Special Types of Labor in Business

The business world is divided into several functional areas, such as entrepreneurship, management, marketing, finance, and accounting. Entrepreneurship is the invention of new products, the improvement of existing products, or the delivery of products in better or more efficient ways. Management is the allocation of economic resources. Marketing is the process of informing society about products in an attempt to convince potential consumers to purchase them. Finance is the management of money, credit, and other financial assets.Accounting is the preparation and inspection of financial reports. Each of these functional areas of business has a special type of labor associated with it.

An entrepreneur is someone who invents a new product that satisfies a want or need of society, improves an existing product, or provides a product in a better or more efficient way. One way to become wealthy is to become a successful entrepreneur. Mark Cuban, the owner of the National Basketball Association’s Dallas Mavericks, acquired his wealth by being a successful entrepreneur. Cuban co-founded Broadcast.com, which provided streaming multimedia on the Internet, in 1995. The Internet company Yahoo! Inc. purchased Broadcast.com in 1999 for $5.7 billion. Successful entrepreneurs are usually highly motivated, creative leaders with some specialized knowledge that can be used to help satisfy the wants or needs of society.

A manager is someone who allocates economic resources. Successful managers are efficient in their use of labor, capital, and natural resources. Economic efficiency occurs when a society obtains the largest possible amount of output from a given set of resources. Skillful management is a key component of successful businesses. Examples of the importance of management are provided by professional sports. The head coach of a baseball team is called the manager and the major league baseball executives in charge of hiring players are called general managers. Four men have even been elected to Baseball’s Hall of Fame based solely on their achievements as general managers: Ed Barrow, Larry MacPhail, Branch Rickey, and George Weiss.

A marketer is someone who promotes the purchase or sale of a product. The marketing process includes the conception, pricing, promotion, and distribution of ideas, goods, and services. These are often referred to as the marketing mix or the four Ps of marketing: product (conception), price, promotion, and place (distribution). Businesses paid an average of $2.4 million for a 30 second commercial during the 2005 Super Bowl. The willingness of some firms to pay such large sums for advertising indicates the importance of marketing to the success of businesses.

A financier is someone who engages in large-scale financial affairs. A financier is sometimes called a capitalist if he or she invests in a business by providing it with significant money or other financial assets. It is not uncommon for people who develop new products to lack the financial resources to market their ideas. Financiers may provide these entrepreneurs with the financial capital to develop and market their products in return for a share of the revenues or profits from future sales.

An accountant is someone who prepares and inspects the tax reports and other financial records of individuals or businesses. Financiers and other business executives rely on accountants to provide an accurate portrayal of the financial condition of a company. Accountants also assist individuals in the preparation of personal financial reports, such as income tax returns for federal, state, and local governments.

Labor - the human economic resources

Economic resources are the things people use to attempt to satisfy their needs and wants. They can be divided into three categories: labor, capital, and natural resources.


Labor – the human economic resources

Labor is human effort, both physical and mental. People use their time and effort to produce things that are useful to themselves or others. Examples of labor are teachers, bankers, construction workers, steelworkers, plumbers, entrepreneurs, and managers.

Economists use various terms to describe different types of labor. A white-collar workertypically performs work that does not involve manual labor, is paid an annual salary instead of hourly wages, and is expected to dress with some formality. Examples of white-collar workers are business executives, stockbrokers, insurance salespeople, bankers, and lawyers. The origin of the expression is that men in these professions traditionally wear a white dress shirt, suit, and tie to work. White-collar workers are often associated with the service sector, which is the area of the economy that does not result in the production of a tangible commodity. A tangible commodity is a product that can be touched or held, such as an apple, a sweater, or a house.

A blue-collar worker typically performs work that involves manual labor, is paid hourly wages, and dresses in clothes that may become heavily soiled. Examples of blue-collar workers are automobile mechanics, garbage collectors, and construction workers. The origin of the expression is that men in these professions often wear a uniform with a blue shirt. Blue-collared workers are often associated with the manufacturing sector, which is the area of the economy that produces tangible commodities.

The Rust Belt is the heavily industrialized area of the upper Midwestern U.S. that contains older factories, many of which are closed. Manufacturing jobs in industries such as automobiles, steel, and coal mining used to be a significant source of employment in Michigan, Indiana, Ohio and Pennsylvania. Over the last few decades, Americans have increasingly preferred to buy manufactured products from cheaper foreign producers.

It is normal for there to be changes in the types of industries that are the most successful in a particular economy. Silicon Valley is a region southeast of San Francisco, California, which is known for its computer and other high-technology industries. These American industries flourished in the 1990s, but have faced increasing foreign competition in recent years.

There is a relationship between education, skills, training, and productivity. Productivity is the amount of output that can be produced in an hour of a worker’s time. Increases in education, skills, and training are usually associated with increases in productivity. As people become more productive, businesses are usually willing to pay them more. To illustrate this concept, consider two salespeople. If one person sells $50,000 worth of a company’s products per year while another person generates $1 million of sales per year, who is more deserving of higher pay? Salespeople are usually paid a commission, which means they are paid based on the value of their sales. Consequently, companies usually pay salespeople more when they generate more sales.

This relationship between education and productivity also explains why most students attend college. As people become better educated, they tend to become more productive. More productive people tend to earn higher incomes. Consequently the most frequently cited reason for attending college is to enable people to obtain a better, higher-paying job than would occur in the absence of the education.

Education, skills, and training are sometimes referred to as human capital.