Question

Two industries (Industry X and Industry Y) are run by labor unions. Even though the unions overseeing these industries are considered honest and conscientious, we have seen a large disparity in pay between the industries. In fact, the wages in Industry X are now three times the rate as those of Industry Y. What factors account for the differences in these two industries?

Answer 1

First, we have the two industries run by unions, second we have the fact that these unions are conscientious and honest, third we know that there is a disparity in pay.

Now analysing the above facts and there could be the following reasons for the difference in pay for the two industries under consideration:

• There would not be any unions issues, the reason being that the unions are honest and conscientious
• The difference in the economic condition of the industry would play a major role in the performance of the companies under the industry and therefore the obvious difference in the pay when compared to any other industry
• Competition in the industry also would play an important role in how the company is making margins and as above, forms an important criteria when there is a disparity in the pay
• While these are two different industries, if they cater to different type of target markets with different levels of disposable income, then definitely there would be a difference in the pay offered by the company as well
• Quality of work and supply of labour for the kind of work done in the industry also could be an important factor in determining the pay, and therefore could be the disparity
• Last but not the least, the labour union, their activities, their relationship with the management and their location and style of living also to a certain extent influence the worker pay and hence ultimately make a difference in the pay scale