Wages Up Again in 2020, With Smaller Contracts Driving Average

Workers in the U.S. are continuing to see wage gains in 2020, based on the latest two-week update of Bloomberg Law’s database of collective bargaining agreements.

The overall average first-year wage increase was 3.8% for contracts added to the database through Feb. 25, compared with 3.6% for the previous two-week update.

“We’re now eight weeks into the year, and we can more confidently say that union wages are trending higher this year than last year at this time,” Bloomberg Law analyst Robert Combs said, adding that the overall average for the same period last year was 3.1%.

All sectors showed improvement. The average increase for manufacturing was 3.4%, compared with 2.8% in 2019; the average for non-manufacturing was 4.6%, compared with 3.4% in 2019; and the average for state and local government was 3.1%, compared with 2.9% for the same period last year.

Smaller Groups Gaining Most

The numbers are being driven primarily by wage gains among smaller groups of unionized employees, Combs said. The weighted average for 2020 is 2.8%, a full percentage point lower than the overall average for the year to date, he said.

“Weighted averages are dependent upon the number of employees covered under the contracts studied. So, a low weighted average like this one suggests a lack of high-paying large contracts being signed so far this year. Because the overall average is high but the weighted average is low, that means that the small contracts are the ones driving the overall improvement,” Combs said.

Among the largest settlements recently added to the database was a five-year agreement between Huhtamaki North America and Local 449 of the United Steelworkers that covers about 480 workers. That agreement calls for wage increases of 2.85% in the first year, 2.5% in the second and third years, 2.75% in the fourth year, and 3% in the final year of the contract.

Also, Henry Mayo Newhall Hospital in Southern California reached a three-year contract with Local 1004 of the United Electrical Workers that covers about 900 workers. That agreement increases wages by 3% to 3.75% during each year of the contract.

About 16.4 million workers in the U.S. are covered by union contracts. The new wage data is based on 132 settlements added to Bloomberg Law’s database between Jan. 1 and Feb. 25.