588 Miller Economics Today, Nineteenth Edition
Chapter 29 Unions and Labor Market Monopoly Power
In Europe Jobs Can Now Move Farther East
Germany has an extensive system of centralized wage bargaining that involves nearly 60,000 different
labor agreements. Furthermore, any German company with more than 2,000 employees must give half the
Higher FDIC Wages for Some Means Fewer FDIC Jobs for Others
Employees of the FDIC are represented by the National Treasury Employees Union (NTEU), which also
has members in the U.S. Treasury Department and various other government agencies. Over the years, the
NTEU has won significant wage increases for its members, including workers at the FDIC. These pay
Lecture Extender Examples 589
The Canadian Wheat Export Monopsony
In Canada, wheat farmers can grow as much wheat as they wish. The only catch is that wheat farmers can
sell their wheat to only one organization, called the Canadian Wheat Board (CWB). The idea behind
making the CWB the only legally sanctioned buyer and seller of Canadian wheat is to give the CWB
The Davis-Bacon Act was passed in 1932. It specifies that the Secretary of Labor can establish minimum
or subsidized with federal funds. The Department of Labor Wage Determination Division has typically
mean union wages. In their bargaining sessions with employers,
As unionization rates have fallen, so have the number of strikes by unions. The number of strikes has
fallen from between 400 to 450 per year in the 1950s to under 100 a year since the early 1980s. Major
strikes used to have significant disruptive effects on the economy, but that is rarely the case today. One of
590 Miller Economics Today, Nineteenth Edition
Monopsony in College Sports
About 600 colleges and universities belong to the NCAA, which controls more than 20 sports. The
NCAA operates as an intercollegiate cartel that is dominated by universities that operate big-time athletic
programs. It operates as a cartel with monopsony and monopoly power in four ways:
2. It often fixes the prices that universities can charge for tickets to important intercollegiate events.
4. It enforces its regulations and rules with sanctions and penalties.
The NCAA rules expressly prohibit bidding for college athletes in an overt manner. Rather, the NCAA
requires that all athletes be paid only for tuition, fees, room, board, and books. Moreover, the NCAA
limits the number of scholarships that can be given by a particular university. These rules are ostensibly to
prevent
individual universities and colleges have attempted to cheat on the rules in order to get the best athletes.
Lecture Extender Examples 591
Will Internet Job-Hunting Services Finally Make Monopsony
an Irrelevant Economic Concept?
The cla a small community in which a single firm is
the dominant employer. In extreme examples, companies have owned and managed all housing, stores, and
health-care facilities in such towns. Of course, the coming of the automobile put an end to most of these
towns. It did not necessarily bring a complete end to monopsony power for some businesses. For
example, imagine being a licensed practical nurse in a remote area with relatively few doctors and a