The United Auto Workers union is largely responsible for the historically high pay of American auto workers by negotiating pay raises above those obtained by workers in other industries. In addition to increasing the pay of auto workers, what other long-run effect would this high pay have on the use of auto workers?

Over the long run, firms will adjust the proportion of labor to capital based on the ratio of MPP to input P. Unless worker productivity increases are at least as great as wage increases, the firm will shift away from labor and toward greater use of capital equipment such as robotics.