[Exerpt] Studying compensation in the nonprofit sector is difficult. In nonprofit organizations, it is not always clear what the objectives of the organization are and, therefore, perhaps even more difficult to consider how to compensate managers than in the for-profit sector. This paper investigates the determinants of executive compensation of leaders of American labor unions. We use panel data on more than 75,000 organization-years of unions from 2000 to 2007 which allows us to examine within union differences over time. We specifically concentrate on two issues of importance to unions – the level of membership and the wages of union members. Both measures are strongly related to the compensation of the leaders of American labor unions, even after controlling for organization size and individual organization fixed-effects. That is, within the same union, higher levels of membership size and average member wage over time are associated with higher levels of pay for union leaders. Additionally, the elasticity of pay with respect to membership for unions is very similar to the elasticity of pay with respect to employees in for-profit firms over the same period.
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