Trade Unions and Productivity: Some New Evidence on an Old Issue

Econometric investigations have yielded new evidence concerning collective bargaining's impact on productivity for workers of a given quality working with the same amount of capital. These findings indicate that in many sectors—in particular, manufacturing and construction—unionized work places are on average more productive than nonunion ones. This positive effect is not an immutable constant. For example, in the underground bituminous coal industry, unionized mines were less productive than nonunion mines in 1975, with the reverse true in 1965. The routes by which unions affect productivity have not yet been carefully delineated, but they appear to differ from sector to sector. In manufacturing, reduced turnover and improved management seem to be key; in construction, better-trained workers and more rationalized hiring and supervision seem to be primary. Finally, while the union/nonunion productivity differential is likely to be positive, it is on the average not large enough to offset the greater compensation and capital intensity under unionism. Hence, higher productivity and lower profitability appear to go hand in hand under collective bargaining.