U.S.A.

All is not quiet on the home front

Ian Urquhart March 3 1980
U.S.A.

All is not quiet on the home front

Ian Urquhart March 3 1980

All is not quiet on the home front

U.S.A.

Ian Urquhart

With all eyes on Iran and Afghanistan, one startling bit of information has almost escaped notice in the U.S. press: the average American worker suffered a five-per-cent cut in real wages last year. But even if they are not being told, they can feel the erosion of their buying power at the supermarket and the gas pump, and those

with the clout to do so were fighting back last week.

The Oilworkers union, representing

55.000 refinery employees, exercised an option to reopen their contract at the beginning of this year and demanded much more than the five-per-cent raise they were due. To back up their demands, they went out on strike on Jan. 8, and last week they were still out. And while a Chicago firemen’s strike was tentatively settled at the week’s end, the union’s leader remained in jail for contempt of court—living proof of the bitterness of the fight.

Such stoppages could set the pattern for the estimated 3.7 million other unionized workers whose contracts expire this year, including 700,000 telephone workers, 280,000 steelworkers,

114.000 aerospace workers, 50,000 longshoremen and New York City’s 288,000 public servants. The Steelworkers have a no-strike clause with their employers which they are expected to honor. But the others may well strike to back

demands for double-digit wage hikes which will keep them close to the inflation rate. That includes New York City’s employees who, as public servants, do not have the legal right to strike. “In the last two negotiations,” says John Lawe, president of the city’s transit workers’ union, “our people got taken to the cleaners. That’s not going to happen again.”

President Jimmy Carter, who has blamed the high inflation rate in the

U.S. on OPEC, has expressed concern that union efforts to catch up will only worsen the situation. To dampen wage demands, he has resorted to “jawboning” unions down to a voluntary guideline (Carter’s detractors call it “wishboning”). Last year, the guidelineseven per cent—was flouted by the Teamsters, Rubberworkers and Autoworkers, all of whom settled for much more with little protest from the administration. This year, Carter is still pondering a flexible 7.5to 9.5-per-cent range for wage increases recommended by an advising committee made up of union and management representatives. The idea has the official backing of the AFL-CIO, whose support Carter wants in the election. But the president’s in-house advisers fear no one would settle for increases at the bottom of the range and that the top would become a floor rather than a ceiling.

Their worry is probably well founded. Many unions have already served notice that they will ignore whatever guideline is chosen. Vows George Poulin, vicepresident of the aerospace workers’ union: “We will negotiate whatever the hell the traffic will bear without regard to the guidelines.” These, he says, are “too damn one-sided” because they are more easily applied to wages than to prices.

■ Faced with such resistance to voluntary restraint, the Carter administration is relying on the Federal Reserve Board—in effect, the central bank—to control inflation. The board, under the chairmanship of Paul Volcker, has been resolutely raising interest rates and squeezing the money supply. But high inflation rates have persisted, prices rose at an annual rate of 18.2 per cent in January, and there are growing demands that something more be done.

Senator Edward Kennedy, Carter’s chief Democratic opponent, has advocated wage-price controls. While this measure has been flatly rejected by most economists, congressional leaders and businessmen, it is backed by a majority of the public (a Gallup poll in early February showed 58 per cent favored controls while just 34 per cent opposed them). Unlike the situation in Canada, where the unions bitterly opposed controls when they were introduced in 1975, Kennedy’s proposal has labor’s support.

To date, Carter has ruled out controls as a “campaign gimmick.” But his resistance may soon break down, especially if the alternative appears to be to throw the country into a deep recession. That is something no president wants to do in an election year.