In a small town, there is only one major employer, a factory that produces shoes. The factory has significant control over the wages it pays its workers due to the lack of alternative job opportunities in the area. If the factory decides to lower wages, what is the likely impact on the workers and the overall labor market in this town?

In a small town where the factory is the only major employer, it has a lot of power over how much it pays its workers. If the factory decides to lower wages, many workers might struggle to make ends meet since they have no other job options nearby. This could lead to lower morale and productivity among workers, as they may feel undervalued and stressed about their financial situation. Additionally, the overall labor market might weaken, as potential workers from outside the town may not want to move there if they know the pay is low. In this way, the factory's decision not only affects current employees but also the town's economic health and attractiveness to new workers.