[lbo-talk] Union Wage Premium (was A public square)

[Yoshie Furuhashi]

On 5/24/07, andie nachgeborenen <andie_nachgeborenen at yahoo.com> wrote:
> Actually the empirical evidence is
> that unions are very effective in raising wages:
>
> Lawrence Mischel and Michael Walters, writing for the
> Economic Policy Institute, state
> that unions raise the wages of unionized workers by
> roughly 20% and raise total compensation by about 28%.
>
> The research literature generally finds that unionized
> workers' earnings exceed those of comparable nonunion
> workers by about 15%, a phenomenon known as the "union
> wage premium."
>
> H. Gregg Lewis found the union wage premium to be 10%
> to 20% in his two well-known assessments, the first in
> the early 1960s (Lewis 1963) and the second more than
> 20 years later (Lewis 1986). Freeman and Medoff (1984)
> in their classic analysis, What Do Unions Do?, arrived
> at a similar conclusion.
>
> http://www.epi.org/content.cfm/briefingpapers_bp143
>
> Richard B. Freeman, James L. Medoff, What Do Unions
> Do? (1984) -- is the classic empirical analysis of the
> broad effect of unions on lots of things, including
> wage rates. The "union premium" is in fact
> substantial, as noted above, although less than
> formerly -- I'd hypothesize, because union density has
> been falling sharply.
>
> Here is an abstract of a recent analysis of Freeman &
> Medoff's theses by
>
> Alex Bryson
>
> NBER Working Paper No. 9973
> Issued in September 2003
> NBER Program(s):   LS
>
>
> ---- Abstract -----
>
> We explore the various claims made by Freeman and
> Medoff (FM) in their famous book What do unions do?
> about the impact of unions on wages and update them
> with new and better data. The main findings are as
> follows. 1) Private sector union wage premium is lower
> today than it was in the 1970s. 2) The union wage
> premium is counter-cyclical. 3) There is evidence of a
> secular decline in the private sector union wage
> premium. 4) There remains big variation in the premium
> across workers. 5) There is big variation in
> industry-level union wage premia. 6) State level union
> wage premia vary less than occupation and industry
> level premia. 7) Union workers remain better able than
> non-union workers to resist employer efforts to reduce
> wages when market conditions are unfavorable. 8) There
> has been a decline in the unadjusted wage gap relative
> to the regression-adjusted wage gap. 9) Public sector
> wage effects are large and similar to those in the
> private sector.
>
> http://www.nber.org/papers/w9973

Countries where large union wage premiums exist, such as the US, the
UK, and Japan, are countries where the working class have been weak
and have therefore failed to put solidaristic labor legislation into
practice.

<http://www.dartmouth.edu/~blnchflr/papers/CHAPTER%207.pdf>
Changes over time in union relative wage effects in the UK and the US revisited

David G. Blanchflower
Bruce V. Rauner 1978 Professor of Economics
Dartmouth College and NBER

Alex Bryson
Policy Studies Institute and
Centre for Economic Performance, LSE

(Forthcoming as chapter 7 in International Handbook of Trade Unions,
Edited by John T.
Addison and Claus Schnabel, published by Edward Elgar,
Cheltenham/England and Northampton/ Mass., 2003)
August 2002

. . . . . . . . . . . . . . . . . . . .

This paper has attempted to address the question: 'what do unions do
on the wage front?' The answer in the cases of both the US and the UK
is that, despite declining membership numbers, unions are able to
raise wages substantially over the equivalent non-union wage. Unions
in other countries, such as Australia, Austria, Brazil, Canada, Chile,
Cyprus, Denmark, Japan, New Zealand, Norway, Portugal and Spain, are
also able to raise wages by significant amounts. In countries where
union wage settlements frequently spill over into the non-union sector
(e.g. France, Germany, Italy, the Netherlands and Sweden) there is, as
one might expect, no significant union wage differential.
-- 
Yoshie