The Perils of Prosperity

U.S. labor is in a restless mood, and that mood was made obvious last week to millions of Americans.

Pilots struck Pan American World Airways, grounding planes all over its worldwide system, and clerks went on strike against two big Manhattan department stores. Strikes were called against a construction firm at Cape Kennedy, towboat owners in Pittsburgh, and three machine-tool plants in Detroit. New York was threatened by another newspaper strike, and the Transport Workers Union threatened to strike the Philadelphia subway system if it continued to use dogs to patrol the subways instead of hiring more guards.

Unions are making stiff demands in the rubber, aerospace, aluminum, shipping and textile industries, all of which must renew labor contracts in coming months. And in Pittsburgh, steel negotiators angrily rejected a United Steelworkers proposal that would cost the industry an extra $1 an hour per man--thus further raising fears of a strike that could damage the unprecedented 50-month advance of the economy.

More Overtime. The healthy U.S. economy is itself responsible for much of the ferment. Employment is at a record 70 million, and the Labor Department reported last week that unemployment in March fell to 4.7%, the lowest in seven years. Union members have worked full time and even overtime for the past three years; most have money in the bank, many are weary, and some would actually welcome a strike-imposed vacation.

Longer hours than usual have made workers in certain industries more conscious and critical of working conditions. Continuous reports of record corporate earnings have whetted their appetites for a larger share of the profits. Higher capital spending has brought a proliferation of modern factories and equipment, which in turn has increased labor's fear of automation and caused demands for greater job security. These factors played an important role in I. W. Abel's apparent victory over David McDonald for the Steelworkers' presidency.

To appease the discontent--and to keep their own jobs--many labor leaders have been forced to abandon responsible restraint at the bargaining table. "It used to be considered a compliment to be called a labor statesman," says Charles Levey, a vice president of the Building Service Employees International. "But if they call you that now, it means you're finished."

Poor Prospects. Labor's new militancy about working conditions and its steep economic demands do not necessarily portend a big increase in major strikes, which have actually been declining in recent years. Automation and the successful elimination of much union featherbedding have so reduced costs that some industries have already been able to grant substantial wage increases without damaging their profits. Record sales and earnings have also put many companies in a more generous mood than usual.

In the crucial steel negotiations, however, generosity has its limits. The Steelworkers, whose contract expires May 1, are asking a minimum 4% increase in wages and fringe benefits. That is below the 4.8% that Walter Reuther won from the auto industry last fall, but well above the Johnson Administration's 3.2% wage guideline. Equally adamant, the steel industry insists that any increase beyond 2%--the average increase in productivity between 1957 and 1963--would force a general rise in steel prices. The union, preferring to look at the increase between 1959 and 1964, cites a productivity gain of 4%. The prospects: either a strike or a wage hike that would result in an inflationary steel price rise, neither of which would be healthy for the economy.

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