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Cyclical sensitivity of union/nonunion relative wage effects

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Summary and Conclusions

The empirical work of this paper indicates that union wage premiums varied significantly from year-to-year in the late 1960’s and early 1970’s, but not as widely as in the 1920 to 1960 period. White-collar union wage premiums varied more widely than blue-collar premiums, but in most cases were not statistically significant. Using highly aggregative measures of unemployment and inflation, we were unable to detect any relationship between annual union wage premiums and cyclical forces.

When we switched to industry rather than national measures of unemployment, however, we found a number of interesting patterns between union real wage premiums and cyclical forces. We found that economy wide the following groups of workers tend to exhibit countercyclical patterns of real wage variation if nonunionized—white workers, black workers, blue-collar workers, and workers in non-manufacturing industries. In contrast, union and nonunion manufacturing workers and union white-collar workers followed rigid wage patterns over the business cycle. Only white-collar workers, among nonunionized workers followed a countercyclical pattern of real wage changes. All of this implies that one must be careful in estimating union wage premiums from cross-section data at a single point in time because some estimates are likely to reflect the underlying economic conditions as well as the “pure” wage effect of unions.

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Authors and Affiliations

  1. University of Houston, USA

    William J. Moore & John Raisian

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  1. William J. Moore
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  2. John Raisian
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Moore, W.J., Raisian, J. Cyclical sensitivity of union/nonunion relative wage effects. Journal of Labor Research 1, 115–132 (1980). https://doi.org/10.1007/BF02685202

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