Question

5. Use the following data for two industries (A and B) to answer the questions. Industry A Industry B WA L WB Live $8.00/hr 15,000 $9.00/hr 20,000 $9.00/hr 10,000 $10.00/hr 10,000 (a) In which industry would a union be more likely to organize workers? Why? (b) In which industry would a union be more successful in winning larger wage gains for union members?

Answer 1

a).

Here there are two industries “Industry A” and “Industry B” if “industry A” pays $9 per hour then number of worker hired will be 10,000. Similarly, if “industry B” pays $9 per hour then number of worker hired will be 20,000. So, industry B can employ more worker then industry A, => industry B would a union be more likely to organized workers.

b).

Let’s assume the initial wage paid by industry A is “$8”, it increases to “$9”, => the percentage change in wage is “(9-8)*100/8 = 12.5%”. Similarly, assume the initial wage paid by industry B is “$9”, it increases to “$10”, => the percentage change in wage is “(10-9)*100/9 = 11.11% < 12.5%”.

So, here union of industry A would be more successful in wining larger wage gains.