Third Man at the Table

As they got ready to bargain on a new contract, steelmakers and union seemed well aware last week that there will be a third man at the table: the public. Both sides were firing off statements designed to win friends and influence people. United Steelworkers President David McDonald, who had rejected the steelmakers' request that he freeze wages, demanded that the steelmen freeze prices for the life of the new contract, and still give 500,000 steelworkers higher wages and benefits. This would be "justified," McDonald argued, by the industry's heavy profits (see below) and the rising productivity of the workers.

"Economic nonsense," replied the twelve firms representing the steel industry. It would be "completely unlawful" for them to freeze prices, said the firms; nor had they any intention of granting wage boosts, "the primary cause" of inflation. But not all steelmen were so sure that the industry could not freeze prices. Chairman Joseph Block of Inland Steel, one of the twelve companies negotiating, said that if the union held the line on wages, "that would enable us to hold the line on steel prices."

Sharp Movements. The steelmen's negotiating committee also argued that productivity per man-hour in the steel industry went down 7 1/2% from 1956 through last year, while labor costs went up 19%. Next day the Labor Department issued the latest productivity figures, and they seemed to back management's claim. Productivity in steel had indeed declined in 1957 and 1958, said the report. But both management and labor were quick to agree that the new figures would have no bearing on negotiations. Reason: they could be misleading.

Productivity in steel, explained Commissioner of Labor Statistics Ewan Clague, traditionally varies more widely with the business cycle than in other industries. Steel productivity dips sharply with a business slump, because production drops faster than layoffs. Productivity comes back quickly when business recovers, because production rises faster than new employment. As steel production has rebounded from last year's recession low, said Clague, productivity has climbed steeply.

Behind the Scenes. Though both labor and management experts predicted a strike, Government officials feel just the opposite. They think that a walkout will be averted --or be no more than a token stoppage--because the public is watching the bargaining so closely. President Eisenhower is reportedly pleased with the prenegotiation squabbling, because it shows that labor and management know they are on the spot, will think twice before assuming public responsibility for an inflationary steel price rise.

Industry knows that it would have a hard job making a price rise stick this year, therefore has stiffened its back to any wage hike that would force one. Washington gossiped that Dave McDonald has already been told privately just what he can get at the bargaining table: a package wage hike in the area of 8-c--10-c- an hour. Some steel officials, though they insist publicly they would have to pass any wage boosts along in prices, privately admit that they could give the union a modest package without a price hike.

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