The Year of Peace

AFTER AFL-CIO Boss George Meany and three other union leaders stormed off the Pay Board in March rumbling that Phase II rules are stacked against workers, it seemed that the U.S. might be in for a new period of labor turmoil. The exact opposite has happened; 1972 so far shapes up as the year that the nation's strike fever was broken. In May, work stoppages reached a 30-year low for the month. During the first six months, production time lost to strikes was only five seconds out of each potential man-hour of work, or little more than half the rate a year ago. In only four full years since World War II has the strike pace been slower.

Administration officials believe that the absence of costly, wasteful strikes is a key reason for the nation's surge of economic growth. In one sense, 1972 was almost bound to be a quieter labor year than 1970 or 1971. The number of workers whose contracts come up for renewal this year is only about 3,000,000 v. about 5,000,000 or more in each of the past two years. But employers, some local union officials and mediators agree that a new and less militant psychology is also at work in labor bargaining.

Says Washingtonian Guy Farmer, a frequent adviser to management negotiators: "We simply have a more peaceful labor scene." The standout reason is that paychecks are finally keeping ahead of inflation. In the years just before 1972, ever-fatter wage settlements negotiated by unions were all but canceled by increases in the cost of living, keeping the actual buying power of U.S. workers just about level and breeding bitter discontent in the factory. By contrast, real earnings have inched ahead about 3.2% in the past four quarters (see story, page 53). In effect, a drop in the inflation rate has made the smaller increases that labor can achieve without strikes in 1972 worth more than the bigger gains won by striking in prior years. Government intervention has also helped mightily to cool tempers. Federal efforts began in April 1971, with formation of the Construction Industry Stabilization Committee, which was charged with bringing some order into the building industry's then-chaotic labor relations. Its existence has given local leaders an excuse to justify moderate demands to militant members. In addition, the committee chairman, Harvard Economist John Dunlop, has demonstrated considerable skill in negotiating with both sides. In 1970, work stoppages preceded the signing of 30% of all new construction contracts; in the first half of 1972 the rate fell to 9%. Moreover, construction wage increases have dropped off from a horrendously inflationary 15.3% to 5.7%. A few unions have settled for even less. Plumbers in Washtenaw County, Mich., recently signed a contract providing no increase whatever in their already-high $10.17 hourly rate.

Although the Pay Board has no power actually to stop strikes, its 5.5% annual guideline for pay hikes also has served as a powerful deterrent. The board can order cutbacks in labor contracts that exceed the limit, so union leaders now realize that gains won in the heat and sweat of the picket line may not survive scrutiny in Washington. A strike in defiance of a Pay Board ruling might seem to the public to be an intolerable attempt to wreck national anti-inflation policy. Says a Government economist: "It just does not make much sense any more to strike for something that the Pay Board will not give." Not one of the relatively few unions whose contracts have been trimmed by the board has yet struck against the ruling; indeed many union members seem happy with Nixon and the new economic program.

Next year is sure to provide a much tougher test of the new peaceful climate. Contracts will expire not only for the 900,000 United Auto Workers, who closed down GM for 67 days in 1970, but also for other powerful and highly visible unions, including those representing rubber workers, electrical employees and teamsters. Whether or not wage-price controls remain in effect, some mitigating factors should work to cool strike fever. For one thing, in the last round of bargaining such big unions as the UAW and the United Steelworkers won pay increases that automatically escalate at least part way along with the cost of living. Thus the unions will not be able to claim that they need huge new raises to catch up with inflation.

On the other hand, with the economy picking up, employers have lately been able to raise worker productivity substantially--an improvement that in the past has triggered higher wage demands. More important, unionists are already hungrily eying the record profits being reported by many companies. UAW President Leonard Woodcock last week began setting the tone for his negotiations with automakers, still a year off, by stating: "Out of their huge profits, they can certainly afford whatever we put before them in negotiations."

Another sign that the new labor peace might be tenuous is union insistence on shorter contracts. Unions that used to bargain for three-year contracts now refuse to go beyond two years, and many construction unions want new contracts yearly. Some recent pacts contain an even-shorter-term escape hatch. They provide that management must reopen negotiations within 24 hours of the lifting of wage-price controls.

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