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. The authors thank Jacqueline Agesa, Keith Bender, Maria Crawford, and Richard Perlman for valuable suggestions. Research assistance from Eric Blackburn is greatly appreciated.     

Have unions impeded growing wage dispersion among young workers?

Wage inequality is examined for young males over the period 1980–1993. While wage inequality increased substantially for nonunion workers over this period, wage inequality increased only modestly for union workers. In part, this difference results from divergent trends in skill prices—returns to skill rose in the nonunion sector but contracted slightly in the union sector. In particular, returns to education increased sharply in the nonunion sector while remaining stagnant in the union sector. At least for young workers, these findings suggest that unions have been largely successful in resisting market pressures for greater wage inequality. We also uncover evidence suggesting that, as relative returns to education decline in the union sector, highly educated young workers become less likely to choose union employment. We acknowledge the helpful comments of Dek Terrell, Steve Trejo, and Carol Horton Tremblay.     

Does Public or Not-for-Profit Status Affect the Earnings of Hospital Workers?

This paper examines the earnings differentials among hospital workers in the public, private nonprofit, and private for-profit sectors. Utilizing data from the 1995 through 2007 Current Population Surveys, unadjusted earnings are highest in the private nonprofit sector and lowest in private for-profit firms. Once measurable characteristics are accounted for, health practitioners in for-profit and nonprofit hospitals earn similar wages while public sector workers earn small but significant wage penalties. Nonprofit hospitals tend to attract workers with higher levels of skill as measured by schooling and potential experience. This could be explained in part by worker sorting and lower cost containment incentives in nonprofit hospitals. Wage change analysis using pooled 2-year panels constructed from the CPS indicate no significant differences in earnings between the three sectors of employment. Whatever the role of the sector of employment on the overall earnings of hospital workers, there is sufficient worker mobility within the industry to largely eliminate systematic wage differences across type of hospital.

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.     

The Political and Civic Lives of Public Sector Workers: Unions and “Public Service Motivation”*

Public sector employees are highly engaged in civic and political life, from voting to volunteering. Scholars have theorized that this political activity stems from “public service motivation,” or the selection of publicly oriented individuals into public work. We build on this work by analyzing the role of public sector unions in shaping participation. Unions are central mobilizing organizations in political life, and one in three public sector workers are unionized. Special supplements of the Current Population Survey provide data on various forms of participation, sector, union membership, and union coverage. Logistic regressions find that unionized public sector workers have much higher odds of engaging in a range of activities compared to non‐union public workers, including protest, electoral politics, and political communication. Union membership impacts service work to a lesser extent, suggesting that unions are more central to political lives. These findings have implications for the consequences of union decline, including the class, race, and gender composition of who participates in democratic life.     

W/age bias in worker displacement: how industrial structure shapes the job loss and earnings decline of older American workers

This paper examines age differences in patterns of worker displacement and employment and earnings changes of displaced workers. Data from the 1998 Displaced Worker Supplement (DWS) of the Current Population Survey (CPS) indicate that older displaced workers possessed higher weekly wages than did younger workers at the time of their displacement. Moreover, older displaced workers suffered greater amounts of earnings loss than did younger displaced workers. Older workers, more often than younger workers, were displaced from jobs in the goods-producing sector. We attribute this age and industry difference in displacement to the higher earnings premium of older workers in the goods producing sector relative to the earnings premium of older workers in the service-producing sector. The age bias against older displaced workers may be viewed as part of social structural changes in the economy that have reduced the wage premium of the more expensive age segment of the workforce within industries that may economically benefit the most.     

Self-employment and earnings among immigrants in Australia

This article contributes to the small Australian literature on the earnings of immigrants in the self-employment sector. Earnings functions for both the foreign-born and Australian-born are estimated, and the results show that compared with native-born workers, foreign-born workers have higher earnings in the wage/salary sector but lower earnings in the self-employment sector.
Among the foreign-born, the results suggest that self-employed immigrants are less skilled compared with those who are wage/salary employed. Thus, low-skilled immigrants may be forced into self-employment.
There is no evidence of immigrant "catch-up" in the self-employment sector. Among wage/salary workers, however, immigrant wages are characterized by a "catch-up" effect.     

REDUCING PUBLIC‐PRIVATE SECTOR PAY DIFFERENTIALS: THE SINGLE SPINE PAY POLICY AS A NATURAL EXPERIMENT IN GHANA

Empirical studies have documented the existence of the public‐private pay differentials in both developed and developing countries. The implementation of policies aiming to reduce this gap has however been mitigated or inconclusive. This paper exploits the Single Spine Pay Policy (SSPP) in Ghana as a natural experiment to examine the effectiveness of wage policies in developing countries. The SSPP was implemented in 2010 by the Government of Ghana to address the public‐private sector wage gap and improve productivity in the public sector. Using a quantile treatment effect approach based on a difference‐in‐difference estimation, we show that the SSPP has yet to reduce the wage gap between the public and private sectors across the entire distribution of earnings in Ghana. The improvement observed is only at the lower tail of the distribution of earnings. However, the SSPP has a larger effect on the earnings of female workers than that of males in the education and health services sectors while male workers have benefited more in the administration sector, suggesting that the policy was successful in reducing the gender wage gap in the education and health services sectors but has widened this gap in the administration sector. Moreover, the SSPP has decreased the productivity of workers across the distribution of earnings, mainly due to a decrease in the effort of female public sector workers in the education and health sectors and male workers in the administration sector. (JEL C31, G15, J24, J31, J45)     

Into the Mainstream? Labor Market Outcomes of Mexican-Origin Workers

We evaluate recent revisions of assimilation theory by comparing the labor market performance of Mexican immigrants and their descendents to those of native white and black Americans. Using the Current Population Survey Contingent Worker Series, we examine public and non-standard employment and fringe benefits in addition to earnings. We find little evidence that Mexican Americans cluster in non-standard work, noting instead intergenerational improvement in benefits and pay. However, all Mexican-origin workers are disadvantaged relative to native whites in terms of benefits. It is only within the public sector that the labor market outcomes of Mexican-origin workers converge with native whites.     

The impact of changing union density on earnings inequality: Evidence from the private and public sectors

The degree of inequality in U.S. earnings has varied considerably over the past 20 years, including a dramatic, much documented rise since 1980. We examine empirically how changes in union density have contributed to these trends, using Current Population Survey data for 1977 and 1992. Inequality is measured as the mean logarithmic deviation of individual earnings from overall average earnings. A decomposition of the change in the inequality index reveals that decreases in private-sector union density have accounted for about 25 percent of the overall rise in earnings inequality during the past 15 years. Decompositions based on public-sector earnings indicate that increases in union density have produced inequality that is 29 percent below what it otherwise would have been. The analysis demonstrates that, among private sector workers, the results are sensitive to the population being studied: Changing union density accounts for 13 percent of the rise among prime aged males (a noticeably smaller fraction than found in existing studies) and only 4 percent among females and non-prime-aged males. The analysis also demonstrates that covariances between the subsamples explain why the union effect is larger in percentage terms for the whole sample than it is in either subsample.     

Enclaves and Entrepreneurs: Assessing the Payoff for Immigrants and Minorities1

Self‐employment and work in sectors with high concentrations of owners and workers of the same ethnicity have been identified as potential routes of economic success for immigrants. This study uses 1990 census data to assess the effects of self‐employment, ethnic employment, and their interaction on the odds of being at work, on number of hours worked, and on earnings of individual members of several representative groups. These groups include Cubans in Miami; African Americans, Puerto Ricans, Koreans, Chinese and Dominicans in New York; and African Americans, Koreans, Chinese, Mexicans and Salvadorans in Los Angeles. Work in ethnic sectors of the economy has no consistent effects, although work in their niche in the public sector offers greater rewards than any other type of employment for African Americans and Puerto Ricans. Findings are mixed for self‐employment, and its estimated effect on earnings depends on model specification. We conclude that the self‐employed work longer hours but in many cases at lower hourly rates. The effects of self‐employment are the same in ethnic sectors as in the mainstream economy.     

The Allocation of Black Workers into the Public Sector

Abstract

This study examines the effects of individual and structural factors on the odds that a black worker will be employed in the public sector (federal or state-local government) rather than the private sector. The independent variables include human capital, gender, citizenship, and the structural features of the labor markets (metropolitan areas) in which these workers reside (percent black, residential segregation, geographic region). The study focuses on percent black and residential segregation, two variables which significantly influence discrimination, group power and the employment opportunities of black workers. Logistic regression shows that, controlling for other factors, the odds of black employment in the public sector are highest in metropolitan areas that have large black populations and relatively low levels of residential segregation. These findings indicate that the allocation of black workers into the public sector results from processes of both discrimination and group power. The implications of the findings for the future prospects of black Americans to advance economically through public sector employment are discussed.     

Public transit wage rates: Pre-Reagan and Reagan-Bush eras

This paper examines the earnings of public transit bus drivers for both the pre-Reagan and Reagan-Bush eras using Current Population Survey data. The findings show that union drivers were consistently paid a significant wage premium over nonunion drivers, a premium which also exceeded that for unionized private nontransport operatives — suggesting that special institutional features of the public transit industry have collectively conferred market power on unionized public transit workers. During the Reagan years, the earnings of public transit drivers, union and nonunion alike, rose relative to those of private and public nontransport operatives in spite of federally-spearheaded cost containment policies. In 1990, these earnings fell relative to those of private and public nontransport operatives, suggesting that the effects of these policies may be beginning to be felt. Helpful comments were provided by Don Bellante and an anonymous referee     

Factors Associated with the Development of Nonmetropolitan Growth Nodes in Producer Services Industries, 1980–1990*

Abstract Over the 1980–1990 period, employment in producer services industries in the nonmetropolitan United States increased substantially. This growth resulted in the development of nonmetropolitan growth nodes in producer services industries. A growth node refers to a nonmetropolitan area that contains a greater than average concentration of employment in a particular industry sector relative to other nonmetropolitan areas. Moreover, this industry concentration not only increases over time, but also represents an important source of employment growth within the area. With nonmetropolitan counties as the spatial unit of analysis, 317 growth nodes in producer services industries are identified for the 1980–1990 period. Access to workers with clerical and administrative support skills, access to highly educated workers, higher earnings per employed worker, access to recreational amenities, and proximity to metropolitan areas were associated with the development of nonmetropolitan growth nodes in producer services industries during this period.     

The future of private sector unions in the U.S.

Conclusion As noted, the union movement’s significant decline during the last four decades is primarily a private sector phenomenon. Since the mid-1950s, the union density of private sector workers has dropped from more than a third to less than a tenth, in contrast to that found in government employment, which is now about 37 percent. We are indebted to the Donner Foundation for support and to Noah Meltz and Rafael Gomez for research and intellectual advice.     

Male-female differences in the potential for union growth outside traditionally unionized industries

Using recent NLS data on preferences for union representation, this paper examines whether differences by sex exist in the potential for union organizing outside of traditionally unionized industries. The methodology distinguishes between workers’ preferences for union representation and the relative supply of union jobs in explaining interindustry differences in the extent of unionization. Within the private sector, women employed in industries other than those traditionally unionized are found to have at least as strong a preference for unionization as do comparable men but a considerably lower opportunity for unionized employment given the desire for union representation. Comparing the public sector with traditionally organized industries, the greater extent of unionization in the public sector is largely explained by a stronger desire for union representation on the part of both male and female public sector employees. The helpful comments of Rodney Fort, Daniel Hamermesh, Robert Hutchens, and Jon Sonstelie on an earlier draft of the paper are gratefully acknowledged.     

Union Worker Wage Effect in the Public Sector

This study examines union wage premiums in the public sector for the 1998–2004 period. Unlike previous studies, our approach estimates union wage premiums considering differences in the rewards to education, experience, and other personal characteristics for union and non-union workers. The approach provides a larger estimated wage gap than the traditional approach, and allows for simulations of union–nonunion wage gaps for different types of workers. Moreover, we use an Oaxaca decomposition to explain the larger union–nonunion wage gap in the private sector in comparison to that in the public sector. We find that between 50% and 60% of the difference in union wage premiums between the private and public sectors is due to differences in the way unionized workers are rewarded in the private and public sectors, while the remaining portion is due to differences in personal characteristics of private and public sector workers.

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.     

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.     

Fiscal austerity and public servant quality

In this article we use a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a utility function U(s, Y) that depends on the share of the labor force employed in public service s and private sector output Y. The government is fully informed about worker productivity. We characterize the behavior of the public sector, and explore the efficiency and employment consequences of imposing fiscal constraint on the government.