Question

if union contracts raise wages above competitive levels, what might be one negative outcome?
○ industries will raise salaries for top - level workers but not entry - level workers.
○ companies will move overseas to escape unions and hire cheaper labor.
○ inexperienced workers will lose their jobs to more experienced workers.
○ employees will be content with their status and thus less likely to join unions.

Explanation:

To solve this, we analyze each option:

• Option 1: The question is about union - induced wage increases above competitive levels, not about differential salary raises between top - level and entry - level workers. So this is not a relevant negative outcome.
• Option 2: If union contracts push wages above competitive levels, companies face higher labor costs. To reduce these costs, they may move their operations overseas where they can hire labor at a cheaper rate (since there are no such high - wage union contracts). This is a logical negative outcome of above - competitive union - driven wages.
• Option 3: Union contracts are generally about protecting workers' rights and wages, and there's no direct link between union - induced above - competitive wages and inexperienced workers losing jobs to more experienced workers. Unions often aim to protect all members, not just experienced ones, and this outcome is not a typical result of wage increases due to unions.
• Option 4: If wages are raised above competitive levels, employees would likely be more content, but this is not a negative outcome related to the economic impact of above - competitive wages. The question is about negative outcomes of the wage increase, and this option describes a positive (from the employee's perspective) or neutral situation, not a negative one.

Answer:

B. Companies will move overseas to escape unions and hire cheaper labor.