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June 1990, Vol. 113, No. 6
Measuring union-nonunion earnings differences
Kay E. Anderson, Philip M. Doyle, and Albert E. Schwenk
Union workers historically have earned more than nonunion workers. Recently, however, wages and salaries of nonunion workers have been rising faster than those of union workers. What has this trend done to the union-nonunion earnings differential? And, what happens to the union advantage when total compensation (wages and benefit costs) is taken into account?
This article discusses recent data from three Bureau of Labor Statistics programs that provide employee compensation and earnings information for union and nonunion workers. These programs are the Current Population Survey, Industry Wage Surveys, and the Employment Cost Index. After summarizing earlier research in this area, the article describes the three BLS programs and examines what the data show about union-nonunion pay difference show large they are now, how they have changed during recent years, and how both the size of the difference and the amount it changes have varied. The discussion demonstrates how different types of published data can be used to gain a variety of perspectives on the complex issue of union-nonunion compensation and earnings differentials.
Many economists have conducted research in efforts to estimate how much of the difference between union earnings and nonunion earnings is due to union membership status and how much is due to other worker characteristics. (Union workers, for example, tend to be concentrated in large firms, which are often higher paying than small ones; they typically are employed in urban areas, which have higher pay levels than rural areas; and a larger proportion of union than of nonunion workers is employed in the higher paying manufacturing and public utilities industries.) The results of the research have varied, depending on the data used and the method by which they were analyzed.
One of the more prominent works on this topic is H. Gregg Lewis' Unionism and Relative Wages in the United States, published in 1963. In this book, Lewis reviewed 20 empirical studies conducted between 1945 and 1961, deriving a set of estimates of relative wage differentials traceable to unionization. Although his estimates varied by worker category and period, one of his most notable findings was that, in 1957-58, the average union wage advantage was between 10 and 15 percent.1
In 1980, Daniel Mitchell suggested that, by the mid-1970's, the union-nonunion wage gap had widened to between 20 and 30 percent for production and nonsupervisory workers. This estimate was supported by results from other studies, which indicated that earnings had grown more rapidly in the union sector than in the nonunion sector over the preceding two decades.2
This excerpt is from an article published in the June 1990 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 H. Gregg Lewis, Unionism and Relative Wages in the United States (Chicago, University of Chicago Press, 1963), p. 193.
2 Daniel Mitchell, Unions, Wages, and Inflation (Washington, The Brookings Institute, 1980), p. 99.
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