A simple view of how a union might increase wages for members is to restrict membership to the union and obtain an closed shop contract with the firms in the industry. If a firm is a closed shop it cannot hire, by contract, any worker who isn't a member of the union. Some states in the US have outlawed closed shop contracts with so called "right to work" laws.

A combination of a closed shop and restricted union membership has the effect of shifting back the labor supply curve from S_L to S_U as shown to the right, decreasing employment from N* to N_U and increasing the wage from W* to W_U.

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