Labor's Tough New World

With unemployment rising, job security is now the top demand of unions

The labor market is imperfect. When there is a considerable increase in unemployment, do wages drop as they would in a competitive market? History answers no.

A generation of college economics students learned that maxim from the classic textbook by Paul Samuelson. Labor unions had become so strong, the reasoning went, that they had virtually repealed the law of supply and demand as it applies to jobs and wages. Even in difficult economic times, unions would prefer to sacrifice jobs rather than relinquish...

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