Why a Steel Strike?

July 27, 1959

Whom does a steel strike hurt? It hurts, of course, the companies against which it is ostensibly directed. When forced to suspend operations, they must face losses instead of profits. And if they are forced to settle at higher labor costs, these must either squeeze or wipe out profit margins, or force the companies to charge higher prices for their steel. This, in turn (except as it may be offset by a new round of monetary inflation), must shrink markets and volume of sales.

A steel strike hurts the whole country. For the nation produces less steel, not only during but perhaps after the strike. It loses export markets, and even part of its domestic market, to foreign producers of steel. This slows down the long-term growth of a key defense industry.

A steel strike hurts workers in other industries. During the strike many of these workers are laid off, because of shortage of raw or semi-finished steel. If the strike is settled by an uneconomic wage rise, these other domestic industries suffer through an increase in their costs.

THE 1956 RESULTS

What, finally, of the steelworkers themselves? During the strike, they are hurt worst of all. Their wage income is totally cut off, and they do not know when it will resume again.

The results of the 1956 steel strike are instructive. Comparing what the steelworkers had 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 in wages as a result of an average of six weeks’ idleness; that even at the end of the three-year contract he won 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 steel workers.” 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. Though it increased in the first half of this year (mainly to fill orders in anticipation of a strike) the net loss to the whole body of steelworkers is clear.

Why, then, another steel strike?

Who wanted it, and why? One answer might be framed in terms of the psychology of a single man—David J. McDonald, the president of the steel union. He had made such sweeping demands that he could not back down without losing face.

UNION IDEOLOGY

But this view is too narrow. The psychology of McDonald must be viewed in a wider setting. Each union leader seeks to show that he can get more for his union, relatively or absolutely, than other leaders get for theirs. It has come to be the established expectation of each of the major unions that every year, and above all at every new contract, there must be a substantial increase in wage rates, beyond any rise in living costs no matter what level wage rates have already reached.

Hence the mere fact that steel wages in the last twenty years have increased both relatively and absolutely more than almost all other wages, and that they stood just before the strike at $3.10 an hour compared with an average of $2.23 an hour in all manufacturing industries, was considered no argument against a still further increase now. Nor was the fact that the American steel industry, on important items, was already being priced out of foreign markets.

For it is part of current union ideology that wages are not determined by marginal labor productivity but by tough “bargaining”; that increases are not the result of competitive demands of employers for workers but of strike threats. Another item in this ideology is that an increase of wages for one group of workers helps all other groups. This is the doctrine of labor “solidarity.” The truth is that any increase of wages for the workers in any line that goes beyond the point justified by marginal labor productivity is at the expense of the workers who must be laid off as well as of the living costs of all other workers.

And union ideology is reflected in our labor law, which confers exclusive bargaining powers, sanctions compulsory unionism, and tolerates mass picketing. So a word from the head of a single union can bring a national industry to a halt overnight.