Not Yet Dead at the Fed: Unions, Worker Bargaining, and Economy-Wide Wage Determination

42 Pages Posted: 16 Oct 2005

See all articles by Daniel J. B. Mitchell

Daniel J. B. Mitchell

University of California, Los Angeles (UCLA) - Anderson School of Management; University of California, Los Angeles (UCLA) - Luskin School of Public Affairs

Christopher L. Erickson

University of California, Los Angeles (UCLA) - Human Resources & Organizational Behavior (HROB) Area

Abstract

Transcripts of the Federal Open Market Committee (FOMC) of the Federal Reserve and related documents provide new insights into how macro-policy makers characterized the labor market. Over the period of the 1980s and the 1990s, the Federal Reserve seemingly overemphasized the significance of union settlements, characterizing them in wage-push terms out of proportion to declining union density. Fed policy makers expressed surprise that the nonaccelerating inflation rate of unemployment (NAIRU) dropped during this period and offered various ad hoc explanations to explain the drop. The underlying common element of these explanations is that they were based on a rhetorical bargaining framework, explicit or implicit, that workers bargain as active agents for wages. Along with ongoing direct discussion of union settlements, this tendency suggests a view of worker bargaining power that seems at variance with union decline and the reality of an increasingly nonunion labor market. While worker bargaining models can be reconciled in a formal sense with various theories of nonunion wage determination, the ability of such models to realistically explain the macro outcomes that puzzled and challenged policy makers can be questioned.

Suggested Citation

Mitchell, Daniel J. B. and Erickson, Christopher L., Not Yet Dead at the Fed: Unions, Worker Bargaining, and Economy-Wide Wage Determination. Industrial Relations: A Journal of Economy and Society, Vol. 44, No. 4, pp. 565-606, October 2005. Available at SSRN: https://ssrn.com/abstract=799345

Daniel J. B. Mitchell (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

University of California, Los Angeles (UCLA) - Luskin School of Public Affairs ( email )

3250 Public Affairs Building
Los Angeles, CA 90095-1656
United States

Christopher L. Erickson

University of California, Los Angeles (UCLA) - Human Resources & Organizational Behavior (HROB) Area ( email )

Los Angeles, CA 90095-1481
United States
310-825-1697 (Phone)
310-825-0218 (Fax)

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