Sanitation privatization and sanitation employees’ wages

Public sector wage settlement and the threat of outsourcing

“…If (9 Pr(wf _~ p(w))/c~w < O, then the non-concession wage rate of the union is decreasing in the probability of the bureau losing the right to produce the publicly funded good to a private firm. This is consistent with the result of Chandler [1994] that shows that an increase in the probability of a city considering privatization of its sanitation services decreases the union non-union wage differential. On the other hand, outsourcing does not necessarily reduce public sector wages, and its effectiveness is dependent on the credibility of the threat of privatization and the ability of the union to influence the likelihood of the outcome.…”

“…Otherwise, a non-concession wage rate is offered by the union. The findings of the study are consistent with the empirical evidence found by Chandler [1994], Zhao [1998], andFarber [1986]. This study extends the results of Farber [1986] by predicting that the government may outsource the provision of the good and eliminate these public sector jobs based on the wage offer emerging from the median union voter constraint, even though there exist public sector employees willing to work at a lower wage rate.…”

“…32, NO. 3 seriously considered contracting-out sanitation services at least once between 1974and 1988. Chandler [1994 also reports that a one percent increase in the probability of a city considering privatization decreases the union and non-union wage differential by approximately 0.5 to 1.0 percentage points.…”

“…He shows that unions may choose to lower wages as an alternative to job losses and predicts that unions potentially influence transfer prices of multi-national corporations. Chandler [1994] develops a two-step model to estimate the probability that a city will consider contracting-out and the actual adoption of the privatization option for sanitation services. Chandler and Feuille [1994] find that 33 percent of the 740 cities in their sample *York University--Canada.…”

Corporations Go to Prisons: The Expansion of Corporate Power in the Correctional Industry

“…Chandler (1994) found that privatization of public services reduces the union wage advantage because unions tend to temper their wage demand. Unions lose bargaining leverage when alternative lower-cost labor becomes available.…”