Management buying and selling

This type of buying and selling is seldom done in the labor market today for several reasons. One is the growing prevalence of long-term jobs in the labor market. While the plant foreman in days bygone might hire and fire workers on a daily or weekly basis, many firms today would find this prohibitively expensive. Firms invest substantial sums of money in their employees in the form of hiring and training costs. 

Thus even if an unemployed worker offers to work at a lower wage than an existing employee the firm will generally not find it profitable to hire him or her.

A second reason why money wages is downwardly inflexible is because unemployed workers frequently refuse to lower their ‘asking wage’ preferring instead to remain unemployed until a job opening is found at the desired wage. This reflects the expectations of many workers that their loss of job is temporary, the psychological resistance of workers to accepting a wage less than what they were accustomed to and the availability of unemployment insurance benefits. For these and other reasons then wages typically do not fall even in the presence of considerable unemployment. Thus TWU Local 100 membership deserves a raise to their wages.