Question

Assignments Assignment 10.1 - Understanding the Effects of Unions After completing this Lesson's readings, answer the short answer questions and submit work to the Assignment 10.1 dropbox. • Do a little outside research. Describe labor and other resource markets. How is the market for labor similar to and different from the markets for steel or other factors of production? What can a firm do to ensure a dependable supply of these resources? • Look up the concept of a spillover effect and explain how unions have benefited workers who have never been a member of a union. Union membership for non-government workers has fallen dramatically over the last 30 years, yet government workers are becoming ever more and more unionized. Why do you think that is true? Would you expect the presence of labor unions to lead to higher or lower pay for worker-members, both in the short and long run? • Would you expect a higher or lower quantity of workers hired by those employers? What effect would you expect this to have on a company's bottom line? As a union member, would you accept higher pay if you knew that would result in layoffs? Explain briefly. • Will union membership continue to decline? Why or why not?

Answer 1

1] Labour market is the market were labour for a particular work are demanded and supplied to perform various functions or economic activities. Capital markets are the markets were trade of capital goods happen that is the capital goods that are produced by the labour and supplied in the market as demanded by the consumers. Service markets are the resource markets that trade the services of the people that is the entrepreneurial services.

Labour is simliar to other forms of resources as it also forms an indispensable part of production process of the goods. And labour like any other factor of production is demanded and supplied in the markets. Labour is different from the market for steel as labour demand depends of the productivity offered by the labours and they are paid wages unlike steel where a price is offered for the final product. While all the factors of production have a price to it, wages of the labour are determined by their productivity. To ensure a dependable supply of the resources, the firm has to provide considerable market rent to the land resources, wages in proportion to the productivity of labour, prices and interest to the capital and profits to the entrepreneur.

2] Spillover effect refers to the economic event that occurs because of something else which happens in a seemingly unrelated concepts. In short it is an economic externality that happens to others. Union members of a company protest against the unethical treatment of the employers and demand a wage hike. Coming under pressure of the union members the employers, better the treatment given to their employees and increase the wages. This helps not only the union members but also spillovers to the non union employees as well.

3] Union membership for non government employees have been going down drastically mainly becasue of the change in the job structure over the years. Healthcare, restaurants and services have had low unionisation rates and the industrial sector where it used to be high has been loosing jobs over the past years. Howvever, the union membership is stiil high among government employees as they have a better chance of negotiating with the government on their problems and queries.

4] I would expect a lower pay for the worker for the worker members both in the short and long run, as with diversification of job structure not many would join a union call. Also, the employeers have aknowledge of the economic scenario wherein the people, government and the economy needs their service, in such a condition it will be likely for the owners to fall in to the demand of the union leaders.

5] The company would hire less number of employees in a situation where it expects unionisation by its workers. This is because one way to lessen the effect of union members is to reduce the number of employees. This would have a negative effect to the bottomline of the company as it will be seen as a company that does not pay heed to the demands of the union and is also effecting a reduction in the number of workers being employed. As a union member i will not accept higher wages if that leads to lay off as it might be difficult for me to get a better employment than this and no one would be able to guarantee a better and much safer job than the current one.

6] Yes union membership will continue to decline in the coming years because people now have a diversifiaction of jobs and they have better portals to register their individual complaints to their higher authorities. Also, unionisation has been successful in government sector than any other, with a rapid increase in the privatisation of companies and also of the government run companies being privatised, lesser unions would be encouraged.