Unions and Wages

See Friedman Milton , “What Price Guideposts?” in Shultz George P. Aliber Robert Z. (eds.), Guidelines, Informal Controls, and the Market Place (Chicago: University of Chicago Press, 1966), p. 21.

Wachter Michael L. , “Cyclical Variation in the Interindustry Wage Structure.” American Economic Review, Vol. LX (March 1970), pp. 75–84.

In recent years the bureau has published an “employment cost index” which provides a union/nonunion breakdown.

The industries are mainly at the three-digit S.I.C. level and were chosen for reasons of data availability. A complete list is available from the author. Union coverage data were taken from contract listings of the BLS.

Data for some industries were not available prior to 1958. Accordingly, a splicing technique has been used to produce the estimate in the text.

The first two periods were used by Pierson in his study of the economic effects of unions. See Pierson Frank C. , Unions in Postwar America: An Economic Assessment (Random House, 1967), pp. 39–51.

See Northrup Herbert R. , “Management's ‘New Look’ in Labor Relations,” Industrial Relations, Vol. 1 (October 1961), pp. 9–24.

Rosters Marvin Fedor Kenneth Eckstein Albert , “Collective Bargaining Settlements and the Wage Structure.” Labor Law Journal, Vol. 24 (August 1973), pp. 517–525.

The employment cost index for 1977 and 1978 showed a faster rise of union wages relative to nonunion, despite distortions created by a significant boost in the minimum wage (which mainly affects nonunion workers) and earnings increases of nonunion stockbrokers (whose commission earnings were increased by trading volume).

The figure does not include associations and certain single-firm unions. With these organizations, the total would be about three percentage points higher.

The analysis of union wage determination sometimes fails to give appropriate weight to employer resistance. Since negotiations involve two parties, it is inappropriate to analyze the outcome of the process solely with regard to union goals. And it is folly to assume that union goals are determined without reference to the probable management reaction. See Mitchell Daniel J. B. , “Union Wage Policies: The Ross-Dunlop Debate Reopened,” Industrial Relations, Vol. 11 (February 1972), pp. 46–61.

Henle Peter . “Reverse Collective Bargaining? A Look at Some. Union Concession Situations,” Industrial and Labor Relations Review, Vol. 26 (April 1973), pp. 956–968.

See Mitchell Daniel J. B. , “Union Wage Determination: Policy Implications and Outlook.” Brookings Papers on Economic Activity, Vol. 3 (1978), pp. 537–582.

For examples of studies in these areas, see Ashenfelter Orley Johnson George E. , “Bargaining Theory, Trade Unions, and Industrial Strike Activity,” American Economic Review, Vol. 59 (March 1969), pp. 35–49; and Krislov Joseph Christian Virgil L. Jr. , “Union Organizing and the Business Cycle, 1949–1966,” Southern Economic Journal, Vol. 36 (July 1969), pp. 185–188.

Estimates are taken from equations developed in Mitchell Daniel J. B. , “Some Empirical Observations of Relevance to Analysis of Union Wage Determination,” Working Paper No. 14, U.C.L.A. Institute of Industrial Relations (1979).

Mitchell , “Wage Determination,” pp. 554–558.

This “inflation-proofness” comes from a combination of scheduled and escalator wage increases. See Mitchell , “Wage Determination,” p. 558.

Sheifer Victor J. , “Collective Bargaining and the CPI: Escalation vs. Catch-Up,” Proceedings of the Industrial Relations Research Association, (August 1978). pp. 257–263: Levin Beth A. , “Scheduled Wage Increases and Escalator Provisions in 1979,” Monthly Labor Review, Vol. 102 (January 1979), pp. 20–25.

Many studies have been made of union/nonunion wage differentials. For a straightforward regression study of the issue, see Ryscavage Paul M. , “Measuring Union-Nonunion Earnings Differences,” Monthly Labor Review, Vol. 97 (December 1974), pp. 3–9. References to other studies can be found in this article.

These studies employ simultaneous-equation techniques of estimation. See Schmidt Peter Strauss Robert P. , “The Effect of Unions on Earnings and Earnings on Unions: A Mixed Logit Approach,” International Economic Review, Vol. 17 (February 1976), pp. 204–212: And Ashenfelter Orley Johnson George E. , “Unionism, Relative Wages, and Labor Quality in U.S. Manufacturing Industries,” International Economic Review, Vol. 13 (October 1972), pp. 488–508. Not all simultaneous-equation studies have contradicted the findings of single-equation studies.

A worker with an expectation of a short spell of employment will have only a short period to enjoy the benefits of higher wages and fringe benefits. In industries which employ such workers, employees may have seen the potential costs of unionization (involvement in strikes, dues, antagonism of the employer) as outweighting the benefits.

Lester Richard , “Pay Differentials by Size of Establishment,” Industrial Relations, Vol. 7 (October 1967), pp. 64–65; Masters Stanley H. , “An Interindustry Analysis of Wages and Plant Size,” Review of Economics and Statistics, Vol. 51 (August 1969), p. 341.

This section owes a great deal to an unpublished manuscript by Okun Arthur M. entitled “Prices and Quantities in Cyclical Fluctuations.” Brookings Institution (1979).

Doeringer Peter B. Piore Michael J. , Internal Labor Markets and Manpower Analysis (Heath, 1971), pp. 163–183.