What Happened in Steel

The expectation of a quick and noninflationary peace in the nation's basic industry abruptly dimmed last week in Pittsburgh. Instead of a new labor contract by March 1, as industry leaders had predicted, the Steelworkers' Union and the eleven top U.S. steel companies laconically recessed their formal negotiations until May 1. Said Steelworkers President David McDonald: "We have not been able to reach any understandings on either economic or noneconomic issues."

McDonald wanted a token wage hike plus a many-fringed package to soften layoffs and spread the work: bigger unemployment benefits, longer vacations, higher pensions, and 13-week sabbaticals for 20-year veterans. Management estimated that this would add up to 14-c- or 15-c- an hour, or a boost in labor costs of at least 3.5%--somewhat more than the 3.1% annual rise in U.S. industrial productivity. The steel companies countered with a 5-c- to 7-c- proposal, or about 1.5%P:somewhat less than the steel industry's annual productivity gain of about 2%.

Clearly, the gap between the two sides was narrower than the one that led to 1959's bitter, 116-day strike. Then why the recess after only three weeks' bargaining? Sighed one top Administration economist: "Both sides wanted to assert their independence and get out from under Government pressure." Both steel labor and management apparently felt that the Administration's energetic tactics had saddled them, in the public eye, with the obligation to hammer out a noninflationary deal or take the consequences.

Having declared their independence, both sides curiously enough expected more Government intervention, and in a way hoped for it. Heretofore, President Kennedy and Labor Secretary Goldberg have spoken only in generalities of the national need for statesmanship in steel. If they now become more specific, and particularly if they endorse what McDonald wants, management could give it to him and then blame the Kennedy Administration for any subsequent price rises in steel. In the meantime, the entire U.S. economy was threatened with the dislocation sure to follow hurry-up buying of steel as a hedge against a possible strike.

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