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Policy analysis about Economics - Research Paper Example

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Labor unions are organizations that are formed by workers in a particular country or region to prevent the workers from exploitations by their employers. Exploitations usually arises inform of low compensation to the workers, poor working conditions and the general economic…
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Policy analysis about Economics
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Policy analysis about Economics

Download file to see previous pages... Due to the disparities of income between the high skilled and low skilled labors, the union advocates for rise in the minimum wages among the low skilled workers. These help to decrease the gap between the high income earners to the low income earners. Through this, they ensure equitable distribution of income in the society that ensures demand is relatively high hence economic growth (Duerrenberger, 2009).
The unions usually lobby for strict immigration rules which limits labor supply within the United States economy especially the low skilled workers from abroad. Hence any labor supply from over-sees are highly qualified which is necessary for the general economy as it would ensure quality products that increase revenue to the country. Through these, they ensure higher incomes to the available labor (Duerrenberger, 2009). High wages results in increased consumption that raises demand hence higher productivity leading to economic growth.
Unions have also supported the restriction of imported goods and services through the imposition of tariffs and quotas that discourages imports while promoting exports leading to increasing in demand of the domestic products. High demand results in increased productivity which raises the labor demand of the country (Duerrenberger, 2009).As a result, more units of output are produced, raising the sales revenue that increases income to the GDP of the nation hence high economic growth.
However labor unions have various impacts on the economic operations of the country. They constantly bargains for increase in the minimum wage rate without an equivalent rise in the production capacity. Increasing wages by firms’ results into high operational cost in terms of salaries.This would otherwise reduce the productivity reducing output leading to decreased sales. As a result, the firms and business will incur loss and may be forced to lay off workers leading to high unemployment rate. High rates of unemployment affect ...Download file to see next pagesRead More
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