Excellent explanation. Where I live, near that dirty ole "oil industry", the unions are well represented. OCAW, Teamsters,etc. Gets really interesting when the contracts are up for renewal. Years ago in the '70s and '80s, the unions would completely shut down the oil refineries for months, and on a few occasions, a year or more. Don't get me wrong, working in an oil refinery is dangerous. Not only do you worry about explosions and fires, but also the health risk that appear later in the lives of these workers. Cancer, asbestosis, etc. However, if a regular worker spends his entire working life at a refinery, they will end up with, on the average, $1 million to retire on. And that is workers without a college degree.
A kid right out of high school can get a two year "process operator" degree and start out at a refinery at around $70K. It could be more now.
To you point, as wages for employees go up, employers simply do one of two things: go up on the price of products, or cut the work force. A business owner or manufacturer has to bring xx per cent return on his investment or at one time, it wasn't worth staying in business. You could sell out and invest your money for a larger return.
Like you say, it's a vicious cycle that not many understand.