In the Wake of the Strike

August 11, 1952

The steel strike was ostensibly directed against the steel companies. But the loss of profit by the companies, and the even greater loss of tax revenues by the government, are now among the less important considerations. What comes foremost is the loss that the strike caused to the country. This has been estimated at some $4,000,000,000. In material terms, it came to 17,000,000 to 20,000,000 tons of steel-equivalent, as Henry H. Fowler, Defense Production Administrator, has pointed out, to “more than the total capacity of Great Britain . . . in a full year’s operation.”

The most telling summary of the loss was made by Defense Secretary Robert A. Lovett: “No enemy nation could have so crippled our production as has this work stoppage. No form of bombing could have taken out of production in one day 380 steel plants and kept them out nearly two months. The weird and tragic thing is that we’ve done this to ourselves.”

Who gained by the strike? The steelworkers? They lost collectively more than $350,000,000 in wages—an average of about $625 each. Even with their new increase, they will have to work a year to a year and a half before they have made up the loss that their self-elected idleness caused them.

Was the strike justified? Necessary? Before it started, the steelworkers were getting $1.88 an hour. This was already 24 cents more than the average wages being paid in all manufacturing industries. As compared with June 1950, at the outbreak of the Korean war, steel wages had risen 12½ percent compared with an increase of 11 percent in the cost-of-living index. On any plausible “stabilization” formula, therefore, or on any concept of “equity” as compared with other wages, there was no ground for any increase in steel wages. Yet the companies were forced to submit the case to Mr. Truman’s Wage Stabilization Board, which recommended an increase of some 26.5 cents an hour, including “fringe” benefits, and called for compulsory unionism in addition.

Immediately all the pressure and propaganda of the Federal government were thrown into forcing the companies to make this settlement. And the companies, in the end, had to grant an increase equivalent to 21.4 cents an hour, as well as compulsory unionism (with a few escape clauses of negligible practical importance).

What may prove to be even greater than the cost of the strike is the cost of the settlement. It destroyed every pretense that the Administration is trying to hold down wages. It proved once again that there is no wage ceiling that a determined union leader cannot tear through at will. There will now be a flood of demands from other union leaders to catch up with or surpass the steelworkers. Once more the government has bought off one set of wage demands at the cost of provoking a hundred others.

From the first the government was not an impartial arbiter but a party to the dispute. Mr. Truman went on the air to take the side of the unions. He refused to carry out the legal provisions enacted by Congress for precisely such an emergency. He seized the companies in defiance of the Constitution. He prolonged the strike by trying to force a wage increase while refusing a corresponding price increase. When his lieutenants at last granted the price increase, they bitterly threw the full blame for the strike on to the companies struck against. Roger L. Putnam, Economic Stabilization Administrator, accused them of holding “a loaded gun” to the government’s head. He neglected to mention the really loaded guns that Philip Murray and Mr. Truman had held to the companies’ heads.

The leading moral of all this is to get the government out of wage arbitration, and to deprive it of wage-fixing and price-fixing powers. The result of government intervention has been to try to boost wages while squeezing profits; to build up industrywide unions; to encourage and prolong strikes and make their impact more deadly. The ultimate result of such a policy must be disastrous to a free economy.