Labor market contracting and wage dispersion

Article Abstract:

This paper uses a variety of data sources to document the effect of long-term contracts (LTCs) on wage dispersion. The paper first shows that LTCs are responsible for the decrease in wage dispersion observed as labor markets tighten; absent LTCs (as in most other advanced nations outside North America), this effect does not exist. The paper next examines the relationship between cost-of-living escalators (COLAs) and wage dispersion. COLAs are typically found only in those countries that rely on LTCs, although the incidence of COLAs in these nations is affected by inflation variability. Thus, in the United States, COLAs became much more prevalent in long-term contracts during the 1970s, which caused an increase in wage dispersion, particularly between the union and nonunion sectors. The paper concludes that, despite some suggestions that we ban LTCs and COLAs because of their perverse effects on wage dispersion and other economic outcomes, such a ban would be unwise in light of historically high levels of industrial strife in those nations that rely on these contractual devices. (Reprinted by permission of the publisher.)

Research, Compensation and benefits, Wages, Wages and salaries, Labor contracts, Working class, Cost of living adjustment

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Management attitudes toward two-tier pay plans

Article Abstract:

The readjustment of the collective bargaining sector starting in the early 1980s has led to the development of two-tier wage plans in which newly hired employees are paid at a lower rater than existing employees. A survey of industrial relations and personnel managers in the Los Angeles area indicated that most managers, especially those in firms already using such plans, were optimistic about the short-term utility of two-tier wage systems. In the long-term, however, most managers believed that these plans would eventually merge into a unified wage system. Managers in companies not using two-tier wage plans were concerned about morale, productivity and labor-management relations, as well as about the departure of the equal pay for equal work concept.

Methods, Management, Economic aspects, Compensation management, Wage payment systems, Labor unions, Pay structure, Two-tier wage payment systems

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Current prospects for employee representation in the U.S.: old wine in new bottles?

Article Abstract:

A major issue currently being debated in the U.S. is whether to allow employers to establish works councils, employee committees, or other representational systems not permitted under the current labor laws. I bring economic, political, and historical analysis to bear on this issue and recommend an experimental relaxation of current law proscribing employer assistance to labor organizations. This is likely to improve the quality of employee participation, although it is unlikely to raise the amount of it. (Reprinted by permission of the publisher.)

Interpretation and construction, Labor law, Works councils, Employee committees

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