Suppose a union obtains a union shop agreement with firms in

Suppose a union obtains a union shop agreement with firms in a particula industry. Is there any limit to the wages the union can achieve for its workers?

Solution

ANSWER:

Yes there is a limit to the wages that the union can achieve for its workers which are determined by numerous factors:

-- When the demand for industry products is high it indicates that workers were performing efficiently and producing the quality products, thus the union has leverage to push for high wages for it\'s workers

-- The current demand and prevailing wage rate has significant impact. When demand is high and prevailing wage rate is low unions can push for high wages

-- The lower the rate of unemployment then the unions can demand for high wages

-- Unions can push wages up in situations where surplus available and profit earned are high.