Union compensation following intrastate deregulation: Evidence from the US trucking industry

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Union compensation following intrastate deregulation: Evidence from the US trucking industry

Trick, Steven / Peoples, James

Abstract This study contributes to the analysis of union pay compensation patterns in the trucking industry by considering the effect of intrastate deregulation on wage and nonwage compensation in the US trucking industry. Providing such an analysis contributes to gaining greater understanding of the persistence of relatively high union premiums in the for-hire sector following federal legislation promoting interstate competition. For-hire trucking still faced intrastate rate and entry regulation following interstate deregulation within this trucking sector. Hence, intrastate service could still generate rent to be shared with drivers. The passage of the Airport Improvement Act (AIA) of 1995 created a business environment that placed additional competitive pressure on rates by eliminating intrastate regulation. Given the stepped-up competition following this act, this study hypothesizes that for-hire union premiums should continue to decline if union drivers were the beneficiaries of regulatory rent. Findings using individual worker information support this study's hypothesis.

Highlights ► We model wage determination for for-hire truck drivers. ► We examine the wage effect of intrastate deregulation. ► Intrastate deregulation reduces union wage premiums. ► Intrastate deregulation reduces union pension coverage. ► Regulatory rent for trucking carriers declines after intrastate deregulation.