Portal de Periódicos da CAPES

Recent Union Contract Concessions

1982; Volume: 1982; Issue: 1 Linguagem: Inglês

10.2307/2534319

1533-4465

Daniel J. B. Mitchell, Albert Rees,

Labor market dynamics and wage inequality

SINCE 1979, union contract concessions have occurred with increasing frequency. Substantial press attention has been devoted to these concessions along with other ills plaguing organized labor such as the declining proportion of union members in the work force and political difficulties with the Reagan administration. Popular accounts of these trends often suggest that a turning point in union wage determination and industrial relations has been reached. It is clear that the current climate for large wage settlements, both union and nonunion, is unfavorable. The general economic slack since 1979 and the deceleration of price inflation that began in 1981 suggest that the rate of wage increase in the near future should be lower than in the recent past. Such behavior by itself does not represent a break from past processes of setting wages; empirical wage equations have long suggested that recession and declining price inflation would have such an effect. Although the concessions have been confined thus far to distressed industries, it might be hypothesized that they would have spillover effects on wages elsewhere. Such spillovers could produce short-term wage settlements below what standard wage equations would predict. Or it might even be argued that recent concessions will prove to represent fundamental changes in wage-determination processes for the longer run, particularly changes that would make wage inflation more sensitive to real business cycle conditions. In this paper I address three questions. First, is the current episode of union wage concessions unprecedented? The answer turns out to be