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Methods of Wage Determination for Bargaining

Comparative Norm - How much do similar employers pay?

Under most circumstances, union workers earn more than their non-union counterparts and as union membership slips, so does the prevalence of union wage scales. This downward spiral may be the greatest drawback to using a comparative norm for wage determination. The situation also highlights the importance of union organizing to maintain existing collective bargaining agreements. One other positive aspect of a comparative norm standard is related to worker recruitment and retention. Employers usually want to avoid incurring turnover costs resulting from a competitor’s largesse, especially in a tight labor market.


Ability to Pay - How much can employers afford?

With respect to ability to pay, defining profit is the stumbling block. Since the union generally exerts very little influence on investment decisions, the amount of money available for wage increases frequently is in dispute. For this reason, many unions are wary of profit-sharing as a method of compensation.


Living Standards - How much is enough?

Nothing illustrates the potential for broad social conflict better than the issue of living standards. While measures such as the consumer price index can be used (fairly accurately) to assess whether wages keep pace with inflation, objective calculations are not so easily amenable to a bargaining goal of raising living standards. There are many newer efforts to look at cost of living issues. Many are connected with so-called living wage campaigns being undertaken in a number of cities. These campaigns involve passing local ordinances that require contractors doing business with a municipality to pay wages in line with the cost of basic services (shelter, transportation, childcare, utilities, etc.) in that area.

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