monopsony can also pay a lower wage (Wm) than workers would earn in a competitive labor market (Wc).

14.3 Market Power on the Supply Side of Labor Markets: Unions

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain the concept of labor unions, including membership levels and wages

• Evaluate arguments for and against labor unions

• Analyze reasons for the decline in U.S. union membership

A labor union is an organization of workers that negotiates with employers over wages and working conditions.

A labor union seeks to change the balance of power between employers and workers by requiring employers to

deal with workers collectively, rather than as individuals. As such, a labor union operates like a monopoly in a

labor market. We sometimes call negotiations between unions and firms collective bargaining.

The subject of labor unions can be controversial. Supporters of labor unions view them as the workers’
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