Final answer:
Labor unions argue that the substantial pay discrepancies between CEOs and non-CEOs are a reflection of broader income inequality. Their stance is focused on reducing this gap to ensure fair and equitable pay within the workforce.
Step-by-step explanation:
The argument commonly used by labor unions regarding the substantial pay discrepancies between CEOs and non-CEOs is Income Inequality. Labor unions emphasize that the vast differences in payment reflect a broader issue of income inequality in the workforce, which they argue undermines the concept of fair and equitable pay for work done and contributes to social and economic imbalances. Unions often advocate for policies and negotiations that aim to reduce this gap and promote a more balanced compensation structure. Regarding the question of equilibrium wage and labor demand, if no union exists, the equilibrium wage would be where the supply of labor meets the demand for labor. If the union negotiates a wage that is $4 per hour higher, it would likely create an excess supply of labor because the higher wage attracts more workers than there are jobs available at this new wage rate.