Collective bargaining and the determinants of teachers’ salaries

Using a national sample of public high schools, we find that bargaining spillovers play an important role in teachers’ labor markets. The spillover variable consistently indicates a larger bargaining effect than does the collective bargaining coverage dummy. We estimate that a 10 percent increase in the state density of teachers’ unions increases the highest teacher salaries by 2.6 percent and the lowest by 0.2 percent. Consistent with prior research, teacher union density was most strongly associated with highest salaries and had a nonsignificant positive association with lowest salaries. Teachers’ unions also affect the structural determinants of teachers’ salaries, offering some additional evidence supporting a median voter model. The proportion of unionized teachers with higher levels of education and experience (i.e., the highest paid) is positively related to highest salaries. Finally, our results confirm the importance of demand factors in teacher wage determination. The authors thank Shawn Windsor for his excellent research assistance and an anonymous referee for helpful comments on a previous draft of this paper. The Inter-University Consortium for Political and Social Research provided the primary data set used in this paper. The U.S. Department of Education, National Center for Education Statistics compiled the original data set. We gratefully acknoledge the assistance of Eric Hanushek and Lori Taylor who also provided data used herein. This research was funded in part by a grant from the McGill Faculty of Management Research Committee.     

Déjà vu for airline industrial relations

Fifteen years after deregulation, labor relations in the airline industry returned to thestatus quo ante, as union power, particularly ALPA’s, still dominates. Without a long-term shift in bargaining power between the parties, costs and productivity have not changed much. Labor accounts for 60 percent of the cost difference between strong and low-cost carriers. American, Delta, United, Northwest, and USAir would require some combination of labor cost concessions or productivity increases of $1.6 billion to match the productivity-adjusted labor costs for low-cost carriers’ flight crews. To remain competitive, strong carriers and unions must develop strategies to deal with anachronistic work rules, provisions to contract out work, and premium pay for airline employees.     

The AFL-CIO v. CTW: The competing visions, strategies, and structures

As the AFL-CIO approached its twenty-fifth biennial convention in July 2005, seven unions formed a new Change to Win (CTW) coalition to challenge the federation for lead position as the voice of the labor movement. These unions, most of which have disaffiliated from the AFL-CIO, formed the CTW to demonstrate their unsparing discontent with John Sweeney’s leadership of the federation. We examine the reasons for the current breach in the house of labor, the competing visions offered by the AFL-CIO and CTW, and the likelihood that the CTW’s strategy will revive unions. We find that the gulf between the two factions is philosophically deep and practically irreconcilable. The CTW advocates an “engineered breakthrough” approach to revitalize labor whereas the AFL-CIO relies on a more conservative “accelerated evolution” path. There are no guarantees that the CTW’s strategy will work. It presupposes an unmet demand for unions that can be tapped through vast new investments. If the current model of unionism is lacking, as the CTW suggests, a viable replacement must be found. The CTW, with its limited resources, will have to experiment until it finds the right model, if one does indeed exist. The task of rebuilding labor is daunting, but it arguably requires a bold and fundamentally different course from what has been pursued. From this perspective, the breakup seems a logical development.     

Bonuses,unions, and labor productivity in South Korea

Using a set of time-series (1972–1989) and cross-sectional data on eight two-digit Korean manufacturing industries, we examine the variability of South Korea’s employee bonus system and the effect of the employee bonus on productivity. A test of the variability of the bonus showed that the bonus rate (ratio of the bonus to the wage) was positively influenced by industrial output, so the bonus is not merely a disguised wage. An augmented Cobb-Douglas production function estimation shows that the bonus has a positive and significant productivity effect. Capital-intensive and laborintensive industries did not have significantly different productivity effects due to the bonus. Lastly, Korean unions reduced labor productivity and negatively affected the productivity effect of the bonus. Also, compared with the previous period, the productivity effect of the bonus has become negative since the1987 Great Labor Offensive.     

Pensions and the uses of ignorance by unions and firms

Pensions are contingent claims contracts that are often fashioned by collective bargaining under conditions of asymmetric information and market power. Pensions are not an employer’s or a union’s optimal contract; they represent compromise. Employers use pensions to minimize labor costs and to adjust to market changes. Pensions help unions improve and protect their members’ work lives and help unions to survive as institutions. When workers’ estimations of their pensions differ from their employers’ estimations a moral hazard can exist. Less mobile workers and those with less influence subsidize the pension benefits of other workers or reduce an employer’s costs. Econometric results based on data from the President’s Commission on Pension Policy show that certain workers, namely women, overvalue their plans, which provides an opportunity to lower labor costs and redistribute benefits. Unions have a contradictory effect on information. The author thanks participants in the Cornell University Collective Bargaining workshop and the Harvard Labor Economics workshop. I especially thank James Medoff for his comments.     

Labor unions in the american economy: An analytical survey

Study of labor unions again is moving to the forefront of economists’ attention. This resurrection of interest stems from two sources. First, econometric studies indicate that the impact of unions on wages is varied. Further, the absence of theoretical foundation for analysis of labor unions now is appreciated widely. But recent developments in theories of agency, of public choice, and of property rights promise progress toward a better model of labor unions. That model built, the impacts of unions can be ascertained. Allen Dalton and Don Leavens provided able research assistance.     

Voice asymmetries in ERISA litigation

ERISA’s equitable remedies limit employees’ access to the courts. The law fails to protect workers with short tenure and low wages, for example female workers, because trial costs often exceed damages. In single-employer plans, unions improve access, but in multiemployer plans they do not. The reason is that in single-employer plans unions bargain at arm’s length with plan sponsors while in multiemployer plans they do not. Plaintiffs’ win rates are approximately 50 percent in singleemployer union ERISA cases but are significantly below 50 percent in nonunion and multiemployer cases. The author thanks Ann Bartel, John Delaney, James Kuhn, an anonymous referee, Victor Goldberg, Eli Noam, Donna Sockell, Kim Ditty, and David Lewin.     

Monopsony power in the market for teachers: Why teachers should support market-based education reform

Employers can exploit individuals with high moving costs when local labor markets are not competitive. Along with nurses and university faculty, teachers are sometimes in such a disadvantageous situation. Teachers’ price elasticity of supply may be quite low in many regions, and their geographic mobility may be low when they are their household's second wage earner. Their occupational mobility is often low because of the scarcity of alternate employers within commuting distance. Nearly 96 percent of Texas' teachers work in tax-financed school districts, and many regions have only one district. An econometric model developed from school district data from 48 South Texas and 48 North Texas counties supports the hypothesis that teachers are paid less in less competitive labor markets. In Texas, teachers’ salaries are not determined by collective bargaining between district officials and teacher unions. That relatively unique feature of Texas makes it especially well-suited to the task of disentangling monopsony effects from other labor market forces.     

An empirical analysis of union election outcomes in the electric utility industry

Unions in the electric utility industry consistently won a greater percentage of elections between 1970 and 1989 than did unions in other industries. Several factors significantly affected union victory rates at electric utilities: when the election was held, the union involved, the size of the utility, the percent of the state’s labor force unionized, the number of eligible voters, whether the election involved multiple-unions, and whether the election was Regional- or Board-directed.     

Interindustry patterns in unfair labor practice cases

This paper studies unfair labor practice charges filed against unions and employers in two-digit manufacturing industries. Such cases were found to follow distinct and consistent patterns across industries, suggesting that litigiousness in labor-management relations is, among other things, part of the relationship’s culture. Cases against employers and unions by individuals appear to be unrelated to many of the factors studied, thus supporting the view that such cases are the product of workers’ unrealistic expectations.     

The american labor movement and employee ownership: Objections to and uses of employee stock ownership plans

This paper analyzes the evolution of American unions’ attitudes and policies concerning employee ownership that coincided with the rapid growth of employee stock-ownership plans during the 1980s. From an initial position of opposing employee ownership and viewing it as a threat, many major unions have come to accept, and in some cases to promote, stock ownership for their members. Among the factors driving this change of view have been economic necessity, evidence that many of the labor movement’s traditional concerns about employee ownership are largely unfounded, and the growing realization among unions that employee ownership is a potentially useful strategic asset.     

Industrial relations reform in Britain since 1979

Important changes to British industrial relations law were undertaken by the Thatcher and Major governments. A succession of legislative measures narrowed the scope of labor union action in pursuit of a dispute, made unions financially responsible for torts committed by their members, removed government support for collective bargaining, abolished the closed shop, and reformed unions' internal structures. At least in part as a result of these measures, union density and the coverage of collective bargaining have fallen; strikes have become rare; and Britain’s productivity performance has improved. The unions and the Labour Party have largely become reconciled to measures which they initially fiercely opposed, and the influence of these reforms is likely to endure even though the Conservatives have lost office.     

Union effects on productivity,personnel practices,and survival in the automotive parts industry

We estimate the effects of unions on productivity and compensation in the automotive engine and non-ornamental body parts manufacturing industry using data obtained from a detailed questionnaire and a series of personal interviews. We find no significant union productivity effect but a significant 30 percent compensation premium in firms organized by the United Auto Workers. Individual personnel policies were shown to differ significantly in the expected manner between the union and nonunion sectors. Finally, we use data on bankrupt firms to show how the failure to correct for sample selection bias might yield upwardly biased estimates of the union productivity effect. We would like to thank Elizabeth Savoca and an anonymous referee for their helpful suggestions.     

The formation and administration of labor policy by the NLRB: Evidence from economic and ULP strike rulings

Conclusion and Implications My result cast doubt on normative assessment of NLRB performance. To illustrate, Gross concludes that the Dotson Board’sdecisions caused the labor movement to atrophy. If the Dotson Board ruled for unions in roughly the same proportion of striker replacement cases as the Gould Board, however, Gross’ conclusion is questionable.     

Member support for union mergers: An analysis of an affiliation referendum

A changing labor relations climate has caused many national unions to merge with smaller independent unions in recent years. One aspect of the merger process concerns the willingness of independent union members to support affiliation with a national union (Chaison, 1986). This article examines the determinants of indivudual-level voting behavior using data gathered from members of an independent union who rejected a proposed affiliation with a national union in a membership referendum. Logistic regression results indicate that affiliation supporters perceived the affiliation as improving union effectiveness, were influenced by social support among co-workers in favor of the merger, and perceived the saliency of the independent union’s support for the affiliation proposal. Conversely, affiliation opposition was influenced by the employer’s “vote no” campaign and by perceptions that affiliation would lead to an increased probability of strikes and to future increases in dues.     

Collective bargaining,teachers, and student achievement

Approximately two-thirds of the nation’s elementary and secondary schoolteachers are represented by the American Federation of Teachers or the National Education Association. Surprisingly, however, relatively little is known of the impact of teachers’ unions on student achievement. The authors offer evidence on this point by estimating “college entrance exam production functions” for a national sample of 2,360 students. Of particular importance, the estimation includes a correction for the selectivity bias inherent if the analysis considers only the performance of test-takers. Results indicate that students in a unionized environment score about 4.7 percent higher on their college entrance exams (SAT and ACT) than their counterparts from a nonunion environment. This study was partially supported by the Joint Council on Economic Education through funding provided by the J. Howard Pew Freedom Trust. Additional support was provided by the Dean’s Office and the Division of Business Research, College of Business and Industry, Mississippi State University. The authors thank Margaret Ray for her assistance.     

The impact of unionization on labor’s share of income

This study examines the effect of unions on labor’s share of income. Because economic conditions within each industry are important in addressing this issue, this analysis incorporates a more disaggregated approach than has been previously used. Cross-sectional data for the 1950s — a period of more stable unionization — permit an examination of the long-run effect of wage increases on labor’s share. The empirical analysis suggests that higher labor prices have no long-run impact on labor’s share in manufacturing.     

Union influence on plant size

Much research has focused on the direct effect of unions on production efficiency given set technology and plant scale. However, another path through which unions may influence productivity has received virtually no attention: the indirect productivity effect that unions may exert on the firm’s choice of plant size. We present a model in which firms explicitly consider the positive correlation between the probability of being unionized and plant scale in choosing plant scale and show that unions may prevent firms from fully exploiting economies of scale by their threat of organizing. Although it may be difficult to directly estimate this effect, there is ample casual empirical support that union status and plant scale are positively related.     

Financial and political resources of nine major public sector unions in the 1980s

Current research offers two potentially competing perspectives on union strength: membership and financial/political resources. We update and broaden the research on the financial and political resources of nine major public sector unions in the U.S. by reporting these unions’ financial assets, net worth, revenues, and political action committee (PAC) receipts during the 1980s and the early 1990s. We find that unions may expand their financial and political resources even though membership levels stagnate or decline. Overall, the unions have amassed larger asset bases, even though some have actually lost members. On a per member basis, federal executive branch unions do not appear as financially weak as the level of their financial resources suggests. Postal unions as a group are clearly the strongest in terms of per member financial and political resources. Federal executive branch unions have experienced a striking reduction in their PAC activity, while the postal and the state and local union PACs have grown substantially. Our analysis indicates that union membership may not adequately measure union strength.     

Is labor-management climate important? some Canadian evidence

I investigate the relationship between labor-management climate and perceptions of productivity, product!service quality, and customer!client satisfaction using a regional and national sample of Canadian organizations and a regional sample of local unions. Overall, the ordered probit results reveal a strong relationship between labor-management climate and measures of organizational performance with a more positive labor-management climate associated with more favorable scores on the performance variables. This study was funded by grants from the Social Sciences and Humanities Research Council of Canada and the Social Sciences and Humanities Research Council of Canada/Saint Mary’s University Matching Grants Fund.