Reconsidering union wage effects: Surveying new evidence on an old topic

I examine evidence on private sector union wage gaps in the United States. The consensus opinion among labor economists of an average union premium of roughly 15 percent is called into question. Two forms of measurement error bias downward standard wage gap estimates. Match bias results from Census earnings imputation procedures that do not include union status as a match criterion. Downward bias is roughly equal to the proportion of workers with imputed earnings, currently about 30 percent. Misclassification of union status causes additional attenuation in union gap measures. This bias has worsened as private sector density has declined, since an increasing proportion of workers designated as union are instead nonunion workers. Corrections for misclassification and match bias lead to estimated union gaps substantially higher than standard estimates, but with less of a downward trend since the mid 1980s. Private sector union gaps corrected for these biases are estimated from the CPS for 1973–2001. The uncorrected estimate for 2001 is .13 log points. Correction for match bias increases the gap to .18 log points; further correction for misclassification bias, based on an assumed 2 percent error rate, increases the gap to .24. Reexamination of the skill-upgrading hypothesis leads to the conclusion that higher union gap estimates are plausible. The conventional wisdom of a 15 percent union wage premium warrants reexamination.     

Health Insurance and Worker Retention in the Construction Industry

Using samples of blue collar construction workers from the 1996 and 2001 SIPP, a shared frailty survival model shows that controlling for wages, occupational and demographic factors, both portable union and nonportable nonunion employer-provided health insurance increase the probability of worker retention within the construction industry. Portable union health insurance increases the probability of worker-industry retention by 30 to 41% compared to 13 to 18% for nonunion employer-provided insurance. Our research suggests that by encouraging industry retention, health insurance preserves and encourages the accumulation of human capital in a turbulent industry with high firm-and-industry-labor turnover and also may reduce worker disabilities by immediately treating medical problems. Furthermore, in the union sector of construction where health insurance is portable across signatory contractors, the problem of job-lock inefficiencies is reduced.     

Unionism and employment conflict resolution: Rethinking collective voice and its consequences

IX. Conclusions and Overall Assessment The central proposition advanced by F&;M is that the collective voice/response face of unionism more than counterbalances the monopoly face of unionism. Following this reasoning, it may be concluded that union workers would remain unionized and nonunion workers would become unionized. But what if the collective voice/response face of unionism does not more than counterbalance (let alone “dominate”) the monopoly face of unionism? Suppose that, consistent with the evidence presented herein, the exercise of voice in the employment relationship leads to further deterioration of the employment relationship rather than to the effective redress of worker grievances? In this circumstance, existing unions would lose members, and unorganized workers would choose not to become union members. Supposition aside, there is no question that unionization continues to decline sharply. When F&;M's book first appeared, about one in five private sector workers belonged to a union; today, less than one in eight private sector workers belongs to a union. But while F&;M and, later, Freeman and Rogers (1999), attributed the decline in unionization to employer/management opposition and weak labor law, some of this decline can be attributed to worker resistance. Such resistance may stem, in turn and following F&;M, from recognition of the net negative consequences of unionism's monopoly face, but also, and contrary to F&;M, from recognition of the net negative consequences of unionism's collective voice/response face. If workers judged unions' voice response face, in particular, grievance procedures, to be effective in redressing worker grievances, more union workers would likely remain union members and more unorganized workers would join unions — even in the “face” of employer opposition. While there is little question that there are widely varying types of real-world employment relationships or that unions are best suited to protecting worker interests in certain of these (usually highly adversarial) relationships, the fact that workers as a whole decreasingly choose to become union members suggests that they do not perceive union voice to be effective in redressing deteriorated employment relationships or to be more effective in this respect than nonunion voice options. Such reasoning is consistent with the picture sketched in this paper — a different picture from that forwarded by F&;M — of unionism and grievance procedures as largely reactive, adversarial-oriented mechanisms for dealing with workplace conflict resolution, especially in a pluralist, mixed-motive type of employment relationship.     

Building safety: The role of construction unions in the enforcement of OSHA

Because unionized workers are more likely to exercise their rights under OSHA, it is hypothesized that OSHA is more stringently enforced at unionized construction workplaces than at comparable nonunion workplaces. A comparison of OSHA enforcement in union and nonunion construction sites demonstrates that union sites face higher probabilities of inspection and receive greater scrutiny during inspections than do comparable nonunion sites. Further, union employers are required to correct violations of safety and health standards more quickly and bear higher overall penalty costs than their nonunion counterparts. As a result, the construction industry operates under a “two-tiered” safety and health regulatory system. The author thanks Ronald B. Mitchell of Harvard University for comments on an earlier version of this paper.     

The influence of legal status on the labor market impact of immigration

This article explores US labor market changes that would take place as a result of an amnesty that would regularize the status of undocumented workers without changing the total size of the alien workforce. The theoretical analysis suggests that the influence of legal status on market wage rates and on minimum wage enforcement is weak and that to the extent that there is an effect, it depends on particular institutional arrangements. Although data are not adequate for a definite measurement of these effects, those data that are available support this conclusion. It appears that the presence of undocumented as opposed to resident aliens can weaken union organizing efforts.     

Beyond Good Intentions. Making Anti-discrimination Strategies Work

This article seeks to explore some key questions about effectiveness in anti-discrimination work: what do we know of what works to reduce discrimination faced by disabled people? It takes, as its key focus, current work to reduce discrimination experienced by people who use mental health services, in Britain and internationally. It also looks at initiatives in wider disability communities. It argues on the basis of available evidence (see, particularly, Link &; Phelan, 2001) that initiatives are most likely to succeed if they effectively challenge the power that underpins discrimination, aim to transform beliefs amongst those with the power to discriminate, intervene carefully in the different components of 'discrimination', drawing on evidence of effectiveness and work within a comprehensive framework for ongoing anti-discrimination work. This means targeting anti-discrimination work at different levels and different sectors, working with a range of different organisations and groups, rather than dispersing resources through ad hoc , one-off mini-initiatives. There is no single solution to discrimination, but different elements of potential 'solutions' exist. What is needed is to bring different strands of work together. In particular, it would be helpful to forge a stronger synthesis between, on the one hand, securing legislative improve ment and enforcement, and on the other, promoting the universal benefits of a more inclusive society. Each complements the other.     

Paying dues to the union: A study of blue-collar workers in a right-to-work environment

Of the 39 states that permit some form of public sector collective bargaining, union security agreements are prohibited in 19. Employees may join and pay dues to the union representing them in these states but they are not required to do so. This study of 372 state government workers compares union dues-payers and non-dues-payers on a variety of personal, positional, economic, and noneconomic variables. Workers who were exposed to more physical danger and less noise were more likely to be dues-payers; higher seniority workers and skilled craftworkers were more likely to pay dues. Results suggest that union voting and union dues-paying have different antecedents. They also raise questions about the generalizability of previous dues-paying research to blue-collar settings. Holding a union card in a right-to-work environment seems to have little to do with the traditional collective pursuit of economic power.     

Comparative advantage and the welfare effects of uniform wage policies

This paper analyzes the theoretical impact of a commonly cited union goal — the elimination or reduction of wage differentials within occupations. By dropping the usual assumption of homogeneous labor, we show how, and under what market conditions, workers will receive rents due to individual comparative advantage. In competitive labor markets a union-imposed uniform wage may lower the earnings of workers holding a productive advantage, causing a reduction in employment and a welfare loss of comparative advantage rents. The implications of a strict uniform wage rule imply that unions may be forced to adapt their wage policy to allow more productive workers to receive wage differentials. This consideration helps explain some common trade union institutions.     

Labor Market Effects of Immigration Policies Border Enforcement and Amnesty

We explore the effects of tighter border enforcement and an amnesty on the wages and unemployment rates of natives and immigrants. We extend the Mortensen-Pissarides labor market model to include individuals authorized to work and illegal workers in a framework that accounts for voluntary return migration. Furthermore, we study the effects of an amnesty when a proportion of illegal workers pays payroll taxes. Our results show that the effect of changes in border enforcement on the number of illegal workers in the United States is theoretically ambiguous. While tighter border enforcement deters illegal migration of prospective workers, it also changes the incentives of those already in the United States decreasing return migration. If tighter border enforcement increases the number of illegal workers in the economy, it will also increase the wages of natives as market tightness increases. Our findings show that the larger the proportion of illegal workers paying payroll taxes, the larger will be the decrease in wages, and the smaller the increase in unemployment generated by the decrease in the number of illegal workers in the economy that will follow an amnesty.     

Workplace hazards and workers’ desires for union representation

This paper investigates “voice” responses to hazardous and otherwise disagreeable working conditions in the form of workers’ expressed desires for union representation. Using data from three surveys conducted between 1977 and 1982, workers exposed to significant health and safety risks on the job are found to be substantially more likely to report a willingness to vote pro-union than are comparable workers not similarly exposed. This finding is obtained using both subjective and objective measures of hazard and both union and nonunion workers. Management resistance, however, appears to play a strong role in determining the actual extent of unionization. Between 41 and 48 percent of workers in hazardous jobs desire union representation but have not achieved it. Support for this research was obtained from the Institute of Industrial Relations, University of California, Berkeley. Computational help was provided by Keun Lee and Glenn Shor. Valuable comments on an earlier draft were obtained from William Dickens.     

Minimum Wages in a Segmented Labor Market: Evidence from South Africa

The segmented labor market model describes the impacts of minimum wages on covered and uncovered sectors. This paper examines the impacts of an industry-specific minimum wage in South Africa, a state characterized by high unemployment, a robust union movement, and the presence of a large informal sector. Under the industry-specific wage law, formal agricultural and household workers are covered, while workers in other sectors are not. The unique aspect of this paper lies in the ability to compare the impacts of minimum wage legislation on formal covered, informal covered, formal uncovered, and informal uncovered workers. This natural experiment allows us to test whether industry-specific minimum wage legislation leads to higher wages, whether wage increases are restricted solely to covered formal sectors or if there are spillover effects, and whether such legislation manifests in disemployment effects. We find evidence of higher wages yet disemployment among black workers in formal markets. In informal markets we find no employment effects, but higher wages in formal markets appear to have spilled over into informal markets in covered sectors.     

Union Legitimacy and the Team Concept: A Case Study of Workers’ Attitudes*

Unions are facing a crisis of legitimacy resulting in part from employer‐initiated workplace participation programs that seek to undermine labor militancy and attachment to unions. The overall trend among union leaders, however, is support for the team concept when implemented in unionized settings. This study examines the effect of union involvement in the team concept on pragmatic and moral union legitimacy at the first unionized team concept assembly plant in the automobile industry—the General Motors’ truck plant in Shreveport, Louisiana. The unique contribution of the study is that it systematically examines how workers who began their careers in the industry under different production regimes view the team concept and union legitimacy. The analysis is based on a random sample survey of workers and employs an original approach of comparing work attitudes and union legitimacy among different “political cohorts.” The results indicate that the team concept threatens pragmatic union legitimacy for veteran workers because it undermines seniority rights. Significant time working under the team concept may also weaken moral union legitimacy, even among workers socialized initially in nonteam concept environments.     

Outsourcing and union power

The outsourcing of union work and jobs either diffuses or diminishes union membership, depending on perspective and situation. The correlation of trends in union membership to trends in union power, while less than perfect, has until recently been relatively strong over the past sixteen years. The fact that as diverse a sample of unions as AFSCME, SEIU, and UAW have chosen to make outsourcing a prominent labor/public relations issue suggests that the correlation continues to be perceived by the union movement to be significant, notwithstanding the efforts of the “new” leadership of the AFL-CIO to break that link with respect to union political power by “taxing” member unions and their members to contribute both money and militancy to the 1996 election cycle. Although outsourcing may lead only to the diffusion of union membership either within or between unions, as opposed to the diminution of union membership, this fact has not received a great deal of attention. The net effect on total union membership of outsourcing from one union employer to another union employer is unclear, although the effect on the membership of the union at the outsourcing employer is not. The redistribution of membership within a union as a result of outsourcing is likely to have little immediate impact on union power. However, as even the best case scenario presented above suggests, it may have significant long-run deleterious effects on union bargaining power by taking labor out of a sheltered market and putting it into potentially competitive market. This is particularly likely to be the case when outsourcing (1) places the outsourced work into a different industry or wage contour and (2) creates the possibility of moving from sole-source to multiplesource supplier arrangements. The redistribution of membership between unions as a result of outsourcing is unlikely to have a major impact on union power broadly defined. It can have, however, serious deleterious effects in terms of the power of an individual union, as suggested in my “competitive case” scenario. The fact that one union’s losses due to outsourcing may be another union’s gain is of little consolation to the losing union. That act, in and of itself, may make the threat of outsourcing a potential union “Achilles heel” at the bargaining table by placing it into competition with some other, perhaps unknown, union as well as possibly nonunion competition. The most obvious threat to union power comes from outsourcing that diminishes union membership overall by transferring jobs from union to nonunion employers. The willingness and ability of employers to move work/jobs entirely out of the orbit of union control constitutes, in terms of power and particularly union bargaining power, a revisitation of the phenomenon of the “runaway shop.” It may also be viewed as a proactive form of hiring permanent replacements for (potentially) striking workers. The union options in dealing with such a challenge are to endeavor to preclude outsourcing through legislation or collective bargaining or to chase the work by organizing the unorganized, hopefully with the help of the unionized outsourcing employer. Neither option may be easy, but as the 1996 auto industry negotiations suggest, the former may be less difficult than the latter. The possibility that outsourcing from union to nonunion employer may provide unions with the power to organize from the top (outsourcer) down (outsourcee) cannot be entirely ignored as the issue of supplier “neutrality” reportedly was raised in the 1996 auto negotiations. The adverse effects of outsourcing on union political and financial power, by virtue of its impact on the level or distribution of union membership, can and may well be offset by an increase in union activism—as measured by dues levels, merger activity, organizing commitment, and political action. The adverse effects of outsourcing on union bargaining power are more problematical from the union standpoint. The effect of outsourcing, whatever its rationale or scenario, appears to be to put union labor back into competition. Thus, outsourcing constitutes yet another challenge to the labor movement in its ongoing and seemingly increasingly unsuccessful battle to take and keep U.S. union labor out of competition by proving itself able and willing to organize to the extent of the market and standardizing wages in that market.     

General Feelings Toward Unions and Employers as Predictors of Union Voting Intent

The union voting intention literature shows that many nonunion employees who indicate that they think unions are instrumental in increasing wages, benefits, and working conditions would vote against forming a union. Although American workers have often been characterized as pragmatic with regard to their support for unions, the “disconnect” between union beliefs and union voting intentions just described suggests that more subtle forces are at work. In this paper, it is shown empirically that union instrumentality is a limited predictor of union voting intentions for a recent national cross-section of workers. Rather, more general feelings toward unions and employers are primary. These accounted for a large portion of the variance in union voting intentions, with general feelings towards unions by far the most critical predictor. A concluding section discusses whether the results may reflect changes in union power and changes in employee views of unions. Areas for future research are discussed.     

Culture,Context, or Conflict? Analyzing Union Attitudes in Six Rural Counties in Conservative Right‐to‐Work States

This study fills an important gap in the literature by analyzing the predictors of union attitude formation in rural, conservative, right‐to‐work states. Drawing on a survey of all licensed electrical workers in six counties in northern Utah and southern Idaho, we analyzed the impact of cultural orientation, job context, and perceived risk on union attitudes. We find that a conservative cultural orientation does not significantly predict union attitudes but job context and perceived risks of union activity do. Dissatisfaction with current working conditions and the belief that employers will oppose and retaliate against workers engaged in union activity significantly predict positive union attitudes. We consider the implications of these findings for scholarship on union attitude formation and for union organizing strategies in rural, conservative right‐to‐work contexts.     

Membership and wage impact of right-to-work laws

This paper examines the effects of “Right-to-Work” laws on union membership and on the earnings of union and nonunion members. Using regression analysis, we find that once the simultaneous equations bias between the degree of unionization and RTW laws is eliminated, RTW laws have no statistically significant influence on union membership. Similarly, using a human-capital earnings model, we find that RTW laws have no significant influence on the wages of all workers, union workers, or nonunion workers. However, we did find evidence that such laws may promote aggressive union wage policies resulting in a larger union/nonunion relative wages advantage in RTW states than in non-RTW states.     

OPTIMAL ENFORCEMENT OF NONCOMPETE COVENANTS

Noncompete covenants or covenant not to compete (CNC) are clauses in employment contracts in which the employee agrees not to gain employment with a competitor firm. In this article, we study the efficiency aspects of such contracts by incorporating the effect of labor mobility restrictions on knowledge transfer across firms, investment decisions by firms, and investment by workers. Following research that shows state‐wise variations in the degree of CNC enforcement, we allow the strength of CNC enforcement to vary as a matter of regulatory policy and derive the optimal strength of enforcement. We also look at how regulations around CNCs should be optimally designed when employers can use collusive agreements, such as “no poaching” agreements, as an alternative to noncompete clauses. Given recent allegations of employer collusion among large Silicon Valley firms, we argue for a cautious approach in designing policies on CNC enforcement. (JEL J24, J41, J63, K31)     

Privatization of Refuse Removal and Labor Costs*

We examine the labor-cost savings associated with privatization by comparing earnings and employment trends of public and private sector refuse workers. Findings suggest that high union earnings for workers in the public sector are a source of labor-cost savings in the refuse industry. Evidence on job changers does not indicate that earnings for this group of workers are a compensating differential. Metropolitan area employment findings suggest that municipalities are less likely to use union refuse workers in the public sector when a relatively small percentage of area residents belong to a union.     

A Feminist Trade Union Agenda? The Continued Significance of Class,Gender and Race

During the 1990s attempts to identify a feminist trade union agenda have focused on both the content and process of such a potential agenda. In a period in which trade unions have changed significantly, the general national agenda appears to be changing, acknowledging issues of importance to women. UNISON, Britain's largest trade union, has enshrined proportionality and fair representation in its constitution, developing national initiatives aimed at improving opportunities in work and in the union for women, black workers, manual workers, disabled workers, etc. who traditionally have been less well represented. Many issues affecting women generally have moved to centre stage, yet issues affecting women ancillary workers seem as excluded as ever. Through a study of cleaners in the National Health Service this article argues that workplace interests reflect wider social divisions, but in a variety of patterns depending on the social organization of work. Despite thewidening trade union agenda, particular interests — more specifically the workplace interests of working‐class women and black women — continue to be neglected.     

Union wages, rents, and skills in health care labor markets

We examine the effect of unions on the earnings of health care workers, with emphasis on the measurement and sources of union wage premiums. Using data constructed from the 1973 though 1994 Current Population Surveys, standard union premium estimates are found to be substantially lower among workers in health care than in other sectors of the economy, and to be smaller among higher skill than among lower skill occupational groups. Longitudinal analysis of workers switching union status, which controls for worker-specific skills, indicates a small impact of unions on earnings within both high and low skilled health care occupations. Evidence is found for small, but significant, union threat effects in health care labor markets. It has been argued that recent legal changes in bargaining unit determination should enhance union organizing and bargaining power. Although we cannot rule this out, such effects are not readily apparent in our data. The authors appreciate the assistance of David Macpherson, who helped develop the CPS data files used in the paper.