Reagan keeps hands off -- coal miners get 3-year, 36 percent raise
Can the Reagan administration curb inflation when coal miners sign a contract giving them a 36 percent wage boost in the next three years? Some 160,000 miners who went on a token strike Friday vote on the new contract Tuesday (March 31). They dig almost half the nation's coal in an increasingly energy-hungry world. Observers note one circumstance in the situation that ties directly in to President Reagan's larger effort to control inflation: In the coal wage negotiations "big labor" and "big business" have been left to fight it out alone; so-called "big government" has stood on the sidelines watching the operation.
Other presidents have tried to participate or actually taken part. Richard Nixon went so far as to impose wage and price controls to curb inflation. President Carter left the Reagan administration the legacy of the Council on Wage and Price Stability, formerly headed by economist Alfred E. Kahn.
It is a feature of Reagan economics that he leaves such matters to the free competitive play of the marketplace and vigorously opposes the intervention of government authority. Now comes what looks like the first test of what happens when powerful corporations and unions follow independent bargaining. At a time of double-digit inflation the auto and steel industries have also sent prices and wages up above the normal average during double-digit inflation. Each industry is in severe difficulties. Reagan tax and budget cuts may bring inflation under control it is thought, but many economists see inflation built into corporate-labor agreements unless the government plays a part.
The coal situation has global implications. America's gigantic energy potential from coal is nearly twice that of the proved oil reserves of the entire Middle East, and half as expensive. The coal agreement three years ago took an 111-day strike to achieve; today miners are voting in cinder-block union halls in Monongah, W. Va., and isolated districts of Kentucky and Tennessee whether to accept the 44-page contract worked out by Sam Church, United Mine Workers Union president, and representatives of the Bituminous Coal Operators Association.
The union's pay has risen, but -- with much coal, especially in the West, now being mined by machines whose operators are nonunion -- its membership makes up just 36 percent of workers involved in producing coal.
The Operators Association won its demand that it be allowed to purchase cheaper nonunion coal for resale abroad without paying a royalty to the UMW. This causes angry protests in district ratification debates. At the Monongah, W. V., discussion about half the miners walked out. Mr. Church explains that he dropped royalty payments in exchange for a $100-a-month pension for miners' widows and other benefits.
But the bigger question is whether President Reagan's hands-off policy in wages and prices can work in the drive against inflation. "Yes", say supporters: If Congress votes budget and tax cuts and if the economy is restored , wage-price bargaining without Washington's interference will automatically produce stability.
"No" declare many middle-road economists who say the current coal agreement carries just the dangers they fear.Walter W. Heller and George L. Perry, for example, Writing for the National City Bank of Minneapolis, deplore the situation which they describe as "no restraint on wages and prices, not even an appeal to big labor and big business to ease up on their wage demands and price hikes."
A posthumously published book by the late Arthur Okun discusses attempts by recent presidents to apply an "incomes policy" of restraint on wages-prices either by moral suasion or direct edict. His conclusion is that some form of incomes policy will be necessary to tame inflation in the 1980s. Mr. Okun favored incentives by taxes to persuade corporations and unions to adopt reasonable prices. President Reagan is almost the only re cent president who has rejected federal intervention.