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Chapter 29: Q. 1FCT (page 663)

Why might unions seeking to reduce hiring of nonunion labor desire higher minimum wages for nonunion workers?

Short Answer

Expert verified

Union members are exempt from local minimum wage laws, ensuring that they can obtain work, although at a lower wage.

Step by step solution

01

Introduction

Unionization may change wage rates in nonunion labour markets, moving them upward or downward and causing a bias in the calculation of the union wage advantage. The pure union wage advantage is the amount by which the union wage exceeds the nonunion wage that would exist if the union did not exist.

02

Given Information

Nonunion workers should have greater minimum salaries, according to unions trying to curb nonunion hiring.

03

Explanation

In a perfectly competitive labor market, raising the legal minimum wage floor above the market clearing wane rate reduces the amount of labor required by employers. As a result, exempting union members from local minimum wage laws ensures that they will be able to find work, although at a lower rate.

The best that can be done in this scenario is to compare earnings of certain types of workers in unionized marketplaces to wages of workers in nonunionized markets.

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Most popular questions from this chapter

The Writers Guild of America (WGA), which represents TV and film screenwriters, called for a strike, and most screenwriters stopped working. Nevertheless, writers for certain TV soap operas, such as the Young and the Restless-which have had shrinking audiences for years, draw small numbers of viewers for repeat shows, and rarely sell on Blu-ray discs-opted to drop their WGA memberships and tried to continue working during the strike. Why do you suppose that the WGA posted on its Web site a phone number for union members to report "strike-breaking activities and 'scab writing" "o the union's 12-person Strike Rules Compliance Committee? What effect do strikebreakers have on the collective bargaining power of a union?

Explain why, in economic terms, the total income of union membership is maximized when marginal revenue is zero. (Hint: How much more revenue is forthcoming when marginal revenue is equal to zero?

In Figure 29-2, suppose that We is a wage rate of \(30 per hour, and WU is a wage rate of \)40 per hour. In addition, QD is 12,000 workers per hour, Qe is 15,000 workers per hour, and QS is 18,000 workers per hour. If each worker hired corresponds to a job available within the unionized industry, how many jobs must the union ration at the wage rate WU? What is the shortage of jobs?

Why could unions' desire to obtain collective bargaining exemptions from minimum wage laws provide evidence that few employers are monopsonists? (Hint: Recall the effects of a minimum wage on the employment level of and wage rate paid by a monopsonist.)

The price and wage structure that a firm faces is depicted in the following table.

The firm finds that the price of its product changes with the rate of output. In addition, the wage it pays its workers varies with the amount of labor it employs. This firm maximizes profits. How many units of labor will it hire? What wage will it pay?
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