Tag: union wage premium

Friedman (1951) thought the union wage premium was overstated because it can’t be as big as doctors’ extract from occupational licensing

The union wage premium is no more

From https://www.berkeley.edu/news/media/releases/2004/09/08_union.shtml

Harvard business School survey discovers that workers want more

Collective bargaining coverage across the OECD, 1990 and 2011

Despite all the hullabaloo, collective bargaining agreement coverage is not declined by that much outside of the English-speaking countries. Outside of the USA, the top 1% are very lazy so they have not benefited from this decline of union power. Within the USA, so few people are covered by collective bargaining agreements for so long that it would not figure in the rising top incomes over the last 30 or more years.

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Source: Economic Policy Reforms 2015: Going for Growth – © OECD 2015 and OECD Employment Outlook 2002.

As for New Zealand, the main difference between 70%  collective bargaining agreement coverage in 1990 and less than 20% collective bargaining coverage in 2011  is real wage growth returned to New Zealand in the early 1990s after 20 years of wage stagnation. The major economic event of the time was the passage of the Employment Contracts Act.

British union membership by public and private sector and gender since 1995

British union membership is very much a public sector phenomena. Outside of the public sector, union membership is low but stable for 20 years now.

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Source: Office of National Statistics, Trade Union Membership 2014

Public and private sector union membership in the USA since 1973

Public and private sector union membership took completely different paths in the USA over the last 40 years. Public sector union memberships held its own. There is been a steady decline in union membership in the private sector. The exception is construction unions which held their own in membership for the last 10 years.

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Source: unionstats.com.

Unions – not the cause of our 40 hour workweek

@CloserTogether @FairnessNZ nail case for neoliberalism @chrishipkins @Maori_Party

The Council of Trade Unions and Closer Together Whakatata Mai charted similar statistics to show that everything has gone to hell in a hand basket since neoliberalism seized power in New Zealand in 1984 and in particular after the passing of the Employment Contracts Act in 1991.

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Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

The passage of the Employment Contracts Act greatly reduced union power and union membership and with it wages growth in New Zealand, according to what is left of the New Zealand union movement.

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Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

Unfortunately, both charts of the same statistics show the exact opposite to what was intended by The Council of Trade Unions and Closer Together Whakatata Mai.

Even the most casual inspection of the data charted above and reproduced below with some annotations shows that real wages growth returned to New Zealand in the early 1990s after 20 years of real wage stagnation.

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Source: Income Gap | New Zealand Council of Trade Unions – Te Kauae Kaimahi.

The reforms of the 1980s stopped what was a long-term decline in average real wages. The reforms of the early 1990s including the passing of the Employment Contracts Act was followed by the resumption of sustained growth in average real wages with little interruption since.

Closer Together Whakatata Mai has even stumbled onto the great improvements in household incomes across all ethnicities since the early 1990s.

The increase in percentage terms of Maori and Pasifika real household income is much larger than for Pakeha. As Bryan Perry (2015, p. 67) explains when commenting on the very table D6 sourced by Closer Together Whakatata Mai:

From a longer-term perspective, all groups showed a strong rise from the low point in the mid 1990s through to 2010. In real terms, overall median household income rose 47% from 1994 to 2010: for Maori, the rise was even stronger at 68%, and for Pacific, 77%. These findings for longer- term trends are robust, even though some year on year changes may be less certain. For 2004 to 2010, the respective growth figures were 21%, 31% and 14%.

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Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015), Table D6.

As Closer Together Whakatata Mai  documented, incomes increased in real terms by 14% for the bottom and 19% for the middle.

Perry noted that in the lowest decile had too many implausible incomes including many on zero income so he was wary of relying on it. I have therefore charted the second, median and top decile before and after housing costs below. All three deciles charted showed substantial improvements  in incomes both before  and after housing costs.

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Source: Bryan Perry, Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2014 – Ministry of Social Development, Wellington (August 2015).

Naturally, measuring changes in living standards over long periods of time is fraught with under-estimation. There are new goods to be accounted for and product upgrades too.