Too Few Employers Means Too Low Wages

Collective bargaining can redress the vulnerability of workers who find themselves in a buyers’ labour market. Employers have more power when workers have less choice—and are not covered by collective agreements. Imagine a man looking for a job but there are only four viable employers for his profile. He will have a hard time negotiating good pay because his alternatives—and thereby his bargaining power—are limited. Now imagine that his sister, by contrast, has 50 employers from which to choose. As she has more leverage with her prospective employer, she will most likely be paid a higher wage.