Eco 200: union wage rates

[kingrat]

(group) Do high wage rates in such strongly unionized industries as steel and automobiles pull up the general level of wages in nonunionized, lower-wage industries? If you think they do, what is the process by which this occurs? If contracts that call for high wages reduce employment opportunities in the industries that must pay these wages, where do the excluded workers find employment?

I have no idea. I can only postualte mechanisms where they might or might not.

One way they might is by redistributing wealth from shareholders to employees. There are fewer employees than shareholders and are generally have a greater percentage of their income coming from wages. They might reasonably be expected to be willing to consume more, thus driving up consumer prices and income for those producing consumables.

Another way is by increasing the opportunities for non-union employees. If they have the option of entering a union workforce, non-union employers will either pay them more or lose them to the union employer.