US Labor Loses Its Economic Clout

UNION negotiators are meeting this week to try to end two high-profile labor disputes.

On paper, it looks like a draw for organized labor: a loss at Caterpillar Inc. and a win at Ravenswood Aluminum Company. In reality, the message to labor is far more sobering.

Unions in the United States are finding it nearly impossible to win labor disputes using economic clout alone, labor observers say. When they do win, some other leverage is usually at work.

"If it's just a sheer power struggle ... the union will probably lose more ... than [it] will win," says Charles Craypo, economics professor at Notre Dame University. "There's no question that the total environment today gives employers advantages."

The most graphic evidence comes from last month's sudden turn of events at Caterpillar in Peoria, Ill. After striking for five months, the United Automobile Workers Union (UAW) sent its 12,600 members back to work unconditionally.

The union is now meeting with company officials and federal mediators to try to work out a new labor agreement.

That the UAW, one of the nation's most powerful unions, should back down in one of its core industries took many labor observers by surprise. The union claims it has simply recessed the strike. But labor observers suggest that the union capitulated because the company was on the verge of hiring permanent replacement workers.

The company was flooded with calls when it began advertising for permanent replacements April 6. When it began testing them April 13, union workers crossed the picket line to go back to work.

"There's mounting concern and mounting pressure to have that permanent-replacement issue taken away as a cloud over labor negotiations," says Karl Mantyla, a UAW spokesman.

Labor unions have fought for several years to get Congress to pass legislation that would ban companies from using replacement workers during a strike. How can the laws of the US give workers the right to strike but negate that right by allowing companies to replace striking workers? labor leaders ask.

Bargaining power is so skewed in companies' favor that labor unions deserve some kind of protection, says Audrey Freedman, formerly of the pro-business Conference Board and now president of Manpower Plus, a human-resource strategy firm in New York.

But the issue is larger than that. Unions lost their economic clout when US companies lost their primacy in the world market, she says. "Competition has taken away the profits and forced management to pare down its costs."

When labor does win a strike where replacement workers are used, it usually has some unusual noneconomic leverage.

In the case of the Ravenswood Aluminum Company, for example, the union was stymied for 17 months. Although only 17 of its 1,700 members had crossed the picket line and returned to work, the Ravenswood, W.Va., company continued operating with management personnel and temporary replacements. Soon thereafter, Ravenswood chairman Emmett Boyle brought in permanent replacement workers.

The union's ace in the hole was Ravenswood's links to Marc Rich, a fugitive of US justice now living in Switzerland. By publicizing those links and getting the US Congress to hold hearings, the union brought pressure to bear on the company.

Finally last month, Mr. Boyle resigned. (Union officials suggest he was ousted by the company's board of directors.)

The net result is that labor and company negotiators are now meeting in Pittsburgh to end the long and bitter dispute. Labor won, not because of its economic clout, but because it managed to embarrass the company.

These attempts to embarrass - or even destroy - the company have emerged as labor's position has weakened, says Ben Fischer, a labor economist at Carnegie Mellon University. "When they get scared, they fight back.... That's what I hear from unions: 'We are under attack. We are fighting for our very lives.' "

Mr. Mantyla of the UAW has noticed rising support among US religious leaders for a ban on replacement workers. Labor observers doubt, however, that unions have enough clout to get a ban enacted in Congress.

"The public still seems to accept the argument that lower labor costs are critical to American competitiveness," Professor Craypo says. In the current environment that means competing with low-wage manufacturers in Asia rather than high-wage manufacturers in Europe.

"Until that [attitude] changes, I don't think we'll see a lot of sympathy for things that strengthen labor's hand," he adds.