Guarded Smiles At The Union Hall

Through 12 years of Republican rule, Corporate America has largely had its way on a wide range of labor and workplace issues. But now, that's about to change. President-elect Bill Clinton is likely to adopt positions that employers have resisted on everything from family leave to the permanent replacement of strikers. Most observers expect management to keep the upper hand in dealings with employees. Still, many employers could face tougher bargaining over new labor contracts. They're also likely to find that government agencies will enforce labor, health, and safety laws more vigorously. In the long term, the biggest change could well come from Clinton's pledge to forge a European-style partnership among business, labor, and government.

One area affected first by the change in Administrations is likely to be bargaining. Many companies expect Congress to pass legislation banning permanent replacements in strikes, despite an anticipated filibuster by Senate Republicans. The bill has strong support in Congress and was only narrowly defeated in the Senate in October. It would end a practice whose legality the Supreme Court affirmed back in 1938--despite its apparent conflict with the nation's basic labor law.

MORE STRIKES? Global competition will continue to prompt companies to demand and win wage restraint. But if it becomes illegal to replace strikers permanently, employers won't be able to carry the day as easily as Caterpillar Inc. did last spring, when the United Auto Workers crumbled in the face of a threat to hire permanent replacements. In fact, Caterpillar may be among the first to be affected. It recently imposed a new contract on the UAW, which is free to strike again and which still insists on the demands that it failed to get in the six-month walkout. "Another strike will be a hell of a lot easier" to sustain if the bill passes, says John Paul Yarbrough, president of UAW Local 145, which represents Cat workers in Aurora, Ill.

Indeed, a ban on permanent replacements might bring the first big increase in strikes since the 1970s. Union members' growing fear of being replaced was one reason that work stoppages involving 1,000 or more workers fell, from 187 in 1980 to 40 last year. As walkouts decreased, union pay-and-benefit increases lagged behind nonunion ones for most of the decade.

That has already begun to change. Swift factory productivity growth in the past decade has enabled union members, who disproportionately work in manufacturing, to pull ahead of nonunion workers for the first time since 1983. Last year, wages and benefits rose 4.6% for union members, vs. 4.3% for nonunion workers, according to the Bureau of Labor Statistics. The gap has widened this year: Union compensation climbed 4.6% in the 12 months ended in September, vs. 3.1% for nonunion compensation. And if the economy picks up, a replacement ban could spur this trend. "The striker-replacement law would certainly give labor more leverage," says William W. Holloway, vice-president for human resources at NCR Corp.

Clinton is likely to change the balance of power on other workplace issues, too (table). Some employers say they expect his appointees to toughen up health and safety agencies. They also anticipate a more aggressive National Labor Relations Board (NLRB), which enforces labor laws and which has been dominated by promanagement Republicans since 1981.

This could make it harder for employers to fend off union organizing drives. Still, few experts believe that labor will reverse its slide. In the 1970s, unions mounted some 7,000 representation elections a year. That figure dropped by half in the 1980s. Given the willingness of companies to ship jobs overseas, it's unlikely to rise much, even in a new political climate. "I don't think labor will represent a larger share than its current 12% of the private-sector work force by 2000," says Daniel J.B. Mitchell, a labor economist at the University of California at Los Angeles.

Management resistance to unions may face the biggest challenge from Clinton's promised high-skills strategy. The President-elect campaigned on the idea that companies must become more competitive by boosting worker skills and employing concepts such as teams and worker empowerment.

To make that happen, Clinton has said that the U.S. should emulate the European system, which involves a partnership among business, labor, and government. As a model, he frequently cites Germany, whose training and apprentice systems are widely admired. Adopting a similar approach in the U.S. would give organized labor an opening to sell itself as a key partner with management. "Clinton's high-wage strategy may be a historic opportunity for unions," says Ray Marshall, formerly Jimmy Carter's Labor Secretary and now a Clinton adviser and leading theorist on the subject.

Still, it's unclear just how far Clinton wants to go down the European path. Organized labor plays a central role in Germany, which has several laws mandating elected worker bodies called works councils. The councils have seats on company boards and significant input in corporate decision-making. Marshall and others close to Clinton argue that such cooperation should occur in the U.S. But most American companies believe unions are unnecessary for high-performance systems. "Our teams work well with unions, but they work well without them, too," says the labor relations vice-president of a major oil company. "To have good employee relations, you don't need a union in between."

NO SURE BET. In any case, many unions are skeptical of cooperative labor systems. Some believe management uses them to avoid unions--or to co-opt union members. Unions also worry that pursuing cooperation may force them to downplay demands for labor law changes, which Congress narrowly defeated in 1978. Those would, for example, allow workers to form unions simply by signing cards saying they want one. The AFL-CIO is loath to deemphasize such changes for cooperative plans, which some of its 88 member unions don't trust anyway. "This is a part of the debate that we are having right now--which way to go on this issue" says Thomas R. Donahue, the AFL-CIO's secretary-treasurer.

Clinton advisers say one way to circumvent the resistance might be with a national commission formed to look at how to spur a high-skills strategy. It also might examine how unions fit into this idea. "Clinton has talked a lot about breaking down the Berlin Wall between labor and management," says Derek N. Shearer, a public policy professor atOccidental College who heads the la-bor-economics group on Clinton's tran-sition team. "We're going to give him several options on how to start doing that."

Clinton has said repeatedly that he's not a traditional Democrat who caters to special interests. So he is unlikely to grant unions most of their demands. But if he can forge the business-labor partnership he has talked about, it could alter labor relations as much as anything a more traditional Democrat might do.

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