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.

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.

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.

Unions, Pension Wealth, and Age-Compensation Profiles

This paper examines the effect of unions on both the magnitude and distribution of pension benefits. Our empirical results show that beneficiaries in collectively bargained plans receive larger benefits when they retire, receive larger increases in their benefits after they retire, and retire at an earlier age than beneficiaries in other pension plans. As a result, the pension wealth of union beneficiaries is 50 to 109 percent greater than that of nonunion beneficiaries. Just as wage differentials within and across establishments are smaller among union workers, benefit differentials within and across cohorts of retirees are smaller among union beneficiaries. This results from the smaller weight given to salary average in determining initial benefits and the larger percentage increases given to those who have been retired the longest under post-retirement increases. The more compressed benefit structure under unionism causes the union-nonunion compensation (wages plus pension contributions) differential to decline more quickly than the union-nonunion wage differential over the life cycle.