The Evolution of Wage Structure

The Evolution of Wage Structure

The Evolution of Wage Structure

The Evolution of Wage Structure

Excerpt

The rapid growth of trade union membership since 1933 has stimulated controversy over the economic consequences of collective bargaining, including its effect on wage structure. Unions have tended to take full credit for wage increases in unionized firms and industries, and to argue that unionism produces desirable changes in wage structure. Employers likewise assume that the impact on wage structure is substantial, though many of them deny its beneficent character. Economists have been drawn into the argument in various ways. Some, using deductive models of competitive wage structure and of economically motivated union behavior, have asserted that unionism necessarily has an undesirable influence on relative wage rates. Other economists have argued that the pre-union wage structure was too imperfect to be taken as a norm, and that in any case union wage behavior does not conform closely to economic models.

If the theoretical controversy is to be resolved, there is an obvious need for investigation of how the wage structures of various industries have evolved under collective bargaining. Granted, the net influence of unionism can never be conclusively demonstrated. The wage structure of an industry is always evolving, and the effects of union pressure are intermingled with those of economic change in a way which defies quantitative analysis. By combining information on union wage objectives with data on changes in industry wage structure, however, it is possible to draw reasonable inferences. If one finds that interplant differentials in an industry have diminished sharply while at the same time this has been a central objective of union policy, it is plausible to ascribe some of the reduction of differentials to union influence.

Chapters 2-6 undertake this kind of analysis for four industries which have unusually good wage data and which illustrate a variety of economic and organizational situations. Railroad transportation is a "natural monopoly" which for several decades has been declining and relatively unprofitable. Union organization, which is on a craft basis, goes back many decades and is now virtually complete. Iron and steel is a mature but still expanding industry, strongly concentrated in a few major companies and with a tradition of wage and price leadership. Union organization in basic steel is virtually complete, but has developed only within the past twenty years. Cotton textiles is a relatively small- scale and highly competitive industry, which has undergone a major locational shift from New England to the southeastern states. The . . .

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