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Discuss the impact of unions on relative wages (that is, compare the wages of union workers...

Discuss the impact of unions on relative wages (that is, compare the wages of union workers with those of nonunion workers)

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Answer #1

Unions have bargaining power over wage rate and other labor related issues. By forming a union, workers can pressurize the management for raising the wage rate, improving the working conditions, as well as providing them with other fringe benefits. If the management does not consider their proposal, they use a credible threat by calling a strike and decide not to work for the management unless the issue is resolved. Due to this collective bargaining power, union can increase the relative wage rate, which implies, they can push for higher wages of union workers compared to the non union workers.

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