Can Union Labor Ever Cost Less?

This paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects. The results show that union contractors have greater economies of scale. This gives them a cost advantage in large commercial office buildings, but in school and hospital construction, nonunion contractors have lower costs at all output levels. Despite the cost differences, profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers.

Productivity Levels and Productivity Change Under Unionism

This paper examines how unions affect the rate of productivity change over time. The direction of union impact cannot be predicted from economic theory. Firms may tend to select more productive technologies to offset the cost of higher union wages or they may tend to select less productive technologies to keep union wage demands in line. Evidence from manufacturing indicates that unions have not affected productivity growth, but in the construction industry productivity growth has been much slower in areas where there is a high initial level of unionization or where unionization is growing.

Human Resource Policies and Union-Nonunion Productivity Differences

Many researchers in both economics departments and business schools recently have become interested in examining how much of an effect human resource decisions and policies have on firm performance. This paper surveys the literature on unionism and productivity and discusses its implications for future research on more general issues. The main focus is on (I) conclusions as to whether unions raise or lower productivity and (2) procedures used to identify the channels through which unions affect productivity. The studies of unions and productivity have documented large productivity differences between seemingly comparable union and nonunion establishments. In many cases unionism is associated with higher productivity, especially when unionized firms are in a competitive environment. However, the mechanisms responsible for union-nonunion productivity differences in each study remain poorly understood, either because detailed information on how unions affected company decisions was not available or because the available information produced inconclusive results. These conclusions suggest that human resource policies can have a very large effect on financial outcomes, but our ability to estimate the magnitude of that effect for a particular policy is currently very limited.

Declining Unionization in Construction: The Facts and the Reasons

This paper documents and examines the forces behind the decline of unionization in the construction industry. The proportion of construction workers belonging to unions has dropped from slightly less than one-half in 1966 to less than one-third in 1984. The employment share of union contractors has declined even further because of the fraction of union members working in the open shop rose from 29 to 46 percent between 1973 and 1981. Initially, an important factor in the initial decline in percentage unionized was the growth in the union-nonunion wage gap between 1967 and 1973. However, the gap did not widen any further after 1973 and actually has narrowed substantially since 1978. A key subsequent factor has been the erosion of the productivity advantage of union contractors, which dropped substantially between 1972 and 1977 and vanished by 1982. The decline of unionization is unrelated to changes in worker characteristics or changes in the mix and location of construction activity.

Unions and Efficiency in Private Sector Construction: Further Evidence

Previous studies using micro data to estimate the impact of unions on productivity in construction in the early 1970's have found productivity to be higher for union than nonunion contractors in the private sector. The validity of these studies has been questioned in light of the declining market share of union contractors. This study re-examines union-nonunion productivity differences over a sample of retail stores and shopping centers built in the late 1970's. It finds that square footage put in place per hour is 51 percent greater for union than nonunion contractors. Lacking data on wage rates by occupation, the impact of unions on efficiency can be gauged only by looking at how unions affect costs, profit rates, and prices. This study finds no mean cost per square foot difference between union and nonunion contractors and offers mixed econometric evidence on translog cost functions. There is no difference in profit rates or prices between union and nonunion contractors in this sample.

The Effect of Unionism on Productivity in Privately and Publicly Owned Hospitals and Nursing Homes

This paper examines the effect of unions on productivity within a sample of publicly and privately owned hospitals and nursing homes to determine whether public ownership influences union behavior. The results show that the productivity of union contractors is much greater in private than in public projects. Within the sample of private projects, the estimates of the union-nonunion productivity difference are generally positive but very imprecise.

Developments in Collective Bargaining in Construction in the 1980s and 1990s

This paper summarizes important developments in collective bargaining in the construction industry in the 1980s and 1990s. Workers in the industry have experienced high unemployment and a 17 percent drop in real wages. Union density has declined from 33 percent in 1981 to 22 percent in 1992, despite a sizable drop in the union-nonunion differential in wages and a tremendous reduction in the number of strikes. The main reasons for the decline in union strength are the adoption of strategies by contractors and owners to control labor costs and changes in the interpretation of labor laws that have given contractors more flexibility in determining their collective bargaining status.

The Value of Phased Retirement

This paper examines how phased retirement plans in higher education create value for both the institution and individual faculty, based upon evidence from the Survey of Changes in Faculty Retirement Policies and an in-depth case study of the University of North Carolina system. Faculty benefit by receiving improved opportunities for part-time work and by having the ability to make a smoother transition to retirement. The policy is clearly of great value to the 25 to 35 percent of UNC faculty who opt for phased over full retirement. The biggest payoff to the university is an increase in the odds that low-performing faculty will start the retirement process earlier. Universities also anticipate increased flexibility in managing faculty employment and compensation; phased retirement is most likely to be observed on campuses where a high percentage of faculty has tenure.

Pensions and Firm Performance

This paper examines how pension plans affect employee behavior and firm performance. Theoretically, the impact of pensions on firm performance cannot be predicted. Firms with pensions should have lower turnover rates and more efficient retirement decisions; their employees will be less likely to shirk. On the other hand, pension compensation is not very closely linked to worker performance and there is some risk that turnover may fall too much. The evidence indicates that although wages do not seem to fall with pension compensation, profit rates are not affected by pension coverage. This suggests that pension coverage is associated with higher productivity, a proposition that is supported by indirect evidence on pensions, turnover, and productivity but not by direct tests of how pension coverage and productivity are correlated.