Question

From time to time you might hear of a player lockout in one of the professional sports (NFL, NBA, NHL, MLB, etc.), even when that sport is doing well financially. This player lockout is imposed by all owners of the teams in a league when there is disagreement with the player’s union on an impending new collective agreement that will likely not be resolved when the current contract expires. Let’s take a closer look at players’ earnings.

A recent Wall Street Journal article asks, “Why do baseball players earn millions of dollars a year for their negligible contribution to society while major contributors—such as schoolteachers, police officers, firefighters, and ambulance drivers—earn barely enough to survive?” Can you offer an answer based on what was discussed in this unit?

Answer 1

This can be asnwered by a simple logic of demand and supply . In our society we find there are many who can teach or work as drivers and police officers but the number of people who can play baseball very well is very little . So the supply matters here . Since supply of teachers and firefighters are very large their wage rate is small and vice versa for baseball players . Companies earn millions by advertisements in which baseball players promote their products . Hence this inequality in income arises .