The Coastal Post - January, 1996


Doing It Unto Others

After a 42-day strike, Boeing workers at first vote rejected the proposed contract which had been negotiated with the help of a U.S. mediator. Boeing posted a profit of $856 million in 1994, showing fourth-quarter earnings of $157 million, or 46 cents/share. Boeing had cut 62,000 jobs since 1989 as it shipped more of its manufacturing overseas. The rejected contract offered only slight pay increases and would require workers pay part of their health care insurance. They would be "consulted" on any shift of work to subcontractors. Boeing had just announced bonuses of $2.5 million to five of its top executives because of rising stock prices. The Associated Press quoted union spokesman Matt Bates as saying, "It would be hard to find a better illustration of what's wrong with American management than Frank (Boeing exec) pocketing that huge bonus the same day the employees are asked to swallow 'takeaways'."

After further negotiations and encouragement from union leaders, the workers agreed to a modified contract. The strike had by then lasted 69 days. Workers are to receive a bonus amounting to 10% of their annual pay plus hourly wage increases from the present average of $20.37 to $23.20 by 1999 which hopefully will not fall much behind the projected cost-of-living increase. The company agreed to continue to cover health insurance, which it had attempted to shift to the workers. However, job security, an important item, was not addressed, so Boeing is still free to continue shifting some of its manufacturing overseas.

A second item of labor news reported in the New York Times (December 18) also concerned union protection of its workers. Macys (now owned by Federated Department Stores) ,just before the Christmas rush, announced it was reducing the sales commissions for its staff from the usual 6% to 3.96%. Sales commissions in department stores at Christmas often provide the sales personnel more than a quarter of their annual earnings. One employee of Macys reported: "People work here all year round just to make that extra money at Christmas." Thus the income reduction was significant. Those Federated Department Stores which had been unionized, however, were spared these commission cuts. James E. Grey, president of Macys, had told employees, "The belt-tightening would help squeeze out competition." Grey, however, confirmed employees' suspicions that "the pay of senior managers had not been affected."

A few weeks ago in the San Francisco Examiner, Sean Keeler reported Graef Crystal's latest survey of CEO salaries, noting that compared with other industrialized countries, the top 200 U.S. CEOs make 160 times the average worker's pay, compared to a 20-25/1 ratio in Japan, and a 30-35/1 ratio in Germany. Add to this largesse a tax structure which permits our management to keep a greater proportion than in other countries. Of even greater significance in the Crystal report was the absence of evidence that these salaries and bonuses were in any way related to CEO performance.

American industry in its downsizing frenzy ignores two important factors: First, the labor force to be most productive must be treated as an essential partner in industry, and labor's interests considered before the stockholders; and second, whenever jobs are shipped overseas where wages are less, a proportion of the purchasing power of this country is automatically reduced, which is reflected in reduced sales and a slowing of the total economy. Employees paid less, buy less. The golden rule is an economic as well as a social statement.

Corporate greed—there is no other word for this phenomenon—does not go unnoticed. Such "conspicuous consumption" creates an atmosphere of envy that eats at a company's soul, affecting workforce performance at every level. U.S. corporations have many times the labor disputes seen in either Japan or Germany. Our product reliability is harder to come by and the constant job-switching, the cost of which is never considered in the annual reports, drains corporate profits. U.S. unwarranted outlays for top management actually represent theft from the work force, the stockholder and even the consumer.

In his allegory Animal Farm, author George Orwell quotes the pigs who are stealing the farm from the other animals: "All the animals are equal, but pigs are more equal than the other animals." In industry as down on the farm, until Americans become a more compassionate society, it is obvious that union power is the only instrument available to help level the playing field.