Steel Strike Lessons

July 16, 1956

Once more an industrywide union has demonstrated that it can halt a great industry and cripple the nation’s economic life unless its demands are met. Once more union leaders have shown that they will not hesitate to abuse this enormous private economic power.

Was the position of the steelworkers so intolerable that their leaders had no choice? On the contrary, the steelworkers were receiving the highest pay they ever received in history. Speaking for the steel industry, Adm. Ben Moreell pointed out that the steelworker’s wages alone averaged more than $5,200 a year, and that his average hourly earnings were already 52 cents above those in all manufacturing industries.

On top of this, the steel industry offered its workers wage increases and other benefits which, it estimates, would have increased the companies’ employment costs by an average of more than 17 cents an hour in the first year and by a total of 65 cents an hour in the fifth year. According to Admiral Moreell, “the total offer was the largest single package ever advanced by the companies in the history of the steel industry.”

This offer was not only turned down cold by David J. McDonald, the $40,000-a-year president of the industrywide steel union, but treated with derision and contempt. It was “picayune.” “The titans of industry have labored,” as he so elegantly put it, “and brought forth a louse.”

EXCESSIVE POWER

Upon what meat do such union leaders feed that they have grown so arrogant and powerful? Up to the moment of writing, the Eisenhower Administration has kept “hands off” the present dispute. That is to say, it has neither threatened to seize the steel companies unless they capitulate, in emulation of Truman, nor has it sought an 80-day no-strike injunction under the Taft-Hartley Act. Yet the union leaders’ power has been in large part brought about by Federal interference under the routine operation of the Wagner-Taft-Hartley Act.

That act forces the employer to “bargain in good faith” with the representatives of a specified union no matter how unreasonable their demands. It is this law that has built up industrywide unions. Through interpretations by the National Labor Relations Board and by the courts, it even permits the strikers to use physical intimidation to prevent others from working. As the president of the steel union’s Local 1843 candidly put it: “The picket lines [around Jones & Laughlin] are being established to prevent anyone from going into the plant.” It has been years, in fact, since the steel companies have dared make any attempt to operate in the face of a strike.

STRIKES VS. WAGES

Labor law is now what it is because of the deep-seated popular fallacy that strikes and other coercive actions by nationwide unions can raise the general level of real wages. But a successful strike by the steelworkers will further raise the price to consumers of all products made with steel. It will thus reduce the real buying power of the wages of all other workers. Further gains by the unions already most powerful and best paid can only be at the expense of the great body of workers that are paid less. A higher price for steel may cause unemployment among steel and other workers. If an attempt is made by Federal officials to counter this by further expansion of money and credit, the result will be another round of inflation. The money-wage gains will be wiped out by further rotting of the dollar.

And what of the steelworkers themselves? Suppose they do gain a further increase, but only after a prolonged strike? The Westinghouse Electric strike, which lasted 156 days and was settled in March, may serve as an illustration. At the end the workers got increases ranging from 5 to 17 cents an hour. But The Wall Street Journal calculated at the time that even if the benefits claimed add up to as much as 20 cents an hour increase, it will take Westinghouse workers 250 full-time weeks, or nearly five years, to earn back the $100 million they lost in wages. They will be then just where they would have been if there had been no increase at all and no strike.