The influence of unions on wages and earnings of labor in the construction industry

(No abstract, no conclusions. This Appendix is informative and provides a useful basis for indexing:) APPENDIX IV: A GENERAL COMMENT ON THE FINDINGS OF THIS STUDY - In Chapter III of this study, it was shown that a positive correlation existed in 1939 between the degrees of union organization and the earnings of skilled building construction labor. A positive correlation also exists between city size and both the average hourly earnings ratios and the degrees of union organization. If the 32 cities are ranked according to size, then the correlation between city size and the average hourly earnings ratios of skilled construction labor is .31 and between city size and their degree of union organization .37. These last two correlations may not be used to deny the validity of the conclusions of this study. We have used a ratio, the average hourly earnings ratio, in order to correct for the effects of city size. Even though the correction which was actually made in this way was quite small, it was probably a reasonable correction. It must be remembered that this study is concerned only with cities of 250,000 or over. It is quite likely that the effect of city size in cities of this size is quite small. It is quite possible to voice still another objection to the findings of this study on the grounds that although a significant correlation was found to exist between the degree of union organization and the average hourly earnings ratios of skilled construction labor such a correlation does not imply a causal relationship. The objection is invalid since, although a correlation does not show causal relationship, the validity of the study does not depend on the existence of this causal relationship. Several other methods of showing the existence of union monopoly have also been used. If we were to assume that no union monopoly existed in 1939, we should have to explain the negative correlation between the working ratio and the degree of union organization on some basis other than the effects of the unions. Similarly, we should have to rationalize the existence of the various practices, laws, and clauses in union contracts cited in Chapter II as competitive phenomena. Finally, we should have to explain the behavior of wage rates over time, especially the contrast between the behavior of wages of skilled workers in the Civil War inflation and in the two World Wars, which in Chapter IV were explained on the basis of the existence of union monopoly as competitive behavior of wages. It would be difficult to rationalize any one of these phenomena using only competitive reasoning. It would be much more difficult to rationalize all or even a major portion of them on this basis. However, the existence of union monopoly is compatible with all the phenomena cited and helps explain their occurrence. It therefore seems reasonable to conclude that the findings of this study are justified in the light of the evidence presented. There probably are differences in the productivity of labor such that labor in the more highly organized, and hence higher wage, cities is "better" labor in the sense that it produces more work per unit period of time than labor in other cities. This is one of the effects of an "effective" union, since employers who are forced to raise wages will attempt to substitute better for poorer labor in order to minimize the costs of wage increases. It is very unlikely that they could evade all of the effects of the union in this way. Such a result would be incompatible with both competitive and monopoly reasoning since it would imply that employers (not a single employer but the construction employers in' a city as a group) were not maximizing profits before the wage increases.