In March of 1982, _Personnel Journal_ published an article by Clarence Deitsch, Associate Professor of Economics at Ball State University in Muncie, Indiana and David Dilts, Assistant Professor of Labor Relations at Kansas State University in Manhattan, Kansas. The article was called "The COLA Clause: An Employer Bargaining Weapon?" Deitsch and Dilts pointed out that the COLA clause formulas in use at the time were scandalously bad at protecting the real incomes of workers, but they did seem to have the side effects of reducing work stoppages and weakening union power. Given the inadequacy of the COLA formulas, Deitsch and Dilts asked, "why has organized labor permitted itself to be manuevered and manipulated by management?" They speculated that union negotiators and rank-and-file members did not fully recognize the impact that inflation was having on real wages. In 1978, 47% of major contracts in the U.S. contained COLA provisions. The most generous of the formulas in use at the time, however, would have barely protected the legal minimum wage (one cent per hour wage adjustment for each quarter point increase in the CPI). NAIRU (not just MF's) contends that accelerating inflation results from workers building inflationary expectations into their wage demands. The case of the COLA clause suggests something quite different: inflationary expectations appear to have made workers eager for nominal wage "protection" without being too picky about whether the actual amount of protection was adequate or about what they had to give up in return for that protection. Such a response can be regarded as rational, in as much as workers may feel that they can afford to give up some real wages in return for some protection against a much larger loss. The problem that this poses to accelerating inflation hypotheses is that it suggests workers have at their disposal more than one set of rational responses to inflation, depending on their tolerance for uncertainty. Some of those responses could even be counter-inflationary. This is not to rule out the _possibility_ of an accelerating inflation, only to point out that acceleration can't be _predicted_ from the model. But all this chatter about accelerationist models is beside the point I wanted to make. That point is that the discussion of COLA clauses as a strategic weapon for employers seems to have begun and ended with the one article I mentioned. In the references for their article, Deitsch and Dilts cite no previous discussion of the issue. Neither Deitsch nor Dilts appear to have published subsequent analyses of this issue. And I could find no citations to the _Personnel Journal_ article in the Social Sciences Citation Indexes for subsequent years. The article -- and the argument it contains -- appears to have been an orphan. Is this so? Or is the article simply an outlier to an intense discussion that took place "elsewhere" but never took notice of the brief article in a trade (not an academic) journal? Regards, Tom Walker ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ #408 1035 Pacific St. Vancouver, B.C. V6E 4G7 [EMAIL PROTECTED] (604) 669-3286 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The TimeWork Web: http://www.vcn.bc.ca/timework/
