Demand for low-wage workers playing havoc with unions
Boston — The law of demand and supply is tough. It is shaking up organized labor in the United States in a way not seen for decades, perhaps since the Great Depression.
Those hardest hit are the nation's worker elite, those paid far above the average. Nonunion labor or lower-paid workers, in this country or abroad, are competing directly or indirectly for the jobs of those union people in the auto, steel, coal, and construction industries. The relatively low-wage workers are winning the competition, sometimes with the encouragement of management.
Look at the situation in each of these industries:
Open-shop contractors have been winning a rapidly larger share of the construction market over the past two decades. Associated Builders & Contractors Inc., representing some 16,000 so-called "merit shop" construction firms, reckons that more than 60 percent of the construction business today is done by open-shop firms (which will sometimes hire union subcontractors). The proportion of construction done by open-shop contractors in 1968-69 was only an estimated 20 percent.
Only in some major cities, such as Chicago, New York, or Philadelphia, do the building trade unions maintain their solid grip on major construction activities. Even there, the open-shop firms are starting to nibble at the edges , helped by lower wages or more efficient use of labor because of the lack of union restrictions.
As a result of such wage pressures -- the fact that many workers will accept good wages if not able to get the even higher wages demanded by some trade unions --building trade unionists have been forced to accept more moderate wage inreases in the last five years or so. A spokesman for Associated Builders & Contractors (ABC), Richard Haas, said: "They had to show some restraint or they were going to price themselves completely out of the market."
The average union construction tradesman now gets about $15.40 an hour in wages and benefits.
Now ABC is pressing a campaign in Congress to repeal the Davis-Bacon Act, which requires, in effect, union wages on government-supported construction projects. The organization's lobbying tactics have changed. Instead of arguing that the restrictions should be lifted for the sake of free enterprise, it now uses a budget-saving angle. Repeal, ABC maintains, would save the federal government some $5 billion over the next four years in construction costs. Davis-Bacon increases costs some 10 to 20 percent for each building project, ABC estimates.
The negotiations between the United Mine Workers (UMW) and the Bituminous Coal Operators Association have deadlocked essentially over the question of the growing invasion of nonunion workers into the coal industry.Eastern UMW members currently on strike ordinarily mine about 44 percent of the nation's coal, down from 70 percent in 1970. Most of the remaining coal is mined by nonunion workers.
The companies are demanding a contract change that would permit the use of non-UMW subcontract workers in mine-related jobs, such as construction, maintenance, and truck transportation at unionized pits. This was forbidden under the union contract that expired two months ago.
Whatever happens in the negotiations, it seems likely that the nonunion trend in the coal business will continue.
In this industry, it is relatively cheap foreign labor in Japan that is costing American workers their jobs. Japanese auto workers, though highly paid by Japanese standards, are getting about half the approximately $20 an hour in wages and benefits earned by their American counterparts. The difference is so great that despite transportation costs, Japanese manufacturers can match or better the prices for American cars.
Auto worker wages in the US are about 60 percent higher than the average industrial wage now. They used to be 20 percent above in the mid-'60s.
The new competition from the lower-paid Japanese has for the first time in years put strong pressure on American auto wages. Chrysler has already negotiated a wage freeze. General Motors and Ford would like the same.
However, with the administration's negotiation of socalled "voluntary" limits on Japanese auto imports, the United Automobile Workers may feel freer to ignore the GM and Ford desire for wage restraint.
Again the government came to the rescue of an elitewage industry with restraints on imports, from relatively low-wage Japan. Of course, other factors than wages are relevant to the competitive picture in the steel or auto industries. But wages are perhaps dominant.
Sam I. Nakagama, an economist with Kidder, Peabody & Co., a Wall Street brokerage house, comments: ". . . the United STates appears to be misplaying a golden opportunity to engineer a major shift toward more realistic wage determination in industries that have been pricing themselves out of both domestic and overseas markets."
Elsewhere, nonunion airlines paying their pilots and other personnel less than the extraordinarily high wages of their union counterparts are taking away business from union airlines. Because of deregulation, some trucking companies are withholding cost-of-living increases under Teamsters' contracts. Some union locals, such as in the rubber industry, have accepted wage cuts rather than lose jobs.
The laws of the demand-supply and com petition are at work. The adjustments are rough.