Does Individualizing the Labor Contract Hurt Women?

• Published date: 01 July 2019
• Date: 01 July 2019
• Author: Claire Cahen
• DOI: http://doi.org/10.1111/irel.12239

Does Individualizing the Labor Contract Hurt

Women?*

CLAIRE CAHEN

The twenty-first century has been marked by a retreat of the collective bargaining

rights of public employees throughout the United States. This study exploits the

variation in legal environments resulting from these reforms to estimate the causal

impact of different collective bargaining policies on public employee compensa-

tion. Using data from the American Community Survey, results show a modest

wage penalty at the aggregate level for employees covered by constraints on col-

lective bargaining. However, this wage penalty is differential and is concentrated

on women in all but one case—a legal environment in which collective bargain-

ing over wages has either been prohibited or directly constricted, allowing gov-

ernments to periodically institute wage freezes and caps on raises for public

employees. In this case, a pre-existing wage gap in which men earned more than

women is disappearing as male and female earnings converge at a lower wage.

The paper suggests that the long-term effects of restricting collective bargaining

occur through the individualization of the labor contract and should be examined

along individual-level characteristics, such as gender.

Introduction

In the 1960s and 1970s, two branches of legal reform radically transformed

work in the public sector in the United States. The first concerned collective

bargaining rights, which were granted to government workers for the first time

(Cantin et al. 2012; Slater 2004), turning the public sector into a unionized

field in which advancement opportunities, benefit packages, and pay increases

became codified in collective bargaining agreements (Frandsen 2016). The sec-

ond took the form of antidiscrimination laws, which improved access to gov-

ernment jobs for workers, such as women and people of color, disadvantaged

in other segments of the economy (Laird 2017). Where union attitudes were

favorable and progressive public sector unions existed, these two policies were

*The author’saffiliation is The Graduate Center at the City University of New York, New York, NY.

E-mail: ccahen@gradcenter.cuny.edu.

INDUSTRIAL RELATIONS, DOI: 10.1111/irel.12239. Vol. 58, No. 3 (July 2019). ©2019 The Regents of the

Universit y of Calif ornia Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA,

and 9600 Garsington Road, Oxford, OX4 2DQ, UK.

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mutually reinforcing: a diversified workforce organized for union protections

(Rubio 2010) and, conversely, collective bargaining agreements helped reduce

between group inequality within diversifying workplaces (Figart 1987; Ric-

cucci 1990; Slater 2004). Indeed, by negotiating (and enforcing) pay scales,

job ladders, and transparency in compensation procedures, evidence shows that

unions—and their collective bargaining agreements—helped shrink (though

not eliminate) gendered and racialized wage gaps (Patrick 2018).

However, since the turn of the twenty-first century, a series of legislative

reforms has repealed the collective bargaining rights of government workers.

These reforms peaked as state budgets bottomed out in the Great Recession

and have continued with renewed frequency since the “Red sweep”of 2016.

Most recently, Iowa passed a law prohibiting collective bargaining on most

topics (Duffy 2017) and, in “a new scalar flank”(Peck 2016: 22), the U.S.

Supreme Court legislated federal right to work (RTW), or a union and dues

opt-out law, for all government workers covered by union representation

(Supreme Court of the United States 2018). How do these reforms impact

civil-service jobs? In particular, if collective bargaining leveled the playing

field for disadvantaged workers, what happens to employee compensation

when collective bargaining rights are revoked, and unions are weakened? In

nonunion environments, as well as in environments in which collective bar-

gaining is prohibited, workers negotiate their pay individually (as opposed to

through the union). Do workers who are vulnerable to pay discrimination, such

as women and people of color, maintain the same compensation standards in

these environments? Does their pay increase as they gain the ability to advo-

cate and negotiate for themselves as individuals? Or does individualizing the

labor contract put these workers at a greater disadvantage? In this paper, I ask

these questions of a group of workers that has an important legacy of partici-

pating in public-sector unions, but for which there is also enduring evidence

of a wage lag and wage discrimination: women (Artz, Goodall, and Oswald

2018; Blau and Kahn 2006, 2017; Stevens and Whelan 2019).

The study uses state-level yearly American Community Survey files and

samples data from states which enacted, from 2000–2017, either RTW provi-

sions or measures to significantly curb the collective bargaining rights of pub-

lic employees. The empirical strategy treats states which retained a high

collective bargaining environment as counterfactual cases. Moreover, within

adopting states, there are contrasts to be exploited, as restrictions on collective

bargaining were implemented with variation across occupations. For example,

while teachers in Michigan were prohibited from bargaining over topics such

as performance pay and layoff procedures, police and fire retained full collec-

tive bargaining rights in this same state. The result has been, within a discrete

time frame, the creation of a multiplicity of legal environments. I exploit the

318 / CLAIRE CAHEN

resulting variation to separately estimate the causal impact of changing collec-

tive bargaining law on the wages of men and women. The empirical strategy

uses a difference-in-differences framework.

The study is conducted in two steps. First, I estimate the impact of these

laws on the wages of both male and female public employees. Consistent

with past literature, I find the laws modestly reduce wages, resulting in an

aggregate and rapid wage penalty. I then test a second hypothesis that these

laws most severely impact the compensation of women, with negative

effects that increase as constraints on collective bargaining grow. The find-

ings support this hypothesis in all but one legal scenario: states in which

collective bargaining over wages is either limited or prohibited altogether,

and governments can institute caps on wage increases. There, female earn-

ings do not see the largest decline. Rather, both male and female earnings

decrease and eventually converge at a lower rate. In the discussion, I argue

these results support the suggestion that repealing collective bargaining

rights and individualizing the labor contract can increase gendered income

inequality. However, the study adds an important caveat to this suggestion

by showing that, when collective bargaining reform allows for direct inter-

vention in base employee compensation, such as by capping or freezing

wages, these reforms too, like union contracts before them, can become

equalizing forces. They eliminate variance in income—by causing the earn-

ings of all workers to bottom out at lower rates.

On the one hand, this study contributes to our understanding of the relation-

ship between union decline and growing economic inequality. On the other, it

helps us understand the recent transformation of government employment. This

study offers, to my best knowledge, the first empirical apprehension of the

gendered effects of recent measures curbing collective bargaining. Finally,

though the research here focuses on states for which we have sufficient postin-

tervention data, the results might be thought of as simulations for what will

occur following analogous measures in places like Iowa and, now, in the wake

of the Supreme Court decision, at the national scale.

Theoretical Framework

In the 1960s and 1970s, as the Fordist labor compact was beginning to

unwind in heavy industry, unionized employment in the service-based public

sector was expanding. A series of executive and state-level statutory rules

granted pubic employees the right to collectively bargain for the first time, and

union growth was exponential, rising, for example, from 10 percent in 1960 to

40 percent in 1976 (Slater 2004).

Individualizing the Labor Contract / 319