Economics Special Topic 10—Do Labor Unions Increase the Wages of Workers?
MULTIPLE CHOICE
1. Since 1970, union membership, as a percent of the labor force, has
a.
remained virtually unchanged.
b.
increased slightly.
c.
declined steadily.
d.
increased significantly.
2. Which of the following is true?
a.
Women are more highly unionized than men.
b.
A higher percent of white workers belong to unions than do African-American workers.
c.
The proportion of government employees belonging to a union is substantially higher than
the proportion of private-sector workers who are union members.
d.
There is little difference in incidence of unionization among occupational categories.
3. How does competition from nonunion firms and foreign producers affect the ability of a union to
increase the wages of its members?
a.
Such competition reduces the ability of a union to achieve wage increases.
b.
Such competition does not affect the ability of a union to achieve wage increases.
c.
Such competition will increase the strength of a union if it produces a product sold in the
domestic market but reduce the strength of the union if it produces an export product.
d.
The effect of this type of competition will be entirely dependent on the elasticity of
demand for labor in the domestic market.
4. Which of the following factors will make it easier for a labor union to increase the wages of its
members?
a.
a highly inelastic demand for the products produced by the union labor
b.
a readily available supply of similar products produced by nonunion labor
c.
low tariffs and strong competition from foreign firms producing the products supplied by
the union labor
d.
a reduction in the demand for the products produced by the union labor
5. Most studies indicate that during the last two decades, the wages of union members have been
approximately
a.
5 percent higher than the wages of similar nonunion workers.
b.
14 to 19 percent higher than the wages of similar nonunion workers.
c.
34 to 39 percent higher than the wages of similar nonunion workers.
d.
64 to 69 percent higher than the wages of similar nonunion workers.
6. Which of the following most accurately indicates changes in the size of the union sector in the United
States?
a.
As a share of the labor force, union membership grew substantially during 1935 through
1955 but has declined substantially since the mid-1950s.
b.
As a share of the labor force, union membership declined substantially during 1935
through 1955 but has grown substantially since the mid-1950s.
c.
As a share of the labor force, union membership has steadily grown from less than 10
percent in 1935 to more than 40 percent today.
d.
Union membership has been approximately 20 percent of the labor force during the last
five decades.
7. Union membership as a percent of the nonagricultural labor force ____ in 1970 to approximately ____
in 2012.
a.
fell from approximately 30 percent; 11 percent
b.
rose from approximately 15 percent; 22 percent
c.
fell from more than 40 percent; 10 percent
d.
rose from approximately 8 percent; 40 percent
8. What percentage of the non-farm labor force in the United States belonged to a labor union in 2012?
a.
less than 10 percent
b.
approximately 11 percent
c.
approximately 28 percent
d.
more than 40 percent
9. Which of the following groups is most highly unionized?
a.
private wage and salary workers
b.
government employees
c.
technical, sales, and service workers
d.
women
10. While most industrial categories have experienced a decline in the percentage of workers unionized,
which one of the following categories has seen a significant increase in unionization?
a.
retail trades
b.
the hotel and restaurant industry
c.
the government sector
d.
automobile manufacturing
11. Which of the following is most likely to belong to a union?
a.
a government employee
b.
a salesperson
c.
a chef at a four-star restaurant
d.
a taxi driver
12. Between 1960 and 2012, the proportion of workers belonging to a union
a.
decreased substantially in the private sector.
b.
was approximately constant in the private sector.
c.
decreased substantially in the government sector.
d.
was approximately constant in the government sector.
13. Which of the following states had the lowest incidence of union membership as a percent of all wage
and salary workers in 2012?
a.
New York, Hawaii, and Alaska
b.
South Carolina, North Carolina, and Arkansas
c.
Illinois, Michigan, and Ohio
d.
Nevada, Hawaii, and Alaska
14. Which of the following states had the highest incidence of union membership as a percent of all wage
and salary workers in 2012?
a.
New York, Hawaii, and Alaska
b.
South Carolina, North Carolina, and Mississippi
c.
Arkansas, North Carolina, and Texas
d.
California, Florida, and Georgia
15. Which of the following states had the highest incidence of union membership as a percent of all wage
and salary workers in 2012?
a.
New York
b.
Arkansas
c.
North Carolina
d.
California
16. Laws that prohibit collective bargaining agreements requiring a worker to join a union as a condition
of employment are called
a.
collective bargaining agreements.
b.
minimum wage laws.
c.
union shop laws.
d.
right-to-work laws.
17. Firms will be much more willing to consent to significant wage increases when
a.
right-to-work laws are present.
b.
the demand for the final product is weak.
c.
the firm has low product inventory.
d.
the demand for the final product is elastic.
18. A strike, or the threat of one, is most likely to be effective when
a.
demand for the firm’s product is strong.
b.
foreign competition for the product is high.
c.
the firm has a high product inventory.
d.
demand for the product produced by the union workers is highly elastic.
19. As the football season approaches, the threat of a player strike would give
a.
both players and management an incentive to bargain seriously.
b.
only the players an incentive to bargain seriously.
c.
only management an incentive to bargain seriously.
d.
neither party much incentive to bargain seriously.
20. The demand for union labor is usually determined by
a.
the number of union members.
b.
the strength of the union.
c.
the total value of the union labor in the production process.
d.
market conditions outside the union’s direct control.
21. Which of the following will tend to increase the ability of a union to increase the wages of its
members?
a.
Almost all of the firms in the industry are unionized.
b.
Foreign competition for the product produced by the union labor is intense.
c.
There is a reduction in the demand for union labor.
d.
The demand for the product produced by the union labor is highly elastic.
22. Which of the following will limit the ability of a union to push the wages of its members much above
competitive levels?
a.
the presence of nonunion firms that produce the same product as the unionized labor
b.
foreign competition in the market for the product produced by the unionized labor
c.
a highly elastic demand for the product supplied by the unionized labor
d.
all of the above
23. Union membership will be more attractive from the worker’s viewpoint if
a.
the demand for the union labor is highly inelastic.
b.
the supply of union labor is highly elastic.
c.
only a few of the firms in the industry are unionized.
d.
the membership dues charged by the union are extremely high.
24. The demand for unionized labor will generally be more elastic, and it will be more difficult for the
union to achieve above-equilibrium wages when
a.
there are many close substitutes for the unionized workers.
b.
trade barriers limit the importation of the product produced by the unionized workers.
c.
the cost of employing the unionized workers is a small part of the total cost of product that
they produce.
d.
the demand for the product produced by the unionized workers is highly inelastic.
25. A union representing a group of workers will tend to be stronger when
a.
there are no good substitutes for the labor services of the unionized workers.
b.
the domestic producers of the good produced by the unionized workers face intense
competition from foreign suppliers of the good.
c.
the cost of employing the unionized workers is a large part of the total cost of the product
that they produce.
d.
the demand for the good produced by the unionized workers is highly elastic.
26. When a union successfully raises the wages of its members, it will also
a.
increase total productivity, which will generally increase in proportion to the wage rate.
b.
encourage employers to purchase more of the union labor.
c.
increase the share of income allocated to labor as opposed to capital.
d.
increase the employer’s incentive to find substitutes for union labor.
27. How does competition from nonunion firms and foreign producers affect the ability of a union to
increase the wages of its members?
a.
Such competition makes it easier for the union to achieve wage increases.
b.
Such competition reduces the ability of a union to achieve wage increases.
c.
Such competition does not affect the ability of a union to achieve wage increases.
d.
Such competition will increase the strength of a union if it produces a product sold in the
domestic market but will reduce the strength of the union if it produces an export product.
28. The experience of the Teamsters in the late 1970s and early 1980s suggests that
a.
there are few restraints on the ability of a strong union to increase the wages of its
members.
b.
product market competition with goods made from (or services provided by) nonunion
labor significantly limits the ability of a union to get increased wages for its members.
c.
higher wages tend to stimulate aggregate demand, which makes it easier for a union to
gain still higher wages.
d.
wages are established by the relative skill of union and management negotiators,
independent of market conditions.
29. Which of the following factors will reduce considerably the ability of a union to raise the wages of its
workers?
a.
an elastic demand for the goods produced by union labor
b.
a five-year apprenticeship before one can qualify for jobs held by union members
c.
high tariffs on goods produced by the union labor
d.
favoritism in the allocation of government contracts to firms that employ union labor
30. Since the demand for a narrowly defined product class (Fords, for example) is more elastic than the
demand for a broadly defined product class (all automobiles), a union will be better able to raise the
wages of its members without causing a reduction in their employment when
a.
it can organize an entire industry, rather than just selective firms within the industry.
b.
it concentrates its organizational efforts on a single firm, ignoring the rest of the industry.
c.
the demand for the product is highly elastic.
d.
there are many good substitutes for union labor.
31. “If a union is only able to organize a few of the firms in an industry, it is unlikely that the union can
substantially increase the wages of its members.” This statement is
a.
false; unions tend to be stronger when they concentrate on only a few producers in an
industry.
b.
false; the demand for unionized workers will be more inelastic if only a few firms in the
industry are unionized.
c.
false; all unions can increase the wages of their members.
d.
essentially correct.
32. The demand for unionized labor will generally be more elastic, and it will be more difficult for the
union to achieve above-equilibrium wages when
a.
there are no close substitutes for the unionized workers.
b.
the domestic producers of the good produced by the unionized workers face weak
competition from foreign suppliers of the good.
c.
the cost of employing the unionized workers is a large part of the total cost of the product
that they produce.
d.
the demand for the product produced by the unionized workers is highly inelastic.
33. Which of the following would be an expected result of substantially higher wages in the U.S.
automobile industry?
a.
an increase in the real wages of workers outside the industry
b.
an increase in the price of automobiles produced in the United States
c.
a reduction in the demand for foreign-produced automobiles
d.
an increase in the profit rate of U.S. automobile producers
34. When a union successfully raises the wages of its members, it will also
a.
increase total productivity, which must rise in proportion to the wage rate.
b.
encourage employers to find a substitute for the union labor.
c.
raise the wages of nonunion workers.
d.
increase the share of income allocated to labor as opposed to capital.
35. Which of the following statements is true for the U.S. economy?
a.
Higher wages in the unionized sectors of the economy push up wages in the nonunion
sectors as well.
b.
Inflation tends to accelerate when the proportion of the labor force that is unionized
increases.
c.
Union workers currently receive wages that are 15 to 20 percent higher, on average, than
similar nonunion workers.
d.
When we compare similar union and nonunion workers, we find virtually no difference in
the wages they receive.
36. During the 2011 to 2012 period, the wage premium of union workers, when compared to similar
nonunion workers, was approximately
a.
9 percent.
b.
20 percent.
c.
28 percent.
d.
33 percent.
37. To the extent that unions can transfer profits from unionized employers to union workers, they will
a.
reduce the incentive of unionized employers to invest in fixed capital and research.
b.
increase employment in the unionized sector.
c.
reduce the incentive of nonunion firms to invest and expand their output.
d.
increase the productivity of labor in the long run.
38. The share of the labor force that was unionized increased from approximately 10 percent in 1930 to
more than 30 percent in 1955. During these 25 years, the share of national income allocated to labor
(in contrast to capital)
a.
remained virtually constant.
b.
increased approximately 10 percent.
c.
increased between 15 and 25 percent.
d.
increased 17.6 percent.
39. The share of the labor force that was unionized increased from 7.4 percent in 1930 to more than 30
percent in 1955. During these 25 years, the share of national income allocated to labor (in contrast to
capital)
a.
increased approximately 10 percent.
b.
increased 17.6 percent.
c.
fell 20 percent.
d.
was virtually unchanged.
40. The share of the labor force that was unionized fell from more than 30 percent in the 1950s to less than
15 percent in the 2000s. During this time period, the share of national income allocated to labor (in
contrast to capital)
a.
decreased by approximately 10 percent.
b.
decreased by more than 15 percent.
c.
increased by 10 percent.
d.
was virtually unchanged.
41. As the percentage of the labor force belonging to a union fell in the United States during the 1955
through early 2000 period, the share of national income going to labor
a.
increased 10 percent.
b.
remained approximately the same.
c.
decreased 10 percent.
d.
decreased 20 percent.
42. Union membership has fluctuated during the last several decades. Which of the following statements
best describes the effect of unions on the share of total output allocated to labor?
a.
The share of output going to labor has been virtually constant, even though union
membership as a share of the labor force has fluctuated.
b.
The share of total output going to labor has followed the same pattern as the business
cycle in recent years.
c.
The share of total output going to labor rose as union membership rose from 1945 to 1960
and fell as union membership declined during the 1960 through 2000 period.
d.
The share of total output going to labor has increased substantially, even though during the
last several decades union membership has declined.
43. Which of the following statements is correct?
a.
Approximately 50 percent of our national income is allocated to human capital, while the
remaining 50 percent is allocated to physical capital in the form of rents, interest, and
corporate profits.
b.
As union membership as a share of the U.S. labor force has declined during the last three
decades, the share of national income allocated to physical capital has risen.
c.
Unions have consistently opposed minimum wage legislation because it tends to cause
unemployment.
d.
During the past several decades, the share of output going to capital has been virtually
constant, even though union membership as a share of the labor force has decreased.
44. Which of the following statements is true?
a.
The share of income going to labor has increased during periods when union membership
has increased as a proportion of the U.S. labor force.
b.
Inflation in the United States has tended to accelerate as the proportion of the U.S. labor
force that is unionized has increased.
c.
Higher wages in the unionized sectors of an economy will also push up wages in the
nonunion sectors.
d.
High real wages cannot be achieved and sustained without increases in output per worker
hour.
45. An increase in the percentage of the labor force that is unionized will cause average wages for all
workers to rise because
a.
union labor is more productive.
b.
profit levels are lowered to increase wages.
c.
strike threats promote wage increases.
d.
This is a trick question because greater unionization does not imply higher average wages.
46. Since 1970, union membership, as a percent of the labor force,
a.
has remained virtually unchanged.
b.
has increased, as more government workers have decided to unionize.
c.
has decreased.
d.
has gone through wild swings both up and down.
47. Which of the following will tend to lower the ability of a union to increase the wages of its members?
a.
strong competition from nonunion labor
b.
threat of a strike
c.
increased demand for union labor
d.
all of the above
48. Which of the following factors will reduce considerably the ability of a union to raise the wages of its
workers?
a.
an elastic demand for the goods produced by union labor
b.
weak foreign competition for the product union labor helps to produce
c.
high tariffs on goods produced by the union labor
d.
favoritism in the allocation of government contracts to firms that employ union labor
49. Which of the following is most likely to be associated with a strong union?
a.
The demand for the products produced by the unionized labor is highly elastic.
b.
There are few good substitutes for the products produced by the unionized labor.
c.
It is easy to substitute capital for the labor of the union members.
d.
Union labor composes a large proportion of the total cost of the product that they help
produce.
50. Data on the relationship between the percentage of the workforce unionized and the share of national
income allocated to labor suggest that unionization has
a.
greatly altered the labor-capital distribution of national income.
b.
increased the share of national income allocated to labor.
c.
had a positive effect on the wages of nonunion workers.
d.
had no significant impact on the share of income going to labor.
51. Which of the following is most likely to occur if a union can transfer profits from a unionized
employer to union workers?
a.
The investment expenditures of the unionized employer will tend to fall.
b.
Employment in the nonunion sector will tend to fall.
c.
The costs of the unionized employer will tend to fall.
d.
The output of the unionized employer will tend to increase.
52. What is the primary source of higher real wages?
a.
labor unions
b.
the threat of a strike by a union
c.
increases in productivity
d.
increases in the supply of money
53. Measured as a share of the labor force, union membership was at its highest level in the United States
during the
a.
1930s
b.
1950s
c.
1970s
d.
1990s
54. Union membership as a share of the work force is ____ in states with right-to-work laws. (Fill in the
blank.)
a.
above the national average.
b.
below the national average.
c.
greater than 50 percent.
d.
close to 100 percent.
55. In which of the following occupations is union membership the highest?
a.
sales
b.
transportation
c.
construction
d.
government
ESSAY
56. What common goals, if any, do labor and management share?
57. A former union employee states: “We were on strike for two years. I know the eventual wage increase
we received will never make up for the wages I lost, but I think the strike was worth it. We forced the
company to give in to our demands.” Evaluate these comments.
58. What characteristics of both the product market and the labor market enhance the likelihood that a
union will be effective?
59. Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers
union?
60. In a strike, what does the union have to lose? What does management lose?
61. List some factors that might make the threat of a strike more effective.
62. If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for
a wage increase, where is the firm likely to get the money to pay the higher wages?
ANS:
