The effect of a union contract is often to create wage compression.

Question

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Union contracts often include provisions that set minimum wages for all workers covered by the contract, regardless of their individual skills or experience. This can lead to wage compression, where the pay gap between high-skilled and low-skilled workers within the union contract narrows. Additionally, some union contracts may include cost-of-living adjustments or seniority-based pay increases that further reduce wage differentials within the union workforce.

The Effect of a Union Contract Is Often to Create