Final answer:
A union negotiating higher wages for its members results in fewer workers hired due to reduced incentives for the firm. To mitigate employment losses, a union might need to ration jobs or increase worker productivity. If productivity does not increase commensurately with wages, reduced profits for firms can affect union employment.
Step-by-step explanation:
When a union successfully negotiates a higher wage for its members (above the competitive wage rate), it impacts the firms' hiring decisions. The quantity of workers hired at the union wage (Qd) is typically smaller than what the firm would have hired at the original equilibrium wage (Qe). This is due to a reduced incentive for the firm to hire. The union must recognize that higher wages may lead to fewer employment opportunities or job rationing among members. Measures such as increasing productivity could help mitigate this effect. If unionization increases worker productivity, the firm could afford higher wages and the demand for unionized labor might increase, reducing job losses.
However, if higher productivity is not matched by these wage increases, firms may see lower profits or losses. This may result in the firm purchasing inputs from nonunion producers, relocating, or opening new facilities where unions have less influence, further impacting union member employment opportunities.