The Long-Haul Effects of Interest Arbitration: The Case of New York State’s Taylor Law

Abstract

The authors examine debates about the effects of mandatory interest arbitration on police and firefighters in New York State under the Taylor Law from 1974 to 2007. Comparing experience with interest arbitration in the first three years after the law was adopted with experiences from 1995 to 2007, the authors find that no strikes occurred under arbitration and that rates of dependence on arbitration declined considerably. Moreover, the effectiveness of mediation prior to and during arbitration remained high, the tripartite arbitration structure continued to foster discussion of options for resolution among arbitration panel members, and wage increases awarded under arbitration matched those negotiated voluntarily by the parties. Econometric estimates of the effects of interest arbitration on wage changes in a national sample suggest wage increases differed little in states with arbitration from those without it. The authors therefore propose a role for interest arbitration in national labor policy.