UNIONS, NONWAGE LABOR COSTS, AND THE CHARACTER OF LABOR-MARKET ADJUSTMENT, 1929-1987

This article estimated the impact of unionism and quasi-fixed, nonwage labor costs on average monthly employment, layoff rates, and weekly hours in manufacturing since 1929. Effects in expansion, contraction, and long-run average phases of the business cycle are compared. Greater unionization raises layoffs only in upturn stages, creates downward rigidity in the workweek, and makes labor input less responsive to changes in output. Higher quasi-fixed employment costs lengthen weekly hours and unintentionally depress employment and raise layoff rates. Both heighten the sensitivity of labor input to seasonal variation. Findings suggest policies that would stimulate employment and curb layoffs.