This short article from the Slate (courtesy of David Kaiser) asks whether Unions are on their way out. The two-tiering of wages in union shops, old versus young, started in the mid-1980s just as Generation X (born 1961-1981) were entering the workforce. The young Xers were the first to get lower wages/benefits for doing the same job just because they weren’t “grandfathered” into the contract. It makes sense for the older people because, by letting the employer pay the young less, they let the employer remain competitive (say with a Japanese auto maker) while still protecting their own windfall (an economist would say “rent”). Better still, with each passing year the deal improves because the cost of your grandfathered cohorts diminish with time relative to the total wage bill. By the time you retire, you can even ask for “Cadillac” health benefits that are totally off the radar screen of what younger workers could ever imagine. Boomer (born 1943-1960)motto: Apres moi le deluge.
I’m not surprised talk of two-tiering is still going on. But now it doesn’t matter as much because the unionized share of the private workforce has shrunk so much. Last month, in fact, the number of private-sector union workers fell below the number of public-sector union workers for the first time ever.