If contracts that call for high wages reduce employment opportunities?

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?

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2 Responses to “If contracts that call for high wages reduce employment opportunities?”

  1. Pliny the Elder Says:

    You have nailed the double-edged nature of this issue. It seems unfair to pay low wages, but to require high wages strengthens the incentive to downsize, outsource or mechanize.

  2. MLaw Says:

    >> where do the excluded workers find employment? <<

    They don’t. Workers in Mexico, Korea & China do the work instead when the manufacturers "outsource."

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