An industrial union, operating in an otherwise competitive labor market, that cannot either increase the demand for or decrease the supply of labor is likely to try to:

Question

Quizplus · Accepted Answer

As the industrial union cannot increase the demand for or decrease the supply of labor, they cannot increase the number of jobs available for their members. Therefore, if they raise the wage, it would make their members more expensive to hire, and employers may reduce the number of jobs available, resulting in decreased employment. Conversely, if they lower the wage, this may make their members cheaper to hire, but this could reduce their members' standard of living and may not necessarily increase employment. Therefore, the only option available to the union is to try to maximize the wage for their members while avoiding pricing them out of the labor market. Hence, the optimal strategy would be to raise the wage, but not too much that employment falls.

An Industrial Union, Operating in an Otherwise Competitive Labor Market