Risk Compensation for Hospital Workers: Evidence from Relative Wages of Janitors

This study, using individual worker data on janitors taken from the 1985–2001 Current Population Survey and industry injury data from the Bureau of Labor Statistics, examines whether compensation for working in a high-risk work environment contributes to the relatively high wage rates of hospital janitors. The authors find that when the analysis corrects for risk endogeneity (workers' tendency to sort themselves according to their tolerance for workplace risk), risk compensation increases wage rates by 13.4% for union hospital janitors and is a major source of their wage advantage over nonunion janitors in other industries. Since this risk compensation is only available to union workers, the authors interpret this result as the effect of the union voice mechanism.