Abolishing Their Own Jobs

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16 Nov 2008 03:46 pm

Gregg Easterbrook's 1983 article on unions still holds some truth:

...automatic raises such as those provided by the ENA became the goal, and most big-labor contracts began to include inflation indexing and cost-of-living escalators that triggered automatic raises regardless of a company's financial outlook. Thus, by 1980, although U.S. manufacturers sold fewer cars than in 1970, the wages of auto workers, in real terms, had increased 15 percent. The wages of union workers in the tire industry increased by 7 percent between 1970 and 1980, while total production fell 16 percent.

By providing raises for many years and boasting about more to come, labor leaders have given members the impression that raises are mandatory. According to Schlossberg, "At some point, items like indexing and COLAs [cost-of-living allowances] became rituals. We didn't even think of them as contract gains anymore—they were just rights."

Workers aren't the only ones who have been led to expect more money regardless of the economy. Business managers, who also have enjoyed steady raises, bonuses, and benefits over the years, have come to think the same way. From 1970 to 1980, executives of major manufacturing firms gained an average of 16 percent in real income. David Roderick, the chairman of U.S. Steel, received $821,322 in 1981, which, adjusted for inflation, was 29 percent more than his predecessor earned a decade earlier—the same percentage of increase enjoyed by steelworkers. Frederick Jaicks, the chairman and chief executive of Inland Steel, received $330,000 in 1982, despite his company's shaky financial outlook and the fact that it lost $119 million that year. Edward Jefferson, the chief executive officer of Du Pont, who presided over the company's merger with Conoco in 1981—a decision viewed by many as a disaster for Du Pont's fortunes—received $887,299 that year.

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