Strikes and wages

Abstract

One of the most basic questions that can be asked about union strategy is whether workers should strike. Neoclassical economists have tended to argue that strikes are economically irrational; therefore, workers should participate in them as little as possible. There are two justifications for this position. The first is that wages are fixed by market factors, and unions have no capacity to raise wages above competitive levels (xcMachlup 1946). This position has been generally discarded in the face of the overwhelming evidence for union wage effects.¹ The more common position is to follow Hicks in arguing that under conditions of perfect information, unions as well as employers should be able to predict the outcome of a strike and make reasonable wage claims based on such estimations. As such, the effects of a strike ought to be capable of being reflected in wage settlements without either party actually having to undergo the costs of conflict (xcHicks 1963); (xcFarber 1978); (xcReder and Neumann 1980); (xcCousineau and Lacroix 1986).