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Higher settlements in 1989 end innovation decade
Fehmida Sleemi
A decade of collective bargaining marked by labor and management efforts to preserve jobs and contain costs ended in 1989 with a slight up turn in the size of negotiated wages. (See chart 1.) Major collective bargaining settlements (those covering 1,000 workers or more) reached in private industry during 1989 provided wage adjustments (the net effect Of decisions to increase, decrease, or not change wages) that averaged 4.0 percent in the first contract year and 3.4 percent annually over the term of the contract. (See table 1.)
The last time that parties to 1989 settlements negotiated, usually in 1986 or 1987, average specified wage adjustments were smaller-2.4 percent annually over the term of the contract. Last year was the first time since the comparison was introduced in 1981 that settlements called for larger adjustments than the contracts they replaced. The larger adjustments reflected the restoration of wages that had been cut in some industries, such as steel, and larger wage gains in the health care industry. (See chart 2.)
The 1980's
The U.S. economy slipped into a mild downturn in 1980, briefly recovered, and then, in
1981, plunged into the longest and deepest recession in the post-World War II era.
Employment declined by nearly 3 million, with job losses heavily concentrated in
manufacturing. The unemployment rate rose to nearly 11 percent, while the rate of increase
in prices fell sharply from two-digit levels. The economy emerged from the recession in
1982 and moved into a period of recovery and modest growth that continued to the end of
the decade.
Collective bargaining during the decade reacted to the changing economic climate. Wage adjustments during the period reflected the economic difficulties experienced by many industries and the approaches taken by unions and employers to meet the challenges and problems facing them. For example, foreign competition shaped negotiations in transportation equipment and electrical and electronic equipment manufacturing, local economies influenced the outcome of settlements in construction, competition from nonunion firms affected the size of adjustments in retail trade, and the entry of new firms into the trucking and airline industries after deregulation influenced bargaining in those industries. The size of wage rate adjustments was also determined by the need to develop a compensation package that balanced wage changes with accelerating health insurance costs. Decisions to opt for lump-sum payments in lieu of wage increases also had an impact on measures of changes in wage rates. (Lump sums are excluded from the wage and compensation rate adjustment series.)
This excerpt is from an article published in the May 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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Collective bargaining, 1991: recession colors talks.
—Jan. 1992.Collective bargaining in 1990: search for solutions continues.
—Jan. 1991.Within Monthly Labor Review Online:
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