Collectively Bargained Wage Increases Rise, but Remain Below Former Levels

One of the functions of experienced collective bargaining agreement negotiators and human resources professionals in unionized and union-free companies is to keep abreast of the labor market conditions locally and within his or her client’s industry. In unionized companies, having this information will assist these individuals in recommending a considered course of action at the bargaining table. In a union-free organization, the information will help in developing strategy to pay its employees competitively. There are numerous sources of information available for review, including the U.S. and state departments of labor. Another source is Bloomberg BNA, which publishes detailed analyses of collective bargaining agreement settlements. Recently, Bloomberg BNA published findings regarding wage increases in labor contracts negotiated in the first quarter of 2013.

The survey found the current first-year median wage increase to be 2%. This reflects a rebound from the last few years in which the first-year increases were 1.6% (2010), 1.4% (2011), and 1.9% (2012). For several years prior to 2010, the median first-year increase was a consistent 3%. The significant decrease in 2010 followed the downturn in the national economy. The slow rise likewise follows the slow recovery since then.

The rise in median wage increases isn’t the whole story. Often, parties negotiate lump sum bonuses in place of wage increases (in whole or in part). The Bloomberg BNA survey factored those in as well. When these bonuses are considered, the “weighted average” increases show an overall first-year increase of only 1.6%.

These numbers reflect the national trend. There are significant differences between regions and among the various industries. Of course, private-sector collective bargaining agreements are not required to be published; surveys rely on contracts made available to the researchers by the parties. Nonetheless, these surveys provide a window on trends affecting employers and the unions with which they negotiate. Clearly, employers are reluctant to return to higher increases.

There are many factors affecting an employer’s wage determinations. Currently, anecdotal evidence suggests concerns over the cost of health insurance, and those arising from the Affordable Care Act in particular, continue to depress wages. Whether an employer is bargaining collectively over wages or not, it is important for it to obtain as much information as possible in order to make an educated decision over the wage increase, if any, it intends to give.