Unions may lower real wages in the nonunion sector because
A)Nonunion firms have difficulty attracting skilled workers away from the unions.
B)Nonunion firms adjust wages to avoid the threat of unionization.
C)Workers who are displaced by higher wages in the unionized sector increase the labor supply in the nonunion sector.
D)Union firms can easily hire nonunion workers for a lower wage.

Question

Quizplus · Accepted Answer

When unions negotiate higher wages and benefits for their members, this can create upward pressure on wages in the nonunion sector as well, as workers may seek employment in the unionized sector or demand higher pay to compete with union wages. To avoid paying higher wages or facing unionization, firms in the nonunion sector may adjust wages downward, leading to a lower real wage for nonunion workers. Additionally, unionized firms may use nonunion workers to perform tasks that require less skill or training, meaning that they can pay these workers a lower wage than their union counterparts.

Unions May Lower Real Wages in the Nonunion Sector Because