To the extent that union-employer bargaining is efficient, price-cost margins in oligopolistic industries are predicted to depend on wage rents and on the elasticity of substitution between wages and employment in union preferences. Unanticipated wage inflation will also affect margins. Cross-section and time-series analysis of price-cost margins in UK manufacturing industries finds that margins tend to be eroded by the level of wage rents and are invariant to the rate of wage inflation.