t has been a big month for big labor, judging from
the bargaining results at some of the nation's best-known
companies.
Bridgestone/Firestone, the embattled tire maker,
averted a strike earlier this week by granting its 8,000 workers
raises that will run from 15 percent to 30 percent over three
years — raises that are far above the inflation rate.
At United Airlines, the 10,500 pilots have won an
immediate raise of 21.5 percent or more to make up for lagging
wages, and that does not include annual wage raises, totaling 16
percent over four years.
And when 86,000 telephone workers ended their recent two-week
strike at Verizon, the new name of Bell Atlantic, they
boasted that their contract calls for a 4 percent raise each
year for three years, along with stock options and profit
sharing expected to be worth at least 1.5 percent more a
year.
Those workers also made major strides on noneconomic issues —
their contract addresses some of the job stress gnawing at
workers in the new economy by, for example, restricting
mandatory overtime.
"These are definitely lucrative contracts," said Richard
Hurd, a Cornell University professor of labor and industrial
relations. "They are the result of the good economy and of
unions becoming more sophisticated in their negotiations over
the past 20 years."
While it remains unclear whether these settlements will set a
pattern for other contracts, what is clear is that labor unions
are doing much better at the bargaining table than just a few
years ago, when much of corporate America was demanding — and
winning — major concessions on wages and benefits. And these
newly bargained contracts, along with others negotiated over the
last year at auto, steel and aircraft companies, show that in
many unionized industries wages are beginning to soar after
years of relative stability.
To be sure, in many contracts in which unions obtain major
wage increases, they compensate by agreeing to concessions on
fringe benefits. But in the latest contracts, there were large
increases, not decreases, in benefits as well. In the Firestone
contract negotiated by the United Steelworkers of America,
pensions are to increase 22 percent to 50 percent.
Union leaders assert that these contracts will serve as a
pattern for other unionized workers — a notion that worries many
economists and corporate executives, who fear that soaring wages
will spur inflation and cut profits.
"We're going to be seeing other impressive union contracts,"
said Richard Bank, director of the A.F.L.- C.I.O.'s center for
collective bargaining. "Union settlements are running higher
than they were several years ago."
But some academics and business leaders said the impressive
gains at Firestone, United and Verizon would not be widely
imitated because they resulted from one-of-a-kind situations
that forced management to be more generous than it otherwise
would have been.
United was in a poor position to withstand a strike because
many customers were already seething over its many flight
cancellations and delays in recent months. For Firestone, it was
hard to imagine a worse time to weather a strike because the
company faces a serious crisis over defective tires and needs to
replace millions of recalled tires as soon as possible.
Several labor experts said that because unions now represent
less than 10 percent of all workers in the private sector, it
will be hard for workers throughout the economy to clinch the
large gains made at Firestone, Verizon and United.
"In the broader work force, the level of insecurity and
uncertainty that was happening in the economy remains
substantially high, so you will not see an explosion of wage
increases as a result of these contracts," said Paul Osterman, a
professor of management at the Massachusetts Institute of
Technology.
But these contracts are already having undeniable effects.
Pilots at American Airlines are suddenly looking less
kindly at their own tentative agreement and several of them say
they are more likely to vote it down now that they have seen how
much better United's pilots did than they. And Delta Air
Lines pilots, emboldened by the United contract, plan to
begin demonstrating this week because they are unhappy about
long-stalled efforts to negotiate a new contract.
Union leaders representing 18,000 workers at Goodyear
and 4,000 at Uniroyal said they hoped the
Bridgestone/Firestone agreement would serve as a pattern — and
inspiration — for them.
The impressive Verizon, Firestone and United contracts have
one thing in common: they were negotiated in heavily unionized
industries. In other words, these contracts show that even
though the percentage of unionized workers in the labor force
has declined steadily for four decades, labor still has a lot of
influence in industries where most workers are unionized.
It is not at all clear, labor experts say, that the strong
wage gains in steel, autos, rubber and airlines will be imitated
by unionized employees in the public sector or by unionized
employees in industries like health care, where only a small
percentage of the workers are organized.
Nowadays, unions feel emboldened because the unemployment
rate is near its lowest point in four decades and the economic
expansion keeps breaking records for longevity.
"Traditionally, when unemployment is low, unions do well
because employers realize that the threat of a strike is more
serious," Professor Hurd said. "In that situation it's much
harder for companies to keep operating by hiring temporary or
permanent replacement workers. And in boom times, demand is
greater so companies have more business to lose."
All this is a far cry from the 1980's when workers in heavily
unionized industries like steel, rubber and automobiles took it
on the chin — and made concessions — because of recession and a
deluge of imports. And in the 1980's many unions were cowed into
submission after Phelps- Dodge miners and federal air traffic
controllers lost their jobs when their employers replaced them
with permanent replacement workers.
But unions have developed more sophisticated tactics. Even
though Bridgestone/Firestone used 2,300 replacement workers
during a 10- month strike that began in 1994, the steelworkers'
union was able to pressure the company into signing a contract
because union members picketed tire dealers and speedways across
the country to urge drivers to boycott Firestone tires.
Bernard Kleiman, one of the steelworkers' chief negotiators,
said another reason that wages had risen strongly in the recent
contracts is a social compact between unions and major
industries. He said unions had agreed to cooperate with
companies to help them cut costs and restructure to make them
more competitive.
"In industries like steel and rubber," Mr. Kleiman said,
"we're globally more efficient than the rest of the world, and
in return we demand job security and good wages, and that's the
responsible way to go."
Largely because of the low unemployment rate and booming
economy, unionized workers and nonunion workers alike have
received greater pay increases over the last year or two.
Employers have felt pressure to pay more to keep their employees
from jumping to competing employers.
In the first 36 weeks of this year, according to the Bureau
of National Affairs, a research group, union contracts called
for 3.7 percent wage increases in the first year, up from 3.4
percent in the 1999 period.
But some economists say there may be little need to worry
that the higher wages will translate into inflation.
"We're having greater productivity growth, so I wouldn't
worry so long as these wage increases come in areas where there
is nice productivity growth," said Richard Freeman, a Harvard
University labor economist.
