Let's Make a Peaceful Deal

On the surface, this year's labor-bargaining outlook would seem heavy with the menace of outsized wage boosts that could speed up inflation and strikes that could disrupt the accelerating recovery, or both. Nearly 4.5 million workers are covered by major contracts that expire or come up for reopening in 1976; that is twice as many as last year. The most important contracts cover five vital industries: trucking, rubber, construction, electrical equipment and autos. They are being renegotiated after two years in which the average hourly earnings of workers in U.S. private industry have risen less than the prices of the goods that the workers buy, so that union leaders are under pressure to push for huge "catchup" increases.

Surprisingly, though, the outlook is for relative peace and moderation. "I'm sure that we will have some strikes in certain industries," says W.J. Usery Jr., the new Secretary of Labor. "But we're finding more and more that people are willing to sit down and talk through their problems." Indeed, labor-management experts generally expect a major strike only in the rubber industry. And most economists reckon that wage and benefit increases negotiated in 1976 should average a fairly reasonable 8% to 11% in the first year of the contract. Since output per man-hour is rising as production picks up, the Council of Economic Advisers regards that prospect as no threat to its prediction that the rate of inflation will slow to 6% this year, from 9.2% in 1975.

Some reasons for the optimism: unemployment is likely to stay above 7% of the work force, deflecting some of the bargaining push away from big wage increases toward new job-security demands. The rate of inflation already is coming down, taking some steam out of the "catchup" drive. Also, many unions will be demanding new, or more generous, provisions tying wage hikes to the cost of living. If price rises continue to slow, the clauses could keep wage increases moderate, too.

The outlook in the major industries, in order of contract expiration dates:

TRUCKING. The Teamsters' last contract contained a cost of living adjustment (COLA) provision, but it had a "cap"--the adjustment could not exceed 110 an hour in any year. Now, Teamster President Frank Fitzsimmons is demanding that the cap be removed. In addition, he opened negotiations last month asking for a $2.50-an-hour increase, spread over three years, in the truckers' minimum wage, which currently averages $7.11 nationwide. Chicago Teamster officials, who in the past have forced the national leadership to tear up newly negotiated contracts and bargain for higher terms, have indicated that this year they will follow Fitzsimmons' lead. So the likelihood of a strike after the contract expires on March 31 is slim.

RUBBER. The contracts between the Big Four--Goodyear, Goodrich, Firestone and Uniroyal--and 69,000 members of the United Rubber Workers expire on April 20. Negotiations begin next week, and all signs point to a strike. The last U.R.W. contract included no COLA at all, and as a result the average hourly wage for rubber workers has fallen $1.35 behind that of automobile workers (who have been getting a cost of living increase). The union is demanding parity with auto workers' wages in addition to a "meaningful" further wage increase, a COLA clause and improvements in pension and insurance plans. Some tiremakers, however, suffered from falling profits in 1975 and will find it hard to agree to the U.R.W. package. President Peter Bommarito may lose control of his union if the new contract is found wanting by the membership. The only deterrent to a long strike is the paltry $5.5 million balance in the union's strike fund; the money could run out in as little as a month.

CONSTRUCTION. About 3,200 contracts will be negotiated in the construction trades this year, most of them in the spring and summer. Construction contracts are drawn up locally and reflect local economic conditions. On the West Coast, for example, plumbers and electricians are in high demand and have been winning richer settlements than their brethren in the East. Such differentials could lead to tensions between labor and management in some areas. But the geographical diversity of construction negotiations makes their outcome hard to prophesy.

ELECTRICAL EQUIPMENT. In late June, the contracts covering 115,000 General Electric employees run out; the pacts governing 60,000 Westinghouse workers expire two weeks later. The seven unions representing electrical workers want to have the cap taken off their COLA arrangement and to retrieve previous income lost because of that cap. They also want the companies to provide workers with better financial protection during layoffs, and are gunning for an improved health plan. Nobody, however, is predicting a strike at G.E., and there is only a small chance of a Westinghouse strike.

AUTOMOBILES. The 1.4 million members of the United Auto Workers have contracts that include an uncapped COLA, and have not been stung much by inflation. President Leonard Woodcock will push hardest on job security. The automakers will be asked to contribute more to the supplementary unemployment benefit funds from which laid-off workers receive payments. The U.A.W. will also demand that laid-off workers be rehired before overtime work is offered to employees on the job. The companies are talking tough, but rising sales should help them reach agreement with the union by the time the contracts run out on Sept. 14.

There are indications of trouble in the public sector. Financially strapped states and municipalities must grapple with increasingly militant unions, and experts fear tough negotiations and possible strikes. Secretary of Labor Usery, concerned that the sophisticated skills of contract bargaining are rare in the public sector, calls it a "tinderbox."

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