Inflationary End to a Class War

As the strike of a twelve-union coalition against General Electric Co. wore on through 14 weeks, the outcome began to seem inevitable. Many of the 130,000 strikers were as united in bitterness against their employer as any band of workers who fought the U.S. industrial class wars of the 1930s. Corporations rarely win that kind of struggle today. Last week G.E. agreed with the two leading unions on contract terms that should permit a resumption of work within a few days--and will further fire inflation in the nation.

The proposed pact will raise wages and benefits more than 25% over the next 40 months, or about 8% a year. Workers who averaged $3.25 an hour in wages before the strike will get an increase of 20-c- immediately, 15-c- more in 1971 and another 15-c- in 1972. A cost-of-living escalator clause and changes in pension, sick leave, vacation and other benefits could bring the total cost by some estimates to 88-c- an hour. That is the kind of settlement that G.E. probably could have got from the unions last fall--but that the unions surely could not have got from G.E.--without a strike.

The Nixon Administration and the national economy are among the losers. Administration officials have vowed to avoid arm-twisting intervention in labor disputes, and they kept their pledge during the G.E. battle. The strike was the first important test of the Administration's hope that an intensifying profit squeeze would force corporate executives to resist union demands for ever higher wage increases--and that union leaders eventually would settle for pay raises smaller than the inflationary ones they won last year. Instead, the G.E. boost is right in line with the 8.2% wage and benefit increase provided by major contracts negotiated in 1969. Such an increase, granted by one of the nation's hardest-bargaining employers, may well embolden other union leaders to hold out for hefty increases in different labor negotiations later this year.

Them v. Us. The G.E. struggle cannot be regarded simplistically as a battle of greedy workers v. inflation-fighting executives. In the minds of the strikers, the primary issue was not even economic. Their aim was to force G.E. to abandon its bargaining strategy of "Boulwarism," named after Lemuel Boulware, G.E.'s labor relations chief in the 1950s. Boulwarism calls for management to make and stick to an initial "firm, fair" offer to employees and to attempt to convince workers of the offer's merits by conducting vigorous "employee marketing" campaigns. Union loyalists have long regarded this strategy as an attempt by the company to fix wage rates unilaterally, but the many unions representing G.E. workers were too divided to challenge the tactic effectively. Then last fall they formed a coalition and won the unconditional support of the whole labor movement for a battle to the end.

In Schenectady, N.Y., a city of 71,000 where G.E. maintains its biggest plant complex, the strike from its outset was a kind of holy war. Many of the Italian-Polish-and German-descent members of International Union of Electrical Workers' Local 301 are second-or third-generation laborers in the heavy-equipment plants. They speak a language of "them" and "us" that has vanished from worker terminology in many other industrial towns.

Some Schenectady workers began last summer to prepare for a prolonged war of attrition. Groups banded together to buy meat in bulk and store it in commercial lockers that they rented cooperatively. During the strike, workers received payments of $12 a week from their union for the first two months, and later got state unemployment-compensation payments of up to $65 a week. G.E. reports on the strike, broadcast over company-owned radio and TV stations, failed to change the workers' minds. "People think this is a strike for a few cents an hour," said Ralph Boyd, one of several hundred black workers at Schenectady last week. "But it is about human dignity. It is about the workingman's right to organize, and it is about an employer's duty to bargain, not to tell us to take or leave his offer. For those issues, I would rather starve than surrender."

In the end, G.E. retreated from Boulwarism enough to raise its initial offer, which was for a first-year wage and benefit boost of 6% to 10% but no more than a promise to reopen the contract in the second and third years. The victory was not without great cost to the strikers. Company officials estimate that the workers lost an average of $1,300 in pay each. G.E. raised the prices of household appliances 3% during the strike, and Chairman Fred Borch told stockholders last fall that the company would post a general price increase as soon as the strike ended. The boost will probably be higher than G.E. had initially planned. The moral drawn by one G.E. executive in Schenectady: "Boulwarism just does not work today."

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