Union Effects on White-Collar Compensation

This paper uses two new data sources, each of which combines information on worker and establishment characteristics with detailed information on the components of employee compensation, to examine union/nonunion pay differentials for white-collar workers. Estimates reveal that nonunion wages and total compensation are more responsive than union pay levels to worker productivity differences, such as education and work experience. Also, large firms pay 10 to 15 percent more to their white-collar employees than small firms in the nonunion sector but only 5 percent or less in the union sector. Overall, the white-collar union wage differential appears to be 3.5 to 4.0 percent, rising to 7.1 percent when fringe benefits are included in the dependent variable. Significant spillovers to nonunion white-collar workers, which appear to erode the measured union/nonunion pay differentials, are also found.