Custom is a practice or belief that has gained acceptance and legitimacy simply because it has been followed for a long time. It is an example of sociological influence on the labor market. Some economists argue that custom has a strong influence on wages particularly relative wage differences between groups of workers. For example pay differences between fire fighters and police officers or between train operators and conductors. Those instances are regarded by the blue collar to be as much a matter of social standing and equity as economics and often become a major criteria in the wage determination process.
Most economists would readily agree that each of the market, institutional and sociological forces have some role in shaping labor market outcomes. One wonders why the blue collar would accept the wages to be dictated by custom? The other side of the coin is why would the union agree to this practice?
If the firms objective is to extract the most profit from the customer while suppressing the wages to a minimum production cost of goods then why are there differences between the labor market for day laborers or migrant workers and the market for teachers or pilots? What are these differences and how do they affect the pricing and allocation of labor?
