Wayne Vroman

Disaggregated Wage Developments

UNEMPLOYMENT has declined substantially in the United States in recent years, from 9.6 percent of the civilian labor force in 1983 to 5.7 percent in the first quarter of 1988, while wage and price inflation have remained low. Annual increases in the private nonfarm average hourly earnings index, for example, ranged from 2.0 percent to 3.8 percent and averaged 3.0 percent between 1983 and 1987. During the first three months of 1988 average hourly earnings increased at an annual rate of 2.5 percent. This report examines nominal wage growth during the 1980s. It first documents the slowdown in wage inflation and then examines possible sources of that slowdown.

Black Men's Relative Earnings: Are the Gains Illusory?

This study investigates the hypothesis that the increase in the median earnings of black men relative to those of white men after 1964 in the United States largely reflects the labor force withdrawal of high proportions of low-wage black men who availed themselves of government transfers. Analyzing Current Population Survey and Social Security Administration data through 1985, the author finds little empirical support for three direct implications of the “sample censoring” hypothesis. Of the total measured gain in relative earnings between 1964 and 1985 (from .531 to .663, or 13.2 percentage points), he finds that only 14% (or 1.8 percentage points) can be attributed to sample selection.

Union Contracts and Money Wage Changes in U. S. Manufacturing Industries

This paper analyzes the relationship between wage changes negotiated in selected large collective bargaining agreements and industry-wide changes in average hourly earnings. Multiple regressions are used to examine the relationship in two-digit manufacturing industries for the period 1958II to 1978IL Negotiated wage changes are found to have a major impact on overall movements in hourly earnings. The estimated equations have potential applications for short-run wage forecasting and for policy analyses.

Cost-of-Living Escalators and Price-Wage Linkages in the U.S. Economy, 1968–1980

This paper examines the importance of cost-of-living escalator clauses as a link between price changes and money wage changes. It surveys the possible kinds of price-wage linkages and estimates the importance of COLAs in overall wage changes in the economy. The author concludes that despite growth in the coverage and yields of escalator clauses since the mid-1960s, they still accounted in 1980 for less than 10 percent of total money wage changes in the U.S. economy and are therefore not a major cause of inflation.

Severance pay compliance in Indonesia

This paper contributes new evidence from two large household surveys on the compliance of firms with severance pay regulations in Indonesia, and the extent to which changes in severance pay regulations could affect employment rigidity. Compliance appears to be low, as only one-third of workers entitled to severance pay report receiving it, and on average workers only collect 40 percent of the payment due to them. Eligible female and low-wage workers are least likely to report receiving payments. Widespread non-compliance is consistent with trends in employment rigidity, which remained essentially unchanged following the large increases in severance mandated by the 2003 law. These results suggest that workers may benefit from a compromise that relaxes severance pay regulations while improving enforcement of severance pay statutes, and possibly establishing a system of unemployment benefits.