Steel Strike Ahead?

May 11, 1959

The Kennedy bill, in the form in which it passed the Senate, would do nothing to mitigate the central labor problem in the United States today. One way to judge how irrelevant it is to that problem is to ask how it affects, if at all, the overhanging threat of a nationwide steel strike.

If ever a strike threat was completely without justification, this one is. Both absolutely and relatively, the steelworkers have made gains far beyond the average. In a January bulletin, the U.S. Department of Labor declared: “According to 1957 gross average hourly earnings data for 318 separate manufacturing industries and groups . . . production workers in the primary iron and steel industry ranked fifth from the top. . . . A study of changes in hourly earnings between 1950 and 1957 reveals that the earnings position of the production worker in primary iron and steel manufacturing improved steadily in relation to that of the average factory worker.”

The position of the steelworker has been further improved since 1957. In January 1959 only one industry—flat glass—paid higher earnings than steel. In 1940 the steelworker was already getting 18.3 cents an hour above average earnings in all manufacturing. In January 1959 he was getting $3.03 an hour—84 cents above. He was also getting 38 cents more than the auto-worker, whom he once trailed. Steel wages have far outpaced the rise in living costs. Since 1940 living costs have increased 106.7 percent; steel wages have increased 259 percent.

PRICES AND PROFITS

The result has been to force up steel prices. The claim of the steel union that the companies have used the situation to make exorbitant profits is not borne out by the long-term record. In 1958, out of 41 manufacturing industries, steel ranked 27th from the top in its return earned on net assets. Where its rate of profit on sales had been 8.1 percent in both 1940 and 1950, it was only 7.3 percent in 1957 and 6.3 percent in 1958. Without profits in our economic system, there would soon be neither tools, nor production, nor jobs.

Yet the steel unions are threatening to strike when their contract expires on June 30. When, on April 10, the steel companies made a proposal for a one-year wage freeze, David J. McDonald, the union’s president, replied: “I reject it out of hand.” One can imagine the political and legal reaction if the companies had made any such retort to a proposal by the union. “Collective bargaining” is still a one-sided requirement.

LOSSES OF STRIKERS

If a steel strike now does occur, it will probably hurt the steelworkers most of all, whether they “win” or lose. This was the result of the 1956 steel strike. Comparing what they won with what they had been offered without a strike, I pointed out in Newsweek of Aug. 13, 1956, that each worker had lost about $600 as a result of six weeks’ idleness; that even at the end of the three-year contract he could make up (assuming a 40-hour week) only $190 of this, leaving him still $410 worse off than if he had not struck. I added: “In the long run higher costs of production will . . . mean less employment of steelworkers.” This is what happened. In May of 1956, 646,000 men were employed in the steel industry; the number fell to 500,000 in May of 1958.

Yet our Federal laws encourage strikes. Roger M. Blough, chairman of the board of the United States Steel Corp., testified in 1957: “The union has struck our plant five times in the past eleven years. . . . Hardly has one of these strikes begun before there is a nationwide demand that we settle it. . . . And ultimately—if we do not settle—we may face the threat of government intervention, as happened five years ago when the then President of the United States seized our plants illegally and sought to grant the union demands in full.”

One factor must be added to this. Because of the attitude of the law and the law-enforcement authorities, no struck steel company today dares to try to carry on its business by hiring workers to replace the strikers. If it did, it is the company, and not the strikers, that would be accused of “provocation” and “violence.”

The political cards are stacked in favor of unjustified strikes and inflationary wage increases.