Union Wage Negotiations

With no union the labor market settles at E, a wage W_e and Q_e jobs. A union that can credibly threaten a strike can negotiate a higher wage W_u for its members.

At that higher wage firms want fewer workers, Q_d, while more people want the jobs, Q_s. The gap between them is an excess supply of labor: workers who would like union jobs at that wage but cannot get one. Union members who keep their jobs are better off, which is the union's point of view; the cost falls on the workers who are not hired. The slider sets how far above the market wage the union pushes.