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Chapter 10
Contract Terms and Employment Outcomes
McGrawHill/Irwin
An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGrawHill Companies, Inc. All rights reserved.
103 3 Tracing the Effects of Union Wage
Increases
• An increase in wages may result in a corresponding, automatic “roll up” in fringe benefits such as sick leave, vacation, pensions, and unemployment benefits
Such wage or benefit increases may pressure the firm to hold down costs by tightening work rules
These “primary direct effects” of unions set off a chain reaction
104 4 The Consequences of Union Effects on
Wages
105 5
Stage 1: Primary Union Effects
• The primary union effects are on the compensation received by their members
• If unions did not raise wages, they would have difficulty attracting and keeping members
• Thus, the primary effect is positive
The critical question concerns the size of this and other primary effects
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