When President Reagan crushed a strike by air traffic controllers in 1981, he signaled corporate America that it had a friend in the White House ready to use the levers of government to trim the power of organized labor. The ripple effects of Reagan’s action were felt in bolder management strategies to weaken union influence. All during the 1980s and into the 1990s, labor leaders were forced to play defense, trying to hold on to past gains as their membership rolls went into a tailspin.
This week, when United Parcel Service settled an expensive 15-day strike essentially on Teamsters’ terms, the scales tipped the other way in favor of a resurgent labor movement displaying new muscle with an assist from a more sympathetic administration.
As a turn of the wheel that may send shudders through many corporate boardrooms, the UPS settlement is apt to spell the end of the Reagan legacy in industrial relations.
President Clinton played a critical role in determining the final outcome. He made it possible for the Teamsters to use the full power of the strike weapon when he refused to invoke the Taft-Hartley law and order 185,000 UPS employees back to work.
Still, the president didn’t swing as far toward the union side as Reagan did against it. During endgame negotiations over the weekend, Clinton nudged the Teamsters to cash in their winnings at the bargaining table, warning the union that pushing too far risked loss of public good will.
The AFL-CIO bristled at this 11th-hour presidential intervention. But it was a not-so-subtle reminder to union leaders that, while he shares many of their objectives, Clinton won’t toe the labor line at every turn.
In this instance, it appears UPS Chief Executive James Kelly overplayed his hand from the start. Not only did he misjudge Clinton’s determination to let the strike go on despite mounting delivery interruptions, but he picked negotiating issues bound to trigger fierce Teamster resistance.
Kelly tried to separate UPS from the Teamsters’ multi-employer pension fund - a move that could have undermined the union’s standing with its members in other companies. It was a grab for power and control that Teamsters President Ron Carey saw as a do-or-die challenge to his union.
In the end, UPS gave in, as it did on the other big issue - the two-tier pay scale for part-time and full-time workers.
On that front, the Teamsters won wide public sympathy with their complaints that UPS was depressing wages through growing reliance on lower-paid part-timers, whose base wage of $8 an hour had not risen since 1982.
Part-timers are an expanding segment of the UPS work force - a pattern that also holds true in many other workplaces across the country. In the last four years, UPS created 46,000 jobs - 38,000 of them part time.
With part-time wages and benefits falling far below compensation levels for full-time workers, the Teamsters demanded that UPS create 10,000 new full-time jobs over the next several years. UPS offered to provide only 1,000 new full-time slots.
Again, the Teamsters prevailed. To sweeten the pot, negotiators also agreed to raise wages of part-time workers by 50 percent or $4.10 an hour over five years. That’s a bigger raise than the $3.10 increase in the new contract for better-paid full-time workers.
By giving a special boost to workers at the bottom, the new UPS contract complements Clinton’s strategy in dealing with troubling disparities in income levels - a higher minimum wage, expansion of the earned income tax credit and child tax credits for poor working families.
UPS, which lost $600 million during the strike, managed to win a longer contract than the Teamsters wanted by forcing the union to spread raises over a five-year span.
Ironically, UPS was viewed as a pro-union and well-paying company in the industry, with full-time drivers getting $20 an hour. But management misjudged the depth of rank-and-file anger over long-term trends in pay, benefits and working conditions.
UPS and its workers now face the challenge of keeping short-term layoffs to a minimum as they scramble to regain their huge customer base. Many analysts believe that the relatively short duration of the strike shouldn’t make this an insuperable task.
Beyond the immediate impact on UPS, the strike was notable for exposing the depth of national disquiet about stagnant wages amid soaring corporate profits and big salaries and bonuses for business executives.
The Teamsters were heartened by a Gallup poll that showed 55 percent support for the striking workers and only 27 percent backing for UPS. Sensing this public mood, White House officials shrugged off pressures from business groups to halt the strike, noting with some relish that such pleas came from interests normally opposed to activist government.
For decades the bad apple of the labor movement, the Teamsters this time were viewed as defending Main Street interests and weren’t fighting a major battle by themselves. Under the more assertive leadership of AFL-CIO President John Sweeney, the 13 million-member labor federation swung behind the Teamsters, offering financial support to deliver strike fund checks to workers on the picket lines.
“Because their fight is our fight, we’re making this strike our strike,” said Sweeney.
Labor’s comeback followed a long string of costly and ineffectual strikes that depleted union ranks and treasuries.
Fifty years ago, more than one out of every three workers belonged to a union. Today, it’s only one in seven.
But public perception, which drives political decisions, favored the union at a time when millions of American workers are increasingly nervous about job security and living standards. Carey and the Teamsters successfully tapped into that climate by depicting their fight as a battle for middle-class families caught in the undertow of a strong current of uncertainty that runs through an outwardly prosperous economy.