will not be hiring for such jobs.

From the union point of view, workers who receive higher wages are better off. However, notice that the

quantity of workers (Qd) hired at the union wage Wu is smaller than the quantity Qe that the firm would have

hired at the original equilibrium wage. A sensible union must recognize that when it pushes up the wage, it

also reduces the firms’ incentive to hire. This situation does not necessarily mean that union workers are fired.

Instead, it may be that when union workers move on to other jobs or retire, they are not always replaced, or

perhaps when a firm expands production, it expands employment somewhat less with a higher union wage

than it would have done with the lower equilibrium wage. Other situations could be that a firm decides to

purchase inputs from nonunion producers, rather than producing them with its own highly paid unionized
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