On the criterion of fairness, one would argue that two employees doing comparable work should draw comparable wages. Unions, too, would want comparable wages as they must protect the interests of all members. However, there are situations within the same national union when members earn different wages. Consider the following scenario: Industry A and Industry B employees are extensively organized by conscientious and honestly run labor unions. Still, since 1972, the wages in Industry A have risen at about three times the rate of those in Industry B. Based on the scenario and your understanding of determinants of wages, respond to the following:
What may account for the difference in the wages between these two industries? Identify and describe each factor and explain its effect on wages. If you make any assumptions about the scenario, state them.