The union wage effect in Canadian manufacturing industries

Data for Canadian manufacturing industries, at the two-digit level, are used to examine the component elements of the union wage effect. The results show that absence of compulsory union membership for all employees in the bargaining unit served by a union does not significantly impair the ability of the union to negotiate wage gains. That is, our results imply that there is little reason for unions to devote much effort to negotiating the stronger forms of union security — union or closed shops. A second implication of our results is that significant bargaining advantages may accrue to unions with an international (U.S.) link, relative to Canadian national unions.     

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.     

Unions and wage inequality

Summary and Conclusions The impact of unions on the structure of wages has recently attracted renewed interest as analysts have struggled to explain the rise in earnings inequality in several industrialized countries. Canada, the United Kingdom, and the United States provide a potentially valuable set of countries for examining this question. All three countries now collect comparable data on wages and union status in their regular labor force surveys. Several features of the collective bargaining institutions of these countries make them suitable for studying the relationship between unions and wage inequality. Bargaining is highly decentralized; there are no general mechanisms for extending collective bargaining provisions beyond the “organized” sector; and the fraction of the work force covered by collective bargaining is relatively modest. Thus it is possible to compare the structure of wages for workers covered by union contracts to those who are not covered, and potentially infer the effect of unions on overall wage inequality.     

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.     

Union membership,economic rents,and migration behavior

This study represents an extension of the human capital paradigm as it relates to an individual’s decision to migrate. It differs from previous studies by incorporating union membership, a labor market variable, into the model. In effect, the National Labor Relations Act of 1935 granted a monopoly bargaining position to unions. The theoretical implication of a union’s monopoly bargaining position is that union wage levels will increase relative to nonunion wages. The increase of relative wages results in union membership granting a property right that possesses positive net present value and hence reduces an employed union member’s probability of migrating. Additionally, the supra-competitive remuneration of union members results in a surplus of labor supplied to union firms. Employers respond by using quality screening to hire workers from the larger labor pool. As a result, unemployed union members will on average possess higher levels of human capital, which will increase their probability of migrating above that of their unemployed nonunion cohorts.     

Empirical evidence on the union free-rider problem: Do right-to-work laws matter?

This study provides detailed statistics by state, industry, occupation, and worker characteristics on private sector wage and salary workers covered by union collective bargaining agreements but who are not union members. A distinction is made between those workers who value the benefits of coverage more than the cost of membership, the true free riders, and those who do not, the induced riders. A probit union membership equation is estimated on a sample which excludes the covered nonmembers. Predicted probabilities are then calculated from the estimated model, yielding a quantifiable measure of the true free-rider problem. The author gratefully thanks Barry T. Hirsch, David A. Macpherson, and an anonymous referee for their constructive comments and insightful ideas. Any errors remain the sole responsibility of the author.     

The impact of labor unions on the passage of economic legislation

This paper examines the political power of labor unions. A model of the decision of an interest group to contribute to a political campaign is developed and tested. The empirical evidence indicates that interest groups, and unions in particular, use political contributions in a systematic and coordinated manner. Unions give money to candidates with relatively little seniority (who might otherwise not be elected) and to candidates from districts with about the average number of union members. Such candidates might otherwise not vote as the union would desire. The influence of campaign contributions and of union membership on the voting of congressmen on issues of interest to unions is also investigated. Union membership is sometimes significant and campaign contributions are always significant in explaining voting on minimum wages, wageprice controls, benefits for strikers, and OSHA and CETA appropriations. The indirect economic effects of labor unions — those effects which occur because unions influence legislation — may be as important as the direct effects which occur through collective bargaining.     

Workers, Unions, and Takeovers

How do takeovers affect workers?? wages and job security in the short-run? What role does the labor union play in mitigating these effects? I answer these two questions by analyzing wage and employment outcomes of over 4,000 public firms that were acquired between 1981 and 2002, using establishment-level data from the U.S. Census Bureau. I find that target establishments exhibit a net contraction in wages and employment, relative to comparable establishments after takeovers. Targets?? establishments in more unionized industries experience worse wage and employment outcomes after takeovers. These adverse effects are exacerbated when the establishment is located in a state with Right-to-work laws where unions face a less favorable bargaining environment. These findings indicate that target firms?? employees are negatively affected by takeovers and that their labor unions do not mitigate these negative effects.     

WHY DO WORKERS JOIN UNIONS? THE IMPORTANCE OF RENT SEEKING

Union status models ignore the fact that rent-seeking prospective members have an incentive to bid up entry costs so that higher union wage gains make union jobs more costly to obtain. The standard presumption that higher union wages cause firms to substitute toward higher quality workers is shown to be incorrect under most plausible assumptions; the observed positive correlation between wage gains and the propensity to join a union underestimates the size of the true supply response. The union/nonunion wage differential reveals more about the social cost of unions than the gain to an individual worker from union membership.     

The (Parlous) State of German Unions

We trace the profound decline in German unionism over the course of the last three decades. Today, just one in five workers is a union member, and whether this degree of penetration is consistent with a corporatist model built on encompassing unions is now moot. The decline in union membership and density is attributable to external forces that have confronted unions in many countries (such as globalization and compositional changes in the workforce), to some specifically German considerations (such as the transition process in post-communist Eastern Germany), and to sustained intervals of classic insider behavior on the part of German unions. The "correctives" have included mergers between unions, decentralization, and wages that are more responsive to unemployment. At issue is the success of these innovations. For instance, the trend toward decentralization in collective bargaining hinges in part on the health of that other pillar of the dual system of industrial relations, the works council. But works council coverage has also declined, leading some observers to equate decentralization with deregulation. While this conclusion is likely too radical, German unions are at the crossroads. We argue that if they fail to define what they stand for, are unable to increase their presence at the workplace, and continue to lack convincing strategies to deal with contemporary economic and political trends working against them, their decline may become a rout.     

Patterns of union membership and relative wages

This paper, using the Panel Study of Income Dynamics, examines the effects of union membership on the wages of white males. The empirical relationship between current wage and union status is estimated controlling for union status in years before and after the current year. The resulting status profiles are four years long in contrast to one or two years used previously. Results indicate that wage changes experienced when workers join or leave unions vary significantly and systematically across these profiles. For example, a status change that appears to be long-term is associated with larger absolute wage changes than short-term changes in status. The authors thank Jeff Moore for comments and suggestions on an early draft of this paper and express special appreciation to John Raisian for his painstaking and valuable review of a recent draft. We are, of course, responsible for remaining errors.     

The level and growth of union/nonunion relative wage effects, 1967–1977

This paper pools cross-section data to obtain an estimate of the overall effects of unions on relative wages for the period 1967 through 1977. We found the average union wage premium for all workers to be roughly 24 percent, but that this premium varies substantially between subgroups of workers. Our analysis showed that real wage rates increased faster in the union sector than in the nonunion sector between 1967 through 1977. However, we found that this relative growth pattern in wages was caused by economic conditions rather than in any fundamental shift in the power of unions. We wish to thank James S. Cunningham, H. Gregg Lewis, and John Pencavel for helpful comments.     

UNIONS, PLANTS, JOBS, AND WORKERS

The relationship between unions and their members is an important, yet neglected, subject in recent studies of the sociology of work. This study develops and tests a theory of union satisfaction and participation that combines recent research in the sociology of work with previous explanations of union satisfaction and participation provided by industrial relations researchers, in an attempt to understand the relationship between unions, plants, jobs, and workers in U.S. manufacturing industries. This theory predicts that union members will be satisfied with their unions and participate more in them if there are extensive ties between workers, employers, and unions. These ties stem from the focus of labor/management relations in particular, and class struggles in general, on market outcomes and the historical linkage of union membership with employment in the United States. The theory also predicts that unions them-selves act as ties to specific work settings and that union participation is a forum for voicing dissatisfaction with specific characteristics of workers' jobs. Testing these predictions is complicated by contradictory nature of the structure and organization of work in advanced industrial societies. The analysis provides qualified support for this theory, with data drawn from more unions, plants, and union members than have been used to date. In addition to discussing modifications to the theory and analysis presented here, the study includes a discussion of its implications for the future of unionization and the organization of work, in light of declines in union membership, increased efforts to decertify unions and resist union organizing efforts, and deindustrialization in the United States.     

A utility-production model of union behavior

This paper expands the scope of the economic analysis of unions by presenting a model that is unusually general with regard to both union leadership objectives and the constraints placed on their behavior and by applying this model to a wide-ranging set of political and economic issues regarding unions. The model assumes that union leadership maximizes an objective function containing both political and economic goals and is constrained by the membership and the firm, as well as by a set of technological constraints. The latter constraints are based on the assumption that union power can be modeled as a partially exogenous production process. After defining the Lagrangian and first-order conditions, the model is compared to previous models of leadership objectives and applied to the analysis of union wage concessions and internal union democracy. The comments of Sinan Koont, Donald R. Williams, Jean-Jacques Rosa, Scott Dennis, and anonymous referees on earlier drafts are greatly appreciated. Remaining errors, of course, are my own.     

Union rent seeking and import competition

conclusion We empirically evaluate two issues: (1) how the union rent seeking responds to import competition and (2) whether union bargaining power, as proxied by the proportion of the labor force in an industry that is unionized, moderates the impact of import com-petition on union wage differentials. Unlike other studies, our emphasis is on the influ-ence of import competition on union rent seeking, rather than on union wages per se. Our primary results indicate that while import competition negatively and significantly affects union rent seeking, the extent of unionization does not substantially influence the impact of import competition on the union wage differentials. This is a somewhat surprising result since the literature suggests that union wages are greater in the pres-ence of stronger unions.     

Union Organizing and Labor Outreach in the Contemporary United States

Despite their long decline, labor unions increasingly find themselves in the news. From the spirited debate over income inequality, to fights over minimum wage and the unlikely mobilization of fast food workers at the very bottom of the American labor market, labor issues are of great public interest. In this article, I review scholarship on contemporary union organizing and outreach activity. This work suggests that while innovative organizing and outreach strategies, sometimes lumped together under the rubric of “social movement unionism” and “alt‐labor,” are demonstrated to be effective in advancing union causes, only a handful of unions appear to have the will and resources to utilize them. Moreover, while the implementation of new organizing and outreach strategies has been uneven and has not boosted union membership nationally, organized resistance to unions, from court rooms to state legislatures, has increased substantially.     

Information technology: The threat to unions

Conclusions Although seldom recognized in the flurry of enthusiastic support, information technology has a dark side for unions. The Internet and the Web, with its power and convenience magnified by wireless communication, will reduce the relevancy of the traditional workplace-centered appeals of organizing unions. With greater physical distance and less psychological attachment to their employer and workplace, professional, clerical, technical, and sales workers will believe that collective bargaining does not fit their situations. Organizing these workers will require that unions not only have to broaden their mode of representation, perhaps even reviving associate membership, but also compete against advocacy and identity organizations. To make matters even worse, when unions try to organize any group of workers regardless of whether or not their jobs have been transformed by information technology, and when unions try to maintain their influence in already organized workplaces, they will have to compete against employer-controlled intranets.     

Challenging Misconceptions about Organizing Women into Unions

In many countries, women are the fastest growing group of unionized workers. As unions scramble to restore their flagging membership, women become central to the process of union membership renewal. Yet survey data collected from union organizers in Canada show that unions are only partially meeting women’s demand for union representation, in large part because of gender bias in union organizing practices. To develop this argument, this article offers data analysis that challenges four popular misconceptions about women and unions which contribute to gender bias in union organizing practices. These misconceptions are: women are less likely to support unions than men; high rates of unionization in the public sector rather than women themselves explain the high rates of union growth amongst women; small workplaces are a particular barrier to organizing women and women are more passive and avoid conflict, therefore reducing their likelihood of withstanding a hostile organizing drive. Having challenged these misconceptions, the article concludes with a discussion of the many ways in which union organizing practices are gender biased. Issues discussed range from the limited number of women hired as organizers to the tendency of unions to target small male‐dominated workplaces for organizing, over women‐dominated workplaces, in spite of the latter’s greater likelihood of success.     

Do union organizing activities affect decertification?

This paper tests the hypothesis that unions face a trade-off between retaining organized units and organizing new bargaining units. Using cost-benefit analysis, a model is developed which examines the impact of representation elections on the level of decertification activity for the period 1948 to 1979. The results indicate that as unions increase their efforts to organize more employees, they trade-off a loss of membership through decertification. The shift of resources from servicing existing units to organizing new units causes a sufficient change in the benefit/cost ratio for employees to result in loss of union certification.     

Intensity of management resistance: understanding the decline of unionization in the private sector

IX. Conclusions Although Lipset and Katchanovski present many of the major societal and structural causes that have influenced the decline of private sector unions, they have unfortunately omitted a factor that can account for as much as 40 percent of the decline in private sector union membership, i.e., intensity of management opposition. The managerial incentives to stop unionization are formidable because unions raise wages and reduce profits. Economic reasons for American managers to stop unionization have grown as the wage between union and nonunion workers has widened over the past 40 years especially relative to EU nations. In addition, as managerial accountability to shareholders has risen and pay related to performance has grown, top executives have attempted to raise productivity through high-performance workplace practices or lowering real wages. Since many of these practices rely on top-level executives being able to make decisions on personnel quickly without challenges from employees or due process, they have fought unions more vigorously in order to maintain this discretion over workplace decisions. Although this behavior by management may result in a more efficient allocation of resources from both a micro-and macroeconomic perspective, the losses to society occur in terms of greater income inequality and less employee voice at the workplace and in the political arena.