Labor Discipline:

Taking it out of their hides

from the book

Sharing the Pie

by Steve Brouwer

A frightening transformation has taken place over the past three decades. Overall economic productivity increased, so that by 1994 the income per capita in the United States was 53 percent higher than it had been in 1967. Yet the real hourly take-home pay of a worker who earned the median income actually declined by 4 cents. Most American workers have been unable to enjoy the fruits of their labor. And the organizations which represented labor, and once had battled on behalf of workers, are rapidly disappearing.

Once, at the midpoint of the twentieth century, organized labor had stood tall in America and was generally accepted as a legitimate partner-albeit a junior partner- of business and government in determining national goals and social priorities. Labor's status had been recently won, the result of years of hard-fought struggles that culminated in the National Labor Relations Act of 1935, which gave workers the legal right to bargain collectively and go on strike. In the late 1930s massive and militant sit-down strikes in the rubber and auto industries launched a wave of unionization that swept through American industry.

Workers succeeded in winning dignity and a fair share of the economic pie after six decades of being on the losing end of industrialization and economic modernization in the United States. From the end of the Civil War through the 1920s, a host of unions and pro-labor movements-including groups such as the Knights of Labor, the American Railway Union, and the Industrial Workers of the World-were repeatedly crushed by a coalition of businessmen and government officials. For instance, when workers went on strike at Andrew Carnegie's colossal steel plant in Pittsburgh in 1892, the state militia of Pennsylvania, armed with machine guns, was called in to subdue the strikers. The steelworkers' union did not reappear for decades. Much later, even after the National Labor Relations Act was passed, remaining outposts of the anti-labor coalition could still muster brutal means of intimidation. In the Hilo Massacre of 1938 in Hawaii, police shot down fifty supporters of a multiracial union which was organizing sugar and pineapple workers.

When labor ascended to a position of respectability and power, roughly from 1945 to 1975, there was an era of unusual harmony between unions and corporations. Companies expected to earn a regular profit and most working people took home paychecks that rose each year at the rate that the economy expanded. There were still disagreements and strikes, but they were generally settled under the supervision of the National Labor Relations Board, a federal, nonpartisan body appointed by the President and charged with guaranteeing fair bargaining by both labor and business.

This all began to change in the late 1970s, when business decided to mount a relentless drive to diminish the power of organized labor. The defining moment signaling that government would take the side of business came in 1981, immediately after Ronald Reagan took office as President. He fired all the federal air traffic controllers, whose union, PATCO, was staging a nationwide strike to protest that working conditions were too stressful, and thus too dangerous for the traveling public. PATCO was completely destroyed by the President's actions and thousands of new controllers were hired at vastly reduced wages.

U.S. corporations took their cue from the President and began an assault on working Americans. They started campaigns to decertify existing unions and to prevent the certification of new unions. They engaged in countless unfair actions against existing unions with the assurance that the National Labor Relations Board, which had been packed with anti-union members by President Reagan, would not rule against them.

In the early 1980s unionized workers faced a multitude of increasing pressures. The effects of a long economic recession were exacerbated when Reagan imposed severe cuts in federal spending on social programs in 1981 and 1982; then industrial corporations, especially in the northern states, began to lay off huge numbers of workers. Workers were forced into "givebacks"-meaning they gave up gains in pay, benefits, and working conditions that had been won in previous years- by corporations that threatened to close down or move factories to different states or other parts of the world. In 1982 union members had to accept wage cuts or freezes in 44 percent of the contracts negotiated (meaning their wages could not keep up with inflation). This was in stark contrast to the previous two decades, when organized labor had almost never given such concessions.

When the economy fumed upward in 1984, the political climate was distinctly pro-business, and unions were not in a position to fight back. Corporations had invested heavily in an array of anti-labor "consultants." By the l990s, two thirds of all American companies facing unionization had hired anti-union consulting firms; they spent $2 billion per year employing seven thousand lawyers and other advisers to help disorganize their workers. In one out of four U.S. companies, employees were fired for engaging in pro-union activities.

The resubjugation of labor involved establishing a programmatic reversal of the gains made by workers in the mid-twentieth century. Corporations sought to:

* reduce hourly wages

* reduce benefits, such as health insurance coverage, and eliminate cost-of-living adjustments

* reduce or eliminate health and safety regulations in the workplace

* induce older, better-paid workers to accept a two-tiered wage plan, whereby new and younger workers have to accept much lower starting salaries

* institute grueling speedups and overtime schedules

* create more non-union workplaces, since unions are consistently shown to produce higher wages and better benefits for their members.

The Cost to Workers = The Profit to Owners

American corporations did not wage this battle for nothing. Owners of capital realized that they could increase their return, not by investing in higher productivity, but by decreasing the union "premium" on wages. In-depth studies have demonstrated that unionized blue-collar workers enjoy wages 50 percent higher than those of nonunion workers; their total compensation, because they bargain vigorously for health insurance and other benefits, is 68 percent higher. Some observers have argued that this advantage merely reflects the historical gains made by workers in a minority of privileged industries, but this is largely untrue. Even when union workers are compared with others of comparable experience-by region, education, type of industry, occupation, years of employment, marital status, etc.-the union premium is still high, providing 20 percent more compensation than nonunion work. This figure holds true, with only minor variations, for men and women of all races.

Obviously, corporate management can easily calculate the pay and benefit advantages in a particular industry and then determine how to profit by doing away with organized labor. By extracting concessions from blue-collar workers in the early 1980s, corporations restored profitability to more than 7 percent between 1984 and 1986. (It had fallen from 10 percent in 1965 to 6 percent in 1977.) Then, with the implementation of downsizing measures against all employees, that profit rate was pushed up throughout the 1990s; by 1995-96 it was well over 10 percent, matching the all-time highs of the mid-1960s.

Clearly, labor's defeats made things more difficult for the surviving unions, whether they were negotiating contracts for existing members or reaching out to the unorganized. Furthermore, nonunion workers lost a hidden advantage when unions were stamped out. In the past, in areas with substantial union activity, the managers of nonunion firms would frequently offer raises and improved working conditions in order to prevent organization within their plants and offices. Now, as the fortunes of union workers declined, so did the opportunities of the unorganized.

Back to the Jungle

In 1906, Upton Sinclair wrote The Jungle in order to describe the cruel realities of American industrialization, in particular in the meatpacking industry, which treated people as if they were animal carcasses, "speeding them up and grinding them to pieces, and sending for new ones." Ninety years later the United States, after seemingly eliminating that kind of exploitation, had come full circle.

Once again meatpacking companies instituted some of the worst wage cuts and working conditions of any industries. A few giant firms-IBP, Cargill, and Con-Agra- controlled 80 percent of all beef production and a large share of the pork market. In 1983 Con-Agra bought thirteen plants from Armour, one of the old meatpacking giants, and lowered the pay of three thousand workers from $10.69 to about $6 per hour. Average pay in another factory in Iowa in 1981, just before IBP took over, was $30,000 per year. The company cut wages for new workers to $6 per hour in 1982; in 1996 that wage had risen only barely, to $7 per hour, or about $14,500 per year. Throughout the industry, hourly pay fell by 31.4 percent over fifteen years when adjusted for inflation. Meatpacking workers, who used to earn more than the average manufacturing worker, now earn almost $3 an hour less than the average manufacturing employee - whose wage has itself declined significantly over the same time period.

Compounding this bad situation, there were drastic and dangerous speedups on the assembly line. By 1985 one representative factory was running its "beef chain" 84 percent faster than in 1979; consequently there was a parallel 76 percent increase in injuries to workers. Data from another plant show this practice continued into the 1990s. "Chain" speed increased 125 percent from 1969 to 1994, to a pace so grueling that it resulted in a turnover rate in employees of 83 percent per year. Meatpacking had become the most dangerous industry in the United States; in 1996, according to U.S. News e: World Report, 36 percent of all employees were injured. In order to keep up a steady stream of replacement workers, companies in Iowa and Nebraska recruited illegal workers in Mexican villages and brought them north. In 1996 Nebraska state officials estimated that illegal migrant workers represented 25 percent of the meatpacking workforce.

The ability of companies to bring in low-wage labor enhanced their power to exploit the workforce in general. Upton Sinclair described the same phenomenon at the beginning of the century-"the people had come up in hordes," he wrote-when millions of impoverished Americans streamed into the cities from rural areas and southern states. At the end of this century, some Americans feel threatened by immigration from places even farther to the south, but the more potent and real danger to the livelihood of workers in the United States originates elsewhere.

... U.S. corporations have responded to workers' most effective form of protest, the strike, by moving to non-union locations within our own country. Today companies use the additional threat of moving outside the United States and utilizing a web of international production that depends on even more egregious exploitation of wage earners, often under the supervision of repressive foreign governments.

Sharing the Pie