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Wage increases
moderate in 1981
Arthur Sackley
Wage gains were moderate in 1981, as the recession developed and inflation abated. Nearly all of the Bureau of Labor Statistics' measures of wage change recorded smaller advances than in the previous year.1 When adjusted for inflation, most measures of real wages declined (continuing the trend started in 1979), but at a diminishing rate, mainly because of the slowdown in the rise in consumer prices. The impact of the recession was especially evident in the Bureau's cyclically sensitive average weekly earnings series; it showed the lowest rate of increase in more than a decade. In fact, the only measure that did not rise more slowly than in the previous year was new settlements negotiated during the year in large bargaining units.
The downturn in economic activity and the easing of inflation, a relatively light incidence of collective bargaining, and wage decisions in prior years were among the elements influencing wage changes in 1981. An examination of the role of these factors is helpful in understanding wage developments in the overall economy and in the collective bargaining sector.
The state of the economy was a major influence on wage changes in 1981. After rising vigorously at an annual rate of 8.6 percent in the first quarter, real gross national product leveled off, then fell 4.7 percent in the fourth quarter. Economic indicators relevant to wage changes reflected this shift: from July to December employment dropped by 1.3 million, unemployment rose by 1.8 million, the unemployment rate climbed from 7.2 to 8.8 percent, and both the factory work week and overtime hours declined markedly.
This excerpt is from an article published in the May 1982 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 For a detailed description of the individual measures, see BLS Measures of Compensation, Bulletin 1941 (Bureau of Labor Statistics, 1977).
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