it instead a lagging economic indicator? You can research your answer at the Conference Board Internet site (http://www.tcb-indicators.org).

4. How does the “offshoring” phenomenon affect unit labor costs in the United States ? To what extent do the data from the economic recovery period following 2001 support your arguments?

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