Unions and compensating wage differentials for workplace accident risk: the English and Welsh railway industry, 1902-12

This blog is based on an article which has been published on Early View on The Economic History Review, and it is available at this link: https://onlinelibrary.wiley.com/doi/10.1111/ehr.13066

by Peter Anderson (University of Nottingham Ningbo China)

The theory of compensating differentials asserts that wages will adjust to equalize differences between jobs.  This insight from Adam Smith has generated papers that have found evidence of companies paying workers higher wages or ‘bribes’ to accept on-the-job fatal-accident risk because it is safe to assume that workers universally dislike the risk of being killed at work.

How unions affect wage-premiums for greater accident risk is less certain.  For instance, unions may negatively affect compensating differentials if they implement automatic pay scales or do away with perceived arbitrary differences in pay that actually reflect differences in risk.  Alternatively, unions may provide workers with better information about the risk they face or counteract large employers’ ability to push down wages, both of which should lead to higher compensating differentials.

My paper contributes to this literature by using a newly-constructed balanced panel of 838 railwaymen working in the traffic departments of three prominent Edwardian railway companies: the Great Central, the Great Western, and the London and South Western.  It considers whether the largest railway union of this period, the Amalgamated Society of Railway Servants (ASRS), was able to transform growing union density and institutional change into power that increased wage premiums for on-the-job fatal, and non-fatal accident risk between  1902 and 1912.

Figure 1 shows the membership of the four main Edwardian railway unions as a percentage of non-salaried railwaymen in the United Kingdom between 1900 and1913.[1]  All of the men in the dataset used for this article could join the ASRS, whose potential to influence compensating differentials was influenced by growing membership, and institutional changes in the setting of railwaymen’s wages — a product of the threatened railway strike in 1907 and the strike by railwaymen in August 1911.

The results reported in my paper are an improvement on previous research because I control for railwaymen’s time-invariant determinants of the jobs they chose, fatal-accident risk, non-fatal accident risk, and changes in the Workmen’s Compensation Act.  The results show that the ASRS was able to use growing union density to increase the wage premiums railway companies paid their men to accept on-the-job fatal-accident risk, although their wages did not compensate them for non-fatal accident risk.

Closer inspection of fatal-accident risk showed that it was highest between 1911 and 1912.  These are the years in which union density was at its highest and when railway companies had received a promise from the government that they could increase their rates to cover higher wage costs.   As for railwaymen not receiving compensating differentials for non-fatal accident risk, this is likely due to the lack of precision in measuring this variable.  My paper reports the occupational accident rates from returns published by the Board of Trade which redefined what constituted a non-fatal injury at the end of 1906.  Subsequently, reported non-fatal accidents increased by 33 per cent the following year.  I addressed this definitional change by only including injuries in which a railwayman’s body part was broken or severed, but the total number of such injuries still increased by 13.7 per cent between 1906 and 1907.

My paper provides two additional reasons why the ASRS may have sought to increase the compensating differential paid to railwaymen for fatal-accident risk.  Five railway grades deemed sufficiently dangerous by the Board of Trade accounted for close to 59 per cent of ASRS membership in 1911.  Hence, it is likely that the ASRS pushed for wages to better insure the at-risk grades that comprised a sizeable portion of their membership.  A second possible explanation is that the ASRS changed leadership in 1910.  The former General Secretary, Richard Bell, was a more cautious leader who said that his personal motto was, ‘Slow, Sure, and Determined’,  and he never ‘agitated for agitation’s sake’.  In contrast, the new leader, J.E. Williams, who had lost a leg in a railway accident,  favored nationalization. This change in leadership does not conclusively explain why railwaymen received the highest compensating differentials for fatal-accident risk in 1911 and 1912, but it is plausible that the ASRS sought higher premiums in the years they were led by a man who had suffered a serious injury during his time working as a railwayman.

To contact the author: peter.anderson@nottingham.edu.cn

References:

[1] In 1913, the ASRS, GRWU, and UPSS amalgamated to form the National Union of Railwaymen.