Labor: A Year of Showdowns

Union demands mil put heavy strain on Administration wage guidelines

Of all the challenges to the Carter Administration's program to stop inflation, the most daunting is next year's tidal wave of labor negotiations. Even before the President announced his program of voluntary wage-price restraints, the 1979 bargaining calendar looked rugged. Next year, contracts covering 3.7 million workers expire, compared with roughly 2 million in 1978. In an era when industry is struggling to hold down costs and union members have seen inflation eating up their wage gains, the stage is set for confrontation. Says John Gentry, labor relations adviser to Alfred Kahn, the nation's top inflation fighter: "Adding the guidelines to that lineup can only make bargaining more difficult."

Crucial, too. For the moment, industry officials are going along with the price guideline, which calls for companies to hold price boosts half a percentage point below the average for 1976-77. But their compliance is not likely to last if unions push wages and benefits up beyond the 7% a year average permitted by the guidelines. Says one Administration official: "Ninety percent of the program will depend on holding down wage increases." Gentry adds: "Companies can agree to abide by the program now and always raise their prices later if things go bad. But a union that takes a three-year contract now under the guidelines would be locked in."

Complicating the Administration's problems are two other factors. One is that, in the words of Audrey Freedman, senior research associate of the nonprofit Conference Board, "the coming year opens a three-year bargaining cycle dominated by fear--on the part of all employees, union and nonunion alike--that inflation will overwhelm wage increases." Thus union members think that they ought to get the biggest raises possible to protect themselves against an inexorable rise in prices. The Administration has sought to counter that fear by ballyhooing a proposal to Congress to grant income-tax rebates to workers whose wages rise slower than prices do. But Congressmen worry that such "real wage insurance" would be inordinately expensive, and union leaders, planning their strategies, have no assurance that it will be in effect as they go to the bargaining table.

Second, the Administration's relations with organized labor are at an abysmal low. Both union and Government insiders sum up the attitudes of President Carter and AFL-CIO Chief George Meany in four blunt words: "They hate each other." Meany bitterly complains that the guidelines press down on wages more than on prices, and calls for mandatory controls on both. In the latest round of hostilities, Carter last week crossed Meany's name off the list of Government-approved directors of the Communications Satellite Corp. (COMSAT), which prompted Meany's heir apparent, AFL-CIO Treasurer Lane Kirkland, to fire off a letter to Carter announcing his resignation from two Government advisory committees.

Still, though most union leaders are publicly backing Meany, they will make what seem the best deals for their members. By the luck of the draw, the first union to negotiate under the guidelines is the Oil, Chemical and Atomic Workers, with more than 60,000 members; their contracts expire Jan. 7. In some ways, Carter could not have chosen a better target had he been able to pick OCAW deliberately. The union's members are well paid; counting shift premiums, they average $9.32 an hour. Moreover, oil refineries are so automated that OCAW could strike and hardly anybody would notice for a while; if there are no breakdowns requiring major repair, refineries can be run by a few engineers turning dials. In fact, says one oil executive, "during one long strike we were actually able to produce more than we did before the walkout."

The Administration has been leaving nothing to chance. According to union officials, it has counseled the industry's executives to be prepared for a long strike and reportedly threatened to reject their bids for drilling leases on federally owned land if they agree to a settlement that busts the guidelines. Says OCAW President Alvin Grospiron angrily: "This kind of interference helps to promote strikes." An industry official in effect agrees: "The guidelines have complicated the situation because the size of the settlement has become a matter of pride with the union. A strike is now more likely."

Whatever settlement OCAW reaches, with or without a strike, will influence the negotiations for a new master freight agreement to replace the one that expires March 31 for 300,000 members of the Teamsters. That contract will be the real make-or-break test of the guidelines. The Teamsters, unlike OCAW, are traditional pattern setters, and a truck strike could paralyze the whole economy.

Last time around, in 1976, the Teamsters won a 34% wage-and-benefit boost over three years, setting quite a precedent--more than 10% a year. Nobody expects the settlement next year to be quite that high. In the past, trucklines have usually won automatic approval from the Interstate Commerce Commission to raise freight rates enough to cover any wage-and-benefit boost they might grant. Now, the ICC, with Administration support, has served notice that it will not be so generous. The Teamsters also are greatly concerned with maintaining their pension funds. It may help that the Administration has ruled that any increased employer contributions necessary to maintain pensions and some medical benefits at existing levels will not count against the 7% guideline.

A complicating element is the fact that the Teamsters are beleaguered by charges of maladministration of the funds. Though it is not known whether Teamster President Frank Fitzsimmons is tied to any of these allegations, he must negotiate in the knowledge that federal officials are pondering just how zealously to prosecute criminal charges of malfeasance. On the other hand, Fitzsimmons is on record as saying that he will not accept anything less than the contract (nearly 40% over three years) that the coal miners won last winter, a settlement that Administration officials, who have shown little facility for handling labor disputes, forced down mine owners' throats. Moreover, a large militant group within the Teamster leadership is ready to scream at any pact that they might view as a "sweetheart contract."

In these negotiations, and in others through next year (see box), a labor version of the domino theory will be in effect. If the oil workers agree to a moderate contract, the Teamsters may follow, and then other unions. But, says one Administration official, "if OCAW busts the guidelines, then we will lose the [Teamsters'] master freight agreement, and if we lose that we can forget about the whole guidelines program." At this stage, no one can tell which way the dominoes will fall.

This file is automatically generated by a robot program, so viewer discretion is required.