Unions strike for a stake in the new economy
August 23, 2000
by Irwin Stelzer
SUNDAY TIMES (LONDON) August 13, 2000
UNTIL last week Americans had pretty much forgotten there are such things as trade unions.
The rise of largely non-unionised high-technology industries, the movement of industries to the south and southwest, where the climate is unfavourable to unionisation, and many years of full employment have caused union membership to shrivel.
But if Americans had any notion that unions no longer count, they were disabused of that idea by two events last week.
The first reminder that unions can still affect our lives came from United Airlines' pilots. Never mind that the 10,000 pilots own 25% of the shares and that the disruptions they have caused cost United $ 50m in lost sales in the second quarter of this year. The pilots behave more like workers than owners, and are refusing to work the overtime demanded by management. So United is in chaos.
Last weekend the airline cancelled 700 flights, about 15% of its schedule. That, of course, left aircraft in the wrong places, resulting in 239 cancellations on Monday. Passengers were left stranded in Chicago and other United hubs for hours -- and sometimes overnight.
Estimates are that in June only 40% of United's flights arrived within 15 minutes of schedule. With one exception this was the worst performance ever recorded by any airline.
The pilots' union says it alone is not the cause of the travel mess. The airline's 49,000 mechanics are unhappy about working without a contract and United's managers accuse them of doubling the number of out-of-service jets, excessive write-ups of maintenance problems and other actions that keep a large number of United planes on the ground.
A second reminder that unions retain the power to disrupt everyday life comes from the Communications Workers of America (CWA) and The International Brotherhood of Electrical Workers (IBEW). Their 87,000 members struck Bell Atlantic, the company that recently merged with GTE to form Verizon Communications, which serves 12 eastern states and the nation's capital. That means new customers cannot be connected and customers with problems have to wait for repairs. Living in the area served by Bell Atlantic, I am tempted to say it will be hard to distinguish the level of service during the strike from normal times, when almost 40,000 repair calls are taken every day.
What is of importance is the issue that led the unions to take to the picket lines. We are witnessing a union effort to get a grip on the new economy, from which they have largely been excluded, and the intensity of feeling has led some members to harass non-strikers and, says management, sabotage parts of Verizon's communications system.
The fastest growing part of Verizon is its quintessentially new economy, wireless business. Unlike its unionised, old-economy wired network, Verizon Wireless counts only 50 union members among its 32,000 staff. The unions, who can already hold a secret ballot to determine if workers want them as representatives, prefer a different procedure, one that might permit them to put more pressure on the non-union workforce. They want the company to recognise them as bargaining agents for the wireless staff if a majority of workers at any site sign cards asking to have the unions bargain on their behalf.
The phone workers and pilots have something in common: both want to end involuntary overtime. One CWA spokeswoman told The Wall Street Journal: "When you have to work every weekend ... or a lot of extra hours ... that really hurts your home and family life."
Verizon says workers know about overtime when they are hired and demand is growing so fast for wireless services that overtime is necessary if customers are to be served.
The pilots and phone workers respond: "Hire more workers so we can work fewer hours", a position that General Motors staff pressed in their strike last year. It is perhaps a tribute to the strength of the economy, to the affluence that has so many flying hither and yon, and to the demand for new communications services that there seems to be more work than union workers feel they can handle. And for skilled wireless workers, jobs are so plentiful they can bargain for great pay without the help of a union.
And it is a tribute to the strength of the new economy that unions are willing to call an unpopular strike to get a toehold in these new technologies. Richard Hurd, Cornell University's labour studies professor, says the non-union wireless industry is growing at an annual rate of 25%, while employment in the wired industry is shrinking. If Verizon gives in and its wireless division is unionised, he says, the unions are certain its many rivals, relieved of low-cost competition from Verizon, will soon follow. Better still from the unions' point of view, adds Hurd, other new-economy industries such as cable will be more likely to accept unionisation if the unions prevail.
Fortunately, the pilots' grievances and the phone workers' strike are likely to be settled soon - perhaps by the time you read this.
The terms of those settlements will determine whether overtime work is to give way to additional hiring, whether unions will get their noses under the new-economy tent and, perhaps most important of all, whether new-economy companies retain the flexibility to continue driving the productivity improvements that underpin the economy's fabulous long-term performance.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.