Consider Table 632 in the 2008 U.S. Statistical Abstract.
(a) Calculate the union wage effect. Calculate the union effect on total benefits.
Calculate the union effect on total compensation.
(b) Note that for nonunion workers, retirement and savings increase total compensation by 75 cents per hour, with 60 percent of this expense coming in defined contribution retirement plans. In contrast, retirement and savings add $2.57 to the hourly compensation of union workers, and over three-fourths of this comes in the form of defined benefit pension plans, not defined contribution. What is the difference between defined benefit and defined contribution plans? Why might a union prefer (and be able to negotiate) more compensation in defined benefit plans than defined contribution plans?