A Wrong Turning

April 9, 1962

Thirty years ago, the idea took hold in Washington that strikes and most other labor troubles were caused by the weakness of unions and of labor’s bargaining power. So the Wagner Act was passed in 1935 to encourage the formation of unions, to grant them exclusive bargaining powers, and to compel employers to “bargain with” them.

The act had two main purposes. One was embodied in its very title: “An Act to Diminish the Causes of Labor Disputes Burdening or Obstructing Interstate and Foreign Commerce.” The other was to enable unions to raise wages. The first aim was not realized. There was an enormous increase in labor disputes. There were three times as many strikes a year in the decade following the Wagner Act as in the decade preceding it. Whether and to what extent the second aim was realized is a matter of dispute. Money wages were probably forced up higher than otherwise, but it is doubtful that real wages were. And excessive wage rate increases in certain lines brought unemployment and a decrease in total real wage payments.

The Taft-Hartley Act of 1947 amended the Wagner Act but retained its provisions granting exclusive bargaining power to government-certified unions and forcing employers to “bargain with” these unions no matter how unreasonable or adamant their demands. And under the Norris-LaGuardia Act of 1932, the employer has been in effect left without recourse against coercion, violence, and mass picket lines to prevent other workers from taking the jobs voluntarily abandoned by strikers.

WHAT THEY FEAR

Yet events have taken an ironic turn. In recent years the chief fear of government officials has not been that unions would be too weak to demand sufficiently high wage rates, but that they would be so strong that they could demand and get excessively high wage rates—wage rates that would force more inflation, price us out of foreign markets, imperil the dollar, bring unemployment.

This is precisely the fear of the Kennedy Administration today, the most “pro-labor” government that the country has ever had. It is the fear of the chairman of the President’s Council of Economic Advisers, Dr. Walter W. Heller, and of the Secretary of Labor, Arthur J. Goldberg. Both hoped for a “favorable” outcome of the Big Steel wage negotiations. And by a “favorable” outcome they meant a wage increase that was not too high. And so they are delighted by the “noninflationary” tentative settlement of the steel wage dispute.

VAGUE ‘GUIDELINES’

To prevent excessive wage-rate increases Secretary Goldberg proposed a government voice in the terms of settlement. Though he denied that he wanted compulsory arbitration of labor disputes, his speech on Feb. 23 came very close to demanding this. In a “definitive” statement of Administration policy, he declared that Federal mediators must “increasingly provide guidelines” at the bargaining table to insure settlements “in the public interest.”

These “guidelines” had to do with “productivity.” The last annual Economic Report of the President assumed that such “productivity” can be statistically measured and that such “guidelines” can be set. But this “productivity” turns out to be a very nebulous concept. It has nothing directly to do with physical output per man-hour. The productivity that determines wages is marginal labor productivity. But there is no statistical way of determining this, except hypothetically and retroactively.

George Meany, the president of AFL-CIO, was right, therefore, when he called Secretary Goldberg’s statement “a step in the direction of saying the Federal government should tell either or both sides what to do.” And the NAM is right when it fears that Goldberg’s proposal would “lead to government regulation and control of the economy.” The government seems driven in this direction because it fears the consequences of excessive union bargaining power. Yet no one dares to ask whether our laws took a wrong turning in the 1930s and whether we should not simply revise or repeal the legislation that created the present union dictatorship.