Regulatory reform and labor outcomes in the U.S. electricity sector
- Topics:
- Labor Contracts
- Tags:
- Earnings,
- Electricity Sector,
- Finance,
- Financial Accounting,
- University Of Wisconsin-Milwaukee
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Overview: Although employment reductions have been associated with deregulation of the U.S. electricity sector, reductions in earnings have not; in fact, premium and real weekly earnings for electricity-sector employees have risen. The last 10 years have seen many States aggressively pursuing the restructuring of their electric utilities. These reforms were motivated by a number of Federal Energy Regulatory Commission (FERC) orders that encouraged competitive markets for wholesale electric power. While the effects of these reforms on the product market (and competition) have been widely studied, there is a dearth of research examining the effect of regulatory reform on the U.S. electricity sector’s labor market, which employs more than 300,000 highly skilled workers. While the impact on the product market—namely prices and competition—has been studied in detail, little attention has been paid to the impact of this restructuring on the labor market. This article finds that significant employment decreases are sometimes associated with this regulatory reform. Overall electricity-sector employment has fallen by more than 24 percent since the regulatory reform movement began in 1990. This study also finds that at least through 2001 electricity-sector regulatory reform has not had any negative impact on earnings. Rather, employees in this sector have seen increases in both their real weekly earnings, as well as their earnings premium, compared with other utility workers. It is postulated that union contracts, and the fact that this reform is still underway, have helped to maintain earnings premiums. It is apparent that electric utilities have cut costs, and become more competitive, through employment declines as opposed to earnings actions. This is reinforced through the study of a handful of recently negotiated union contracts in this sector.
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Format: PDF | Size: 78KB | Date: May 2003 | Pages: 10
