Final answer:
Management might not always resist wage increases; they may adapt by increasing investment in machinery which can enhance worker productivity but also potentially reduce the overall need for labor. This can make the remaining workers more productive and potentially in higher demand.
Step-by-step explanation:
The assertion that a higher degree of labor intensiveness increases management negotiators' resistance to bargaining proposals designed to increase wage rates is not necessarily true. Within the realm of labor economics, the relative wage coordination argument suggests that across-the-board wage cuts can be challenging to implement within an economy because such actions often trigger resistance from workers. Simultaneously, an increase in wages can lead to a shift where firm management might invest more in capital, such as machinery, to maintain productivity while employing fewer workers. Thus, rather than always resisting wage increases, management may respond by optimizing their production strategy.
For example, if wages rise to $24 an hour which may be as a result of union negotiations, firms have the incentive to substitute labor with machines. This incentivizes the employment of fewer workers but each working with more or better equipment, thus enhancing their productivity. Over time, workers who can produce more with the aid of better capital become more appealing to employers, and this can actually increase the demand for labor, potentially leading to higher wages in the market. However, the flip side includes a reduction in overall labor demand as machines replace some of the human labor.