Collective bargaining in 2020 wasn’t as much of a cost-saving opportunity for employers as one might expect from a year ravaged by economic instability and job losses. True, management-side negotiators gained some wage concessions from unions, compared with recent years. But contracts ratified in 2020 still promised workers an average pay raise of more than 3%, which is higher than it was at any time during the long recovery period following the Great Recession.
First-year wage increases averaged 3.1% among 840 union contracts ratified in 2020, down from 3.3% in contracts ratified in both 2018 and 2019, according to Bloomberg Law’s Quarterly Union Wage Data report. If signing bonuses and other one-time lump-sum payments are also counted as if they were wage increases, 2020’s average comes out to 3.3%, which is down from 3.6% in 2019 and 3.7% in 2018.
But despite this dropoff from the previous two years, management’s purse strings are still nowhere near as tight as they were during the decade prior. Average first-year pay raises in union contracts fell sharply from 2008 to 2009, and bottomed out at 1.4% in 2011 (1.8% with lump sums factored in). Even as recently as 2017, the average was only 2.7% (3% with lump sums).
The fourth quarter kept 2020 from being a bargaining disaster for unions. After three straight quarterly declines, unions somehow stopped the free-fall in Q4 and held the average pay hike firm at 2.8%. And with lump sums factored in, the average actually rebounded—from 3% in Q3 to 3.2% in Q4.
If 2020 was indeed the worst that the U.S. economy could throw at pandemic-era labor-management relations, then these averages suggest that, at least in terms of wages, both parties might be emerging with their bargaining model more or less intact.
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