No going backwards

The failure of money wages to decline in the face of an excess supply of labor represents one of the most important deviations of actual labor market behavior from prediction. For example when President Carter imposed the embargo on grain sales to the Soviet Union in 1979, the price of wheat received by North Dakota farmers dropped down in a matter of days.

Now when you talk with the management they want to treat labor as a commodity such as wheat - they want to lower the wages and cut benefits, why?

The answer to this question revolves around differences in the two types of markets which the management would never acknowledge. First the wheat market is a classic example of an auction market. Prices rise and fall as buyers and sellers bid against each other in an attempt to strike the best bargain possible. The flexibility of prices is encouraged by several features of the market and the goods in question. Buyers and sellers of wheat for example engage in constant ‘shopping around’ in the market as they search for the best price. Likewise since the wheat is a standardized commodity the only variable of concern to both parties is the price. Finally since wheat is an inert commodity it does not care at what price it is bought and sold, nor does it care who the buyer is or how many times it changes hands. 

The labor market on the other hand is far different. If labor were like a commodity market (which is the desire of the management) just imagine how firms would auction jobs on a daily basis to the lowest bidders. Competition among unemployed workers would result in the wage being bid down until everyone who wanted a job had one. We are not going back to the days of bygone when a foreman would stand at a plant gate and offer work to those outside at whatever wages he felt like. TWU Local 100 membership deserves a raise to their wages.