Labor unions create a rent when they succeed.This rent forces employers or management to return some of their profits to unionized workers in the form of improved working conditions,health benefits or increased wages.

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Labor unions bargain with employers for better working conditions, wages, and benefits for their members. When they succeed in obtaining these improvements, it creates a rent for their members as they receive benefits they may not have gotten without the union's collective action. This rent is funded by the employer returning some of their profits back to the workers.

Labor Unions Create a Rent When They Succeed