A living wage for former welfare recipients entering employment: The case of Butler County,Ohio

Since the late 1970s, changes in family income in the United States have varied by income category. While the average income of families with children in the top 20% of the income distribution has grown, the average income of families with children in the bottom 20% has declined. Factors contributing to the growing income gap include disparities in wages paid to low-income workers relative to high-income workers, an increase in female-headed single parent families, and a decrease in the value of the minimum wage. Welfare reform will likely only exacerbate this situation. This study synthesizes existing research as well as data from an Ohio county to demonstrate that the minimum wage incomes available to poor families are not sufficient for even basic necessities. In order for former AFDC recipients to become economically independent, government policies must be enacted to increase wages and/or provide income assistance for poor families.     

Countercyclical union wage premium? Evidence for the 1980s

Empirical results based on pooled male data from the Panel Survey of Income Dynamics indicate an overall union wage premium of about 11.92 percent for the 1980s. In response to fluctuations in local labor market conditions, proxied by the local unemployment rate, a much more flexible wage-setting process is found in the nonunion sector relative to the union sector. The long-term effect of unemployment on nonunion real wages suggests an approximate 0.6 percent decline for every one percentage point increase in unemployment, a statistically significant reduction, but the long-term effect of unemployment on real wages of union members is negligible. The union wage premium ranges between 11.6 to 12.3 percent for the sample years. Even though union wages are insensitive to short-run fluctuations in local labor market conditions, and are somewhat countercyclical in nature, widespread union wage concessions which occurred during the 1980s may now be exerting a downward pressure on union wages. We acknowledge financial support of National Science Foundation [OSR-9350540], the Ada Howe Kent Research Fund, and The Fogelman Academic Research Excellence Fund. We thank Barbara Ganley for valuable editorial comments and Noga Peled for her able research assistance. The usual caveat applies.     

Union density effects in the supermarket industry

Unions provide higher than competitive wages for members, but their effect on non-union wages is not clear. We investigate the effect of union density on supermarket wages from 1986 to 1993, a period of declining real wages and declining union membership. Full-information maximum likelihood techniques are used to estimate log wage equations for both the union and nonunion sectors. Decomposition techniques then separate the union wage premium into the relative effects of densities and union membership. We find a significant, positive effect of union density for both union and nonunion employees. This effect explains approximately one-third of the union-nonunion wage differential. This research was conducted while Johansson was a graduate research assistant at the University of Minnesota.     

Union-nonunion wage differentials and the functional distribution of income: Some simulation results from a general equilibrium model

During the past two decades, a number of studies have established the ability of unions to obtain wages for their members that exceed the payment to similar but nonunionized workers. This article investigates empirically the impact that this wage differential has on the real incomes of union labor, nonunion labor, and capital. The analysis is accomplished by solving explicitly a numerically specified general equilibrium system with and without the union wage premium. Comparison of real factor incomes in each equilibrium yields the desired information. The findings indicate that union labor gains as a result of the differential, while nonunion labor and capital lose. This outcome is realized both in terms of real income levels and in a redistributive sense. I would like to thank Nick Carlozzi and Aris Protopapadakis for valuable comments and Mary Agnes McPeak for excellent research assistance. Remaining errors are my responsibility alone.     

Union wage premiums by gender and race: Evidence from PSID 1980–1992

We find that the overall union wage premium is relatively stable (ranging from 22.3 to 28.4 percent), but there seems to be a convergence of union wage premiums across different demographic groups between 1980 and 1992. Nonwhite men (whose premium ranges from 23.5 to 36.2 percent) show the largest gain, followed by white women (17.1 to 30.5 percent), white men (19 to 26.4 percent), and nonwhite women (10 to 20 percent). One explanation for this convergence of union wage premiums might be the “equalization hypothesis” associated with unions. This converging trend could have important implications for the future of unions. If union membership can explain a portion of the gender/racial wage gap, and if women/nonwhites can obtain, through union membership significant wage premia, increased female/nonwhite union participation in highly unionized sectors that offer high union wage gains could, in time, greatly decrease the gender/racial wage differential. This study was supported in part by National Science Foundation funds [OSR-9350540]. An earlier version of this paper was presented at the Southern Economic Association conference in New Orleans in 1995. We thank Emilia Lulcheva and Michael Lauze for their able research assistance and William Warren for his valuable editorial comments on an earlier draft of this paper. The usual caveat applies.     

CORRUPTION,TAX EVASION AND THE ROLE OF WAGE INCENTIVES WITH ENDOGENOUS MONITORING TECHNOLOGY

The importance of high salaries to circumvent bureaucratic corruption has been widely recognized in the policy debate. Yet, there appears to be much reluctance when it comes to the implementation. In this paper, we argue that deterring corruption through wage incentives may become prohibitively expensive that the government finds it optimal to accept higher net revenues at the expense of honesty. Deviating from the existing literature, we set an endogenous monitoring technology that allows us to capture the dual role of auditing, as a complement with and as a substitute for wage incentives to deter bribery. We find that the government is better‐off either completely eliminating corruption or accepting corruption by offering wages lower than the market wage. Offering public wage premium that does not deter bribery is suboptimal. When it is optimal to deter bribery, the government can do it either through wage incentives or monitoring. The role of wage incentives decreases in societies with higher level of dishonesty. (JEL D73, H26, J33, J41)     

Public–private wage differential and gender gap in Latin America: Spoiled bureaucrats and exploited women?

This paper uses a rich collection of household surveys to investigate the wage differential between the public and private sectors in 13 Latin American countries. It also studies how the sector of employment affects the gender wage gap. Contrary to what is commonly thought, it is found that, in the majority of Latin American countries, there is a premium associated with working in the public sector. It is also found that the premium is often higher for women than for men but that this difference does not compensate for the wide gender gap.     

Cohabitation Premium in Men’s Earnings: Testing the Joint Human Capital Hypothesis

This paper provides new evidence on the increase in wage earnings for men due to marriage and cohabitation (in the literature, commonly referred to as marital and cohabitation wage premiums for men). Using data for a sample of white men from the National Longitudinal Survey of Youth 1979, the paper shows that even after accounting for potential selection bias there is a cohabitation wage premium for men, albeit smaller than the marriage premium. Our analysis shows that a joint human capital hypothesis (a la Benham in J Polit Econ 82(2, Part 2):S57–71, 1974) with intra-household spillover effects of partner’s education can explain the existence of the wage premiums. Our estimates provide some empirical support for the joint human capital hypothesis.     

ELECTORAL CYCLES AND THE EARNINGS OF FEDERAL BUREAUCRATS

This paper analyzes the relationship between the timing of federal elections and the pay raises received by civilian employees of the federal government. The theoretical framework discusses how electoral wage cycles are generated as a result of optimizing behavior on the part of voters, bureaucrats, and the government. The empirical analysis uses a time series of wage rates for the twenty-eight largest federal agencies over the period 1961–1978. The study indicates that pay hikes during the Presidential election year are significantly greater (about 2 to 3 percent higher) than bureaucratic pay raises in other years.     

Class Differences in Establishment Pathways to Fatherhood Wage Premiums

Organizations have been argued to favor fathers over childless men and skilled fathers over less‐skilled fathers, but group wage inequalities vary across as well as within establishments. This article theorizes class differences in the contribution of being employed in a high‐wage firm to the fatherhood wage premium. Analyses of linked employer–employee data from the Canadian Workplace and Employee Survey reveal that sorting into high‐wage establishments accounts for 60% of the economy‐wide premium for less‐educated and nonprofessional fathers, whereas high‐skilled fathers tend to work in lower wage establishments but receive the largest net fatherhood premium within firms. Among the subsample of fathers who changed employers in the past 5 years, less‐skilled fathers fared worse, whereas high‐skilled fathers sorted into high‐wage firms. Results thus suggest that employment in a higher wage firm likely enables less‐skilled men to transition to fatherhood, whereas high‐wage employers may discriminate in favor of only high‐skilled fathers in hiring.     

The wages of regulation

This paper relates the growth of relative wages of government scientists and other federal employees to the growth of regulation during the 1970s. A theoretical model of bureaucracy provides a linkage to data that suggest that rents were generated during the period of analysis and that at least part of those rents were paid to specialized factors in government. The opinions expressed are those of the author and do not necessarily reflect the opinions of the Commission, Commissioners, or staff of the FTC.     

From the WPA to Workfare

This paper examines two fundamentally different types of government work programs that have been implemented in the U.S. from the 1930's through the 1980's. Voluntary job creation programs, such as the Works Progress Administration in the 1930's and the Comprehensive Employment and Training Act in the 1970's, have created conflicts with the logic of capitalist production- for-profit. Contradictory regulations designed to avoid these conflicts have led to criticisms of the programs as "make-work" and inefficient. On the other hand, mandatory programs, such as workfare and the 1988 Family Support Act, have channeled welfare recipients into the low wage labor market and are consonant with production-for-profit criteria. Drawing on this analysis, principles and policies are suggested for a progressive government work program.     

Upgraded to Bad Jobs: Low‐Wage Black Women's Relative Status since 1970

Labor market changes complicate the analysis of black women's status relative to white women because education, occupational attainment, and race–gender are now less predictive of earnings. Low‐wage black women's relative status has improved somewhat from 1970 to 2000, contrary to the well‐documented decrease in relative status reported for all black women wage earners since 1980, but their dramatic occupational upgrading was not responsible for the trend. White‐collar occupational positions formerly responsible for white women's relative earnings advantage no longer deliver that reward, as restructuring has produced a proliferation of bad jobs across occupational groups. This study argues that increasing exposure to precarious work is crucial to understanding changes in low‐wage black women's relative economic status since 1970.     

UNCERTAINTY AND STICKY-DOWNWARD BUT UPWARD-MOBILE WAGES

The usual search models of unemployment hold that firms do not offer wage cuts to employees in time of slack demand because the employees have alternatives open to them at wages higher than the reduced wage that would be required to maintain full employment. This paper extends these models by considering employees as choosing in conditions of uncertainty and showing that refusal to accept a wage cut is often rational in the absence of a higher alternative wage. Additional implications are derived for union behavior and simultaneous inflation and unemployment.     

Education,Skills, and Wage Gaps in Canada and the United States

We analyse data from the Programme for the International Assessment of Adult Competencies to reveal that immigrants in Canada and the United States make over $200 less per month than native‐born workers. In the United States, immigrants disproportionately work in low‐wage occupations, leading to large mean national differences between immigrants and native workers. The wage differential disappears after accounting for education and cognitive skills, indicating policies must focus on reducing education and skill gaps in the United States. In Canada, an immigrant wage gap persists in nearly all occupational fields, suggesting that the better skilled and educated immigrants in Canada are not receiving the same wage premium as native workers. We close with implications for policy and future research.     

Management attitudes toward two-tier pay plans

Two-tier pay plans, under which new hires are paid on a lower pay scale than existing employees, have been used with increasing frequency in union-management contracts. The two-tier phenomenon appears to be associated with the wider concession bargaining movement that began in the early 1980s. In this study, management attitudes toward and forecasts about two-tier pay plans are explored by means of a questionnaire survey. In general, the management community is found to be optimistic about the spread and utility of two-tier pay plans in the near term. Managers in firms that actually have two-tier plans are more enthusiastic about their impacts than other managers. Over a longer term, however, the managers surveyed tend to believe that separate wage scales under two-tier plans will eventually be merged into a unified scale. The authors would like to thank Maury Pearl and Gwang-Gi Baek for research assistance on this study.     

Why do married men earn more: productivity or marriage selection?

Using data from the Current Population Survey March Supplement 1999, this study examines why married men earn more than men who have never married. We find that the marriage wage premium cannot be attributed to the unobservable higher earnings capability of married men. Instead, wage gains from marriage are explained by the degree of specialization within the household. Our findings cast doubt on the argument that the selection of high-ability men into marriage is the cause of the marriage wage premium.     

The Labor Market Returns to AACSB Accreditation

We examine whether there is a wage premium from attending an AACSB accredited business college compared to a non-accredited business college. To estimate the returns to AACSB accreditation, we use data from the 1993/1994 Baccalaureate and Beyond Longitudinal Study, which provides a rich set of control variables. The earnings regressions suggest that there is no wage premium associated with graduating from an AACSB accredited business college upon entry into the workforce.     

Unit costs,legal shocks,and unionization in construction

I develop an econometric model to examine three potential causes of the decline of unionization in the construction industry in the 1970s and 1980s: increased cost relative to the open shop, reduced coverage by prevailing wage laws, and expanded double-breasting in response to NLRB decisions. The results show that relative cost was the decisive factor in the 1970s, whereas double-breasting was the most plausible explanation in the 1980s. Research support was provided by North Carolina State University. I am deeply indebted to Barry Hirsch for estimating the union-nonunion wage gaps for 1983–1991. An appendix describing the definitions and sources of the variables used in this analysis is available from the author.     

The working spouse penalty/premium and married women’s labor supply

Using data drawn from the Current Population Surveys, this paper provides a consistent explanation for why the presence of a working wife reduces the husband’s wage among managers, but increases the husband’s wage among non-managers. It is not husband’s occupation per se but rather the distribution of husbands’ wage levels that underlies the working spouse penalty or premium. Positive correlations in earnings between married couples that arise from assortative mating make the cross-wage effects of the husbands’ wages on the wives’ hours of work first positive, then negative in cross-sectional data. The phenomenon of a working spouse penalty/premium is simply the flip side of this relationship.