Big Labor's Pains

April 17, 1992

Labor relations in the United States have now gotten down to the gut issue of a union's right to strike versus a management's right to hire permanent replacement workers. Both of these mighty weapons are enshrined in law; both are cherished by the respective combatants; both are an unproductive part of a free economy's give and take.

What brought the issue to a head was a bitter five-month confrontation between Caterpillar Inc., the No. 2 U.S. exporter, and the United Automobile Workers, the most powerful of AFL-CIO components. At this juncture, the Cat has to be ruled the winner. The UAW is hardly a mouse but, faced with a threat that the company would begin to hire new workers, it suddenly agreed that its members would go back to work under terms of Caterpillar's "final offer." Contract negotiations continue.

The right to strike has long been a central element of the labor scene. Although the Supreme Court ruled way back in 1938 that management can hire permanent replacements, employers did not really use this leverage until President Reagan in 1981 fired striking air traffic controllers and turned their jobs over to newcomers. Ramifications in the private sector were to prove immense.

Phelps Dodge in 1983 crushed a Steelworkers' union local in Arizona by hiring replacements. Greyhound, Continental Airlines, the Chicago Tribune Co., Hormel, International Paper, Eastern Airlines, the New York Daily News and Holsum Bread later used the same tactics with varying success.

The Caterpillar-UAW confrontation goes a step farther, putting "pattern bargaining" on the line. The UAW has made a practice of getting a good contract from one company and then imposing this contract on rival firms in the same industry. It got such a contract from Deere & Co. last year, then struck Caterpillar for similar terms.

Coming in a recession, UAW's timing was self-destructive. To thousands of the unemployed, Caterpillar jobs, averaging $17.85 an hour, looked wonderful. The company was inundated by job applicants when it said it would start hiring replacements this week. At that point, the UAW blinked, thus compromising its ability to impose pattern bargaining in big auto negotiations next year.

The rank and file are dismayed, angry at both the corporate and union leadership. Organized labor is putting pressure on Congress to outlaw the hiring of permanent replacement workers. But the House has failed to muster a veto-proof majority and the issue is even less promising in the Senate. Big Labor's pains continue: Declining membership, diminishing political clout, repeated failures.

But Cat's leaders should not exult, nor should the nation's business community. Unhappy employees vowing to work to rule won't lead to corporate success. Both management and labor have to develop new attitudes and relationships if the U.S. economy is to achieve its real potential.

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