Faced with Economic Crunch and Management Squeeze, Unions Fight Back

By Mischa Gaus and Mark Brenner, Labor Notes. Posted December 27, 2008.

As companies scramble to shore up profits, many are turning to a well-rehearsed script: ask union workers for concessions. The supposed payoff ? You’ll get to keep your job. In late November, the Teamsters announced a deal with Yellow-Roadway Corporation to crack open their contract and cut wages 10 percent.

The company claims it is the latest victim of the credit crunch, unable to secure financing for its large debts. Union officials warn that the company could fall into bankruptcy if concessions aren’t granted. If approved by the members, the wage cuts will stay in effect through 2013, when the contract expires. In exchange for concessions, the company has offered the union about 15 percent of the company’s stock.

“We’re being bamboozled,” said Mike Schaffer, a Roadway driver and member of Local 769 in Miami. “Even if they come back to profitability, we don’t get any relief. The union agreed to this lock, stock, and barrel.”

But even profitable companies use turbulent times as an excuse to get the upper hand. In Sault Ste. Marie, Ontario, Essar Steel Algoma pressed Steelworkers (USW) Local 2251 for concessions in October, despite a record-setting third quarter where net income topped $146 million. The sheet-steel maker, whose products are sold to the construction and auto industries, insisted that workers agree to gut their contract. If not, the company threatened to lay off nearly a third of the workforce—1,000 workers—and build a new pipe plant elsewhere. Essar’s laundry list of givebacks would have clipped workers’ overtime and unemployment pay and steamrolled hard-won rights over job assignments and scheduling, as well as layoff and recall rights.

RIGHT FOR EVERY OCCASION

Management first developed the concessions formula during the downturn of 1980-1983. Since then, companies have stretched the argument for concessions to fit almost every situation. Whatever the problem, from global competition to rising health care costs, the solution is always making workers do more with less.

“Companies are going to use these hard times to try to see what they can get out of us,” said Cam Pucci, a steward in Local 2251 who’s repaired and maintained machines at Essar for 30 years. “They put the fear factor in, to see how far they can go.”

In hard times, employers frame concessions as shared sacrifice—everyone pulling together to get the company back on its feet. But sharing was in short supply during the 1990s, when profits were flush and CEO pay skyrocketed.

Even in hard times, though, management is brazen about cushioning itself. United Airlines, for example, clawed back more than $4 billion from workers between 2003 and 2006, while shedding 20,000 jobs and unloading pensions onto the federal government through bankruptcy courts. Top brass, meanwhile, were amply rewarded. Last year United’s top eight executives took in a combined $45 million.

At Essar, the union discovered that the company had paid out $438 million to shareholders in 2005 and 2006. “If they want concessions,” Pucci said, “they should be trying to recover some of that money.”

Although evidence has piled up for nearly 30 years that concessions don’t save jobs, some union leaders still call for givebacks as a solution to hard times. But others have seen that whether it’s easing work rules or chopping wages, health care, and pensions, concessions can’t change the economic landscape. These givebacks only weaken the union once business picks up.

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Mischa Gaus is an editor of Labor Notes, the country's largest cross-union magazine writing from a workers' perspective. Mark Brenner is the Director of Labor Notes.

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