The Woodshed Approach

There was a predictable note of triumph in the President's voice as he fastened a paternal gaze on the television cameras and intoned: "Both sides of the negotiating parties in the airlines strike are here with me to report that they have now reached agreement on the terms of a settlement." Lyndon had done it again: he had squeezed elbows, waved the flag and presto, solved yet another labor deadlock. Thanks to the old Johnson magic, the strike of 35,400 members of the International Association of Machinists against five major U.S. airlines was about to end after 22 costly, frustrating days.

That, at least, was the Administration's script. Conveniently omitted was the fact that it was the President him self who had been largely responsible for paralyzing the negotiations for most of that time. And, as it turned out, the union's notoriously fractious membership flatly rejected the terms of the agreement so effusively hailed by Lyndon Johnson.

"Emergency Situation." Last spring, when the machinists' strike seemed in evitable, the President invoked the 40-year-old Railway Labor Act to postpone the walkout so that a three-man presidential emergency board could study the dispute. Chaired by Oregon Democrat Wayne Morse, a partisan of organized labor, the board ultimately recommended a wage-benefit increase of 3.6%, a notch above L.B.J.'s 3.2% anti-inflationary wage-price guideline. Johnson was pleased nonetheless, urged both labor and management to accept the board's terms. The five airlines-Northwest, TWA, Eastern, United and National--agreed, but the I.A.M. turned thumbs down, went on strike July 8. "I have done everything within my power," moaned the President.

The impasse left the U.S. with only one major transcontinental airline, American,* still in operation and a flock of regional carriers to cope with the air traffic (60% of all U.S. passengers, 73% of all cargo, 70% of all mail) usually carried by the grounded five.

The strike took an ever-rising toll. Business losses mounted at a daily rate of close to $20 million. The airlines were losing more than $7,000,000 in revenue every day. In all, some 3,100,000 would-be passengers were delayed or grounded. By last week, such congressional leaders as Senate Majority Leader Mike Mansfield and Minority Leader Everett Dirksen agreed with the Civil Aeronautics Board that the nation faced "an emergency situation of major proportions."

"No Danger." As negotiations bumped along, the airlines stuck with the recommendations of the presidential board. But the I.A.M. negotiators refused to budge, in view of the carriers' record profits. Even though the machinists were ignoring his express wishes, the President flatly refused to intervene --though, in the nature of politics, he might have proved much less reluctant if the intransigent party had been management rather than labor. In an election year, the Administration is particularly leary of further antagonizing Big Labor, which has already voiced resentment over the Democrats' failure to get the bills that labor most coveted through the 89th Congress.

Congressmen, under pressure from agitated constituents, eventually acted on their own to force federal intervention. Morse introduced a bill that would halt the strike for 180 days while another special presidential mediation board worked toward a settlement. At mid week, Alabama Senator Lister Hill's Labor and Public Welfare Committee scheduled a hearing so that Administration spokesmen could testify whether the strike emergency warranted special legislation. A.F.L.-C.I.O. President George Meany lost no time offering his opinion. "No danger to the nation's health and welfare and no threat to national defense have been demonstrated," he said. "The air-traveling public has, of course, been inconvenienced, but inconvenience is a small price to pay for freedom."

That turned out to be about the same verdict handed down by Labor Secretary Willard W. Wirtz. Testifying before Hill's committee, Wirtz allowed that the strike was having "a serious, substantial, adverse impact on the national interest" but had not yet "brought the country to an emergency stage." He urged Congress to do nothing while the two groups went "back to the woodshed" to continue negotiations. Doubtful that collective bargaining alone could do the job, the Senate Labor Committee voted next day to introduce a measure authorizing the President to call off the strike for as long as six months.

"A Better Way." That, willy-nilly, would land the dispute right back in Lyndon's lap, and the President decided at last to move on his own. In the small hours of July 29, he told Wirtz that he wanted negotiators to be in the Cabinet Room at 9 a.m. When they arrived, Johnson said: "You men around this table can find a solution equitable to both parties better than anyone else. That's a better way than legislating the breaking of a strike or seizure or by presidential fiat."

After 27 minutes, Johnson sent them across the street to another woodshed, his old vice-presidential suite in the Executive Office Building. Barely twelve hours after leaving the President, they arrived at a settlement.

Miraculous? Not quite. From the strike's start, the airlines had been waiting for some hint that Johnson would not be angered by a settlement that went well above the guidelines. No other industry in the U.S. is subject to more rigid federal regulation, and airline management was fearful of Administration reprisals if the terms were deemed inflationary. All five struck lines have pending applications for trans-Pacific routes; a vengeful President could influence many decisions affecting their income. Thus when it became clear at last that Johnson would actually welcome the kind of agreement needed to end the dispute, management sat right down and settled for a wage-benefit increase of nearly 5% annually over the three years that the new contract runs.

Ad-Lib Arbitration. It was by any definition an inflationary boost. Johnson's woodshed rationale was that its effect would somehow be neutralized by the airlines' hefty 1966 profits, which he preferred to call "productivity." The President explained on TV: "Unit labor costs in the air-transportation industry will continue to decline, thus assuring that this settlement will not contribute to any increase in the prices the public pays." This gloss did not cover the fact that the major airlines have won federal approval for six rate increases over the past decade, and in each case a major factor in getting the raise was rising operating expenses--a big chunk of which is wages. Despite Johnson's assurances, a new round of fare increases is inevitable in the near future.

With good reason for jubilance, the union leadership enthusiastically endorsed the settlement. By rejecting management's offer, the I.A.M. membership invited compulsory arbitration as urged by the Senate before the President's intervention.

Apart from its economic effects, the needlessly prolonged stoppage pointed up a critical need for legislation to prevent such situations. In his State of the Union address, President Johnson promised to draft tough new federal laws to "deal with strikes which threaten irreparable damage to the national interest." No such legislation has yet been proposed, and until it is, the Government can do little but muddle through crippling work stoppages in the transportation industry. The Administration's next exercise in ad-lib arbitration will most likely come when the militant railroad brotherhoods hold long-postponed negotiations with companies that control nearly all of the U.S.'s railroads.

*Which was also threatened with a strike last week--in this case by the Transport Workers Union. The President headed it off by naming another emergency board to recommend a settlement.

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