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.     

Union merger incentives and pecuniary externalities

The collective bargaining process is influenced by the market structure that exists on both sides of the bargaining table. That structure, in turn, is affected by the merger activity of both firms and unions. Until recently, however, union merger incentives have remained unexplored. This paper surveys the principal theories that explain these incentives and develops a new theory of union mergers based on pecuniary externalities between unions. We are grateful to Ethel Jones, Jim Long, and an anonymous referee for useful comments on a prior draft of this paper. The usual caveat applies.     

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.     

Equality Bargaining: Where,Who, Why?

It is common to identify a role for trade unions in combating sex inequality at work through collective bargaining. This article uses a survey of paid union officers to identify the context in which equality bargaining by unions is likely to occur, using the specific issue of bargaining on equal pay. It concludes that equality bargaining is a function of women’s voice within unions, the characteristics and preferences of bargainers themselves and of a favourable public policy environment. Bargaining on equal pay is also more likely in centralized negotiations that cover multiple employers.     

The long-run and short-run impacts of global competition on U.S. union wages

Union opposition to trade liberalizing agreements suggests that international trade harms organized labor. Using union contract data, we assess both long- and short-run impacts of international trade on U.S. collective bargaining outcomes. Results indicate that, in the short run, increases in either imports or exports reduce union wages. This is attributed to risk aversion on the part of both unions and management. In the long run, however, trade has little net impact on average union wage settlements. In forming their opposition to more open U.S. trade policies, unions appear more concerned with short-run impacts of trade and are willing to trade-off immediate wage gains in lieu of future employment possibilities. We thank Dan Rickman, Bill Levernier, and the anonymous referee for their useful comments.     

Compensation,employment, and the political activity of public employee unions

It has been hypothesized that because public employee unions are politically influential, they have a bargaining advanatage over their private-sector counterparts. Previous studies, however, have not directly measured the political activities of public employee unions and have instead usually used some type of unionization proxy. This paper uses unpublished data from the International City Managers Association to develop a more direct measure of union political activity. Using this measure, it is found that an increase in union political activity leads to higher compensation and employment for public employee union members.     

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.     

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.     

The effect of type of union on member-nonmember wage differentials

The union-nonunion wage differential can be decomposed into bargaining and membership effects. While some analysts suggest that they are not separable and that bargaining power is a function of membership density, others argue that they are separable and that the former derives from monopoly power while the latter stems from socialization. Our results support the latter view. We derive estimates of bargaining and membership effects for workers covered by national, industrial, and craft union contracts as well as for all covered workers taken together. Since industrial and craft unions differ in structure and organization, we expect differences in the socialization effects among types of unions. It is clear from our results that union membership per se in each case gives a large positive wage advantage.     

Labor unions: Victims of their political success?

Conclusion A glimpse of the future of private sector unions may be gleaned from examining the past. Union densities have declined for nearly half a century, and structural and demographic changes, global competition, and various other factors have caused much of this decline. However, as recognized by early union leaders, legislative successes that diminish the role of collective bargaining naturally contribute to a diminished role for unions in the workplace and union decline must inevitably follow. We thank Bruce Kaufman for valuable comments and suggestions on an earlier draft of this paper.     

Agency costs,property rights,and the evolution of labor unions

Collective bargaining requires that an agent represent workers. This paper examines the implications for the trade union movement of the resulting agency costs. Without transferable rights in the union, union members lack the means and incentive to bring forth the innovative agent controls common to the modern corporation. Considerations of the bargaining strengths of employers and employees, each represented by an agent, provide an explanation of the simultaneous decline of private sector union membership (corporate share holders have been more successful at lowering agency costs) and growth of public sector union representation (where the union official, a “double agent,” serves the interest of both employee and bureaucratic employer). The authors acknowledge the helpful remarks Donald L. Martin whose earlier research on property rights in unions inspired this effort. Don Bellante’s work was supported by a grant from the Research Committee of the College of Business Administration, University of South Florida.     

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.     

An analysis of multi-union elections involving incumbent unions

This article investigates the extent and outcomes of multi-union elections involving incumbent unions between 1974 and 1986. During this 13 year period a total of 1423 raid elections (an average of 109 per year) were conducted. The data reveal that the number of raid elections is declining and that unions, as opposed to no-union, continue to be victorious in the majority of cases, although there is considerable regional, industrial, union, and bargaining unit size variance in union victory rates.     

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.     

Sustaining and Developing Women's Trade Union Activism: A Gendered Project?

Against the background of heavy membership decline, the increasing importance of women as a source of members for unions and union efforts to attract women into membership, this paper explores the nature of women's union activism. The focus is on why women stay active in unions. The paper employs Klandermans' model as a framework for examining senior union women's activism. This study suggests that the model is gendered in that women's experiences and perceptions of trade unions are highly gender specific and further that their union activities are underpinned by a feminist paradigm. The women in the study expressed a strong desire to ensure that the union works for women, indicative of the gendered nature of their commitment to the union. They revealed gendered bargaining priorities and thus gendered perceptions of union instrumentality. Their social integration within the union is shown to be highly or partially contingent upon, formal and informal women's support networks.     

Bargaining for Success: Examining the Relationship Between Teacher Unions and Student Achievement

While many previous studies have identified a positive relationship between teachers unions and student achievement on standardized tests, little research to date has explored the channels through which unions might actually affect achievement. Utilizing multilevel random intercept models, we examine the effects of two categories of items commonly negotiated in teacher contracts—“industrial union” items and “professional union” items—on individual student math scores. Further, we assess the ability of these two clusters of variables to explain the positive union effect found in previous research. The results confirm that teachers unions are positively associated with student achievement and suggest that the industrial model explains moderately more of the union effect than the professional model; however, only the combination of both models is capable of reducing the union effect to nonsignificance. These findings are also confirmed in a supplemental analysis utilizing instrumental variables to account for the possibility of endogeneity. Finally, a decomposition of the union effect suggests that teachers unions are most beneficial to middle‐ and high‐achieving students. We conclude that through industrial and professional bargaining, teachers are able to secure higher salaries, credentialing, and greater autonomy which lead to improved student achievement.     

Information technology, unions, and the new organization: Challenges and opportunities for union survival

The rapid transformation of the U.S. business environment has radically changed the character of organizations where unions seek to represent workers. Many of the structural elements that have provided critical support to union representation in collective bargaining have been significantly altered, or lost altogether. We have argued that information technologies have been a pivotal force of change in business organizations and have identified a set of key structural elements of these transformed organizations. It is our belief that while the new organization creates significant challenges for private sector unions, it also creates an opportunity for unions to develop new roles and new opportunities to prosper in the next millennium.     

Wage indexation: Social benefits and private incentives

The question addressed in this paper is: Do social benefits from wage indexation coincide with private incentives to incorporate COLA clauses in union contracts? In general, market forces provide an “approximately correct” solution so that legislative remedies are not required. Based on the work of Gray and Fischer, full indexation is beneficial when the economy is subjected to stochastic nominal shocks, but only partial indexation is optimal when real disturbances dominate. If unions and management of firms are risk-averse they both have an incentive to adopt full indexation when monetary uncertainty exists. On the other hand, when the economy faces real shocks, union negotiators oppose indexation if the demand for labor is elastic, but insist on full indexation if demand is inelastic. Managers of firms prefer nominal wage contracts in either case. This suggests that both parties will agree to omit COLA clauses in the first case, but are likely to compromise with partial indexation in the second case. A role for government intervention is indicated only to the extent that bargaining strength may dictate a degree of indexation that deviates from the social optimum. The analysis is extended briefly to other assumptions about the utility function of the two parties at the bargaining table.     

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 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.