Smelling Salts For Labor?

Reynolds Metals Co. and Aluminum Company of America never threatened outright to permanently replace their 20,000 union members during 1993 contract talks. Still, the possibility worried union leaders so much that they reined in their demands and didn't walk out. But labor will be tougher when the pacts expire in 1996. The reason: President Clinton's recent order barring employers who hire permanent replacements from doing business with the government, as the aluminum makers do. "The order is extremely important to us," says Ernie J. LaBaff, president of the Aluminum, Brick & Glass Workers union. "Even if the companies don't say they'll hire replacements, it makes us stronger if members know it can't happen."

Labor unions have been complaining lately about how little Clinton has done for them, a core Democratic constituency. But his Mar. 8 order on permanent replacements may help ease that jilted feeling. The move could have a big impact on bargaining at large, unionized companies. Labor also is benefiting from a newly awakened National Labor Relations Board (NLRB), which is moving aggressively to curb labor-law violations by employers.

"SNOWBALL EFFECT." True, Republicans and business groups may yet reverse both efforts. They may try to cut the NLRB's budget and are opposing Clinton's order in Congress and the courts. Republicans also plan to push bills that would weaken safety and health inspections and other pro-labor programs. And even if Clintonites prevail, labor won't suddenly become a powerhouse. Still, the cumulative effect will give unions a boost. "These things have a snowball effect," says Daniel J.B. Mitchell, a management professor at the University of California at Los Angeles. "You could see an improvement in labor's bargaining position and maybe even a turnaround in organizing."

The executive order calls for federal agencies to terminate contracts with anyone who hires permanent strikebreakers. It also allows the Labor Dept. to bar employers who already have hired them, such as tiremaker Bridgestone/Firestone Inc., from bidding on future contracts. The Administration is downplaying the impact, pointing out that only about 19 government contractors a year use permanent replacements. And officials note that the order covers only contracts worth more than $100,000.

But the move is certain to ripple beyond the numbers. More than 90% of the nation's 1,000 largest companies have government contracts over the threshold, federal officials say. And while most large employers don't experience strikes or wind up hiring permanent strikebreakers, many threaten to do so to deter walkouts. Fully 82% of large unionized employers say they would hire replacements if they were struck in 1995, according to a recent survey by the Bureau of National Affairs in Washington. Of those, 25% said the replacements would be permanent. An additional 57% said they hadn't decided that issue--leaving the possibility open as a risk unions must run if they strike.

CLAMPING DOWN. Even a company such as General Electric Co., which prides itself on being an enlightened employer, likes the added leverage. GE says publicly it shuns permanent replacements. But it has long opposed legislation to ban them so labor won't gain clout. Indeed, Clinton's order "would shift the balance of power to labor if it sticks," says Sharon F. Canner, a vice-president of the National Association of Manufacturers, which is fighting the order.

Clinton's NLRB is swinging the pendulum back from management, too. One of the agency's most powerful weapons is the court injunction, which helps it to stop employers from breaking the law and delaying the consequences until a union is defeated. In the year since Chairman William B. Gould took office, the board has sought 105 such injunctions, including one against baseball owners on Mar. 27. By contrast, the board requested about 40 a year during the Reagan and Bush years.

Gould is clamping down in other areas, too. The board has set timetables for its 70 administrative judges and has assigned special judges to try to settle cases before they get bogged down in litigation. The board also is considering procedural changes to reduce the endless legal challenges employers mount to block union organizing drives. "The point is to eliminate wasteful litigation and delay," says Gould.

Of course, these changes aren't enough to revive labor. Workers still fear losing their jobs to imports or domestic rivals if they strike. And the NLRB actions do little to deal with employers who illegally fire union supporters, which occurs in a third of all organizing drives, studies show. Still, Clinton is giving labor its biggest leg up in years.

Before it's here, it's on the Bloomberg Terminal.