The cyclical conditions prevailing in an industry may also influence the percentage of workers with escalator clauses. We hypothesize that workers place a relatively greater premium on wage indexation when the labor market is strong.
Part-time employees, by virtue of their shorter job horizon, are likely to place a lower value on escalator clauses than do full-time employees.
The percentage of union workers with escalator clauses also depends on regulatory and economic conditions in the industry.
A second major concern for the union is the possibility of unanticipated inflation, which would erode real wages under a long-term labor contract in the absence of a cost of living escalator clause and, again, cast an unfavorable light on the union leadership.
The presence of an escalator clause in the contract at least partially insulates the union from losses in real wages due to inflation and should, therefore, make the union more willing to consent to a contract of greater duration.
Boeing, they said, had benefited from price escalator clauses
in its sales agreements that boosted 2000 operating revenues in a way that was not likely to be repeated in 2001