‘87 Pay Raises Bigger, but Not Enough to Pace Inflation

For the first time since 1980, pay raises averaging 3.3% in private industry last year were bigger than the previous year, the government said Tuesday, but not big enough to keep up with inflation.

The raises left workers with 1.1% less buying power at the end of December than they had a year earlier after taking into account a 4.4% increase in consumer prices.

In 1986, wage increases in private industry averaged 3.1%, the smallest of the decade, but still outpaced consumer prices that rose only 1.1%. Last year was the first since 1981 that wage gains have failed to keep up with inflation.

Non-union workers in private industry, with increases averaging 3.6% last year, fared better than their unionized counterparts at 2.6% in terms of base wage raises, the Bureau of Labor Statistics said Tuesday.

But the BLS figures indicate that unions have succeeded in reversing a pattern of concessionary bargaining that for five years has kept the size of wage increases for their members below that of non-union workers.

Automatic cost-of-living adjustments, or COLAs, still exist in two of every five major collective bargaining contracts. When the COLAs are included in the wage adjustments, the average net increase for union members last year also was 3.6%, the bureau said.

Kept Wage Advantage

Averaged over the nation’s entire union membership, including the approximately 1 million workers in private industry who worked under wage freezes last year, the percentage wage gain falls to 3.1%.

The COLA clauses and deferred bonus arrangements, now a part of about three-fourths of the labor contracts in manufacturing, enabled unions to maintain a 36% wage advantage for their members over non-union workers--$465 a week, compared to $342 in 1987.

First-year wage increases in major contracts negotiated last year averaged 3.5%, excluding COLAs and lump-sum bonuses, falling to an average annual increase of 2.6% over the usually two- to three-year lives of the agreements.

In contracts negotiated in 1986, first-year increases averaged only 2.9%, falling to 2.7% over the lives of the agreements.

About 23% of the workers covered in union contracts negotiated last year accepted wage freezes in 1987 and 11% agreed to those freezes throughout the lives of the agreement.

And about 4% of the workers, primarily in the steel industry, accepted pay cuts averaging 8.1% last year and 2.1% annually over the lives of the accord.

The 1987 figures on concessionary contracts contrast sharply with 1982 when 42% of the workers covered in contracts signed that year agreed to a wage freeze and in 1983 when 15% agreed to pay cuts.

Sharing in Rebound

“There has been an essential change from the earlier years of the 1980s when workers reeled heavily as a result of the depth of the 1982 recession,” said Rudy Oswald, chief economist for the AFL-CIO. “The movement now is away from lump sums back to basic wage increases and front-loaded contracts.”

Oswald said virtually all of the few remaining concessionary contracts include bonus, profit-sharing and other arrangements enabling workers to share in the economic revival of industries that suffered the most from the recession.