Strike Shock Waves

THE ECONOMY

Either transit fares or real estate taxes seem sure to go up in San Francisco because of the costly settlement that ended New York City's twelve-day transit strike. Transit wages in the Golden Gate city are tied by contract formula to those in New York, highest in the nation. As a result, San Francisco's transit wage bill could rise by $572,000 a year next July 1 and by another $1,600,000 a year in 1967. Meeting that cost would require a 100 rise in realty taxes, from today's rate of $10.17 per $100 of valuation--or else an end to San Francisco's 15-c- fare.

Because the strike half-paralyzed

New York City, the largest metropolitan area in the U.S. and headquarters for more of the world's commerce than any other business center, its ripples quickly spread across the nation, affecting thousands of businessmen and, potentially, millions of their customers. Banks and securities dealers from Chicago to Dallas ran into snags that curtailed check clearing and stock trading. Some ocean shipments were diverted to other ports. Traffic dropped as much as 15% on railroads along the Boston-Washington axis.

Home in Frustration. Retailers everywhere in the U.S. still face the probability of late deliveries--perhaps even sales-losing shortages--of Easter finery. Reason: at least 125,000 New York garment workers were unable to reach their cutting tables and sewing machines at the height of the seasonal production rush. Some buyers in town for spring-fashion showings went home in frustration; others turned to the growing garment centers in Dallas and Los Angeles. Eastern buyers, many there for the first time, helped swell the attendance by 33% at California Market Week in Los Angeles. In Denver, one store canceled newspaper ads because promised shipments of dresses failed to arrive.

Inside New York, estimates of strike-caused loss ranged from $500 million (Mayor Lindsay) to $800 million (the Commerce & Industry Association). The association figured that wage earners lost $187.5 million in pay for 75 million unworked man-hours--a blow that fell most heavily on the poor. Said Executive Vice President Ralph C. Gross: "The city's economy was struck harder than at any time since the Depression."

Retailers suffered a $320 million loss in sales. Only 35% of the sales force showed up in most department stores --but that didn't matter, since customers stayed away in vastly greater numbers. Department-store sales during the first week of the strike fell 41% behind the level of the same week in 1965; but a mere ten miles away, in strike-free Newark, sales gained 14%. In New York City, some small shops were hit hardest of all. Most furniture and liquor stores did only half their normal business; jewelers and camera and hardware stores reported sales declines of as much as 80%. To recover, many Manhattan stores scheduled post-strike sales. "Most businesses," predicted Macy's president, David L. Yunich, "won't be able to recoup their losses."

Perhaps a Lesson. Disastrous as the strike itself was, its lingering effects on a city already burdened with urban problems worried businessmen even more. "A lot of business was taken out of the city," said Neil H. Anderson, executive vice president of the Board of Trade, "and is gone for good." Coming after 1964's Harlem riots, belated recognition that the city's welfare costs have tripled in three years, the water shortage and the power blackout, the strike prodded conventioneers to switch elsewhere, caused executives to reconsider Manhattan as a corporate base. Fantus Co., one of the nation's largest plant-location consultants, reported that eight clients--all big employers of office help--were hastening plans to leave the city. Said Fantus Vice President L. Clinton Hoch: "It was the last straw--on top of heavy taxes, the inadequate supply of the right kind of labor, high occupancy costs, and congestion."

On the other hand, this scare could jolt enough New York businessmen into the realization that they must face these problems, and work intensively and collectively for their solution.

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