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Collective Bargaining and Disinflation

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Labor relations and collective bargaining have changed markedly in recent years. Although economic recessions usually bring deescalation of wages and increased labor concessions, an inordinate number of labor concessions occurred in the recession years of 1981 and 1982. Economy-wide wage growth dropped to its slowest pace since the early 1970s. At the same time, roughly one-half of the 3.3 million workers settling union contracts in 1982 accepted wage freezes or cuts. An even larger number acceded to costsaving changes in work rules and fringe benefits. Concessionary labor contracts were settled in highly visible key industries, such as automobiles and steel, and traditional bargaining patterns among' unions deteriorated. Strike activity dropped to a postwar low, and unions lost more than one-half of their representation elections. Meanwhile, many employers seemed more willing to accept the notion that their firms' survival depended on improving productivity and cutting costs.

Labor relations and collective bargaining have changed markedly in recent years. Although economic recessions usually bring deescalation of wages and increased labor concessions, an inordinate number of labor concessions occurred in the recession years of 1981 and 1982. Economy-wide wage growth dropped to its slowest pace since the early 1970s. At the same time, roughly one-half of the 3.3 million workers settling union contracts in 1982 accepted wage freezes or cuts. An even larger number acceded to costsaving changes in work rules and fringe benefits. Concessionary labor contracts were settled in highly visible key industries, such as automobiles and steel, and traditional bargaining patterns among' unions deteriorated. Strike activity dropped to a postwar low, and unions lost more than one-half of their representation elections. Meanwhile, many employers seemed more willing to accept the notion that their firms' survival depended on improving productivity and cutting costs.


Suggested citation: Sniderman, Mark S., and Daniel A. Littman, 1984. “Collective Bargaining and Disinflation,” Federal Reserve Bank of Cleveland, Economic Commentary, 02.13.1984.

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