Union economic power is one of those sensitive issues that most people - especially politicians - prefer to avoid.
You can understand why. It's easy to be genuinely confused about labor's proper role in society. Few of us want to return to the days when management held absolute control over wages and working conditions. Even in non-union companies, the existence of unions creates a useful check on management.
At the same time, though a gnawing feeling exists that major unions possess disproportionate economic power - power that adds an extra twist to inflation.
In fact, this is true. More than almost anyone realizes, the combination of inflation and recession in the 1970s has resulted in a stunning redistribution of wage income. From all the availabe evidence, the big industrial unions steel workers, auto workers, coal miners - rank among the major winners.
Curbing that power has emerged as one of the great political issues of postwar industrial democracy. It isn't easily done. Common sense suggests that when unions have a monopoly over labor, their power should be greatest. And a new study by labor economist Marvin H. Kosters confirm that conclusion: more highly unionized sectors, Kosters found, tend to have greater relative wage gains.
But efforts to restore a healthy balance - allowing more non-union competition - invariably encounter strong, usually effective union political opposition. The Carter Administration is struggling with the alternative approach - an "incomes policy" but is finding that path loaded with mines, too.
Some sort of wage restraint - call it a guideling or whatever - necessary forms the centerpiece of a wage policy. But, not surprisingly labor's very success at the bargaining table makes such a standard difficult to conceive.
If government sets the standard too low, big unions may strike to break it. That's just what the coal miners did in England (and what in effect, they did here last winter).
Yet, trying to minimize the risk by setting a higher standard might accelerate inflation. The mass of other workers -those in weaker unions or those who aren't unionized - would seize upon the government figure as a minimum "fair" wage increase.
There is, unfortunately, a large gap between major union settlements and average wage increases. Last year, major settlement ran about 10 per cent, against a rise in average hourly earnings of 7.6 per cent.
That sort of disparity has persisted for much of the 1970s and has created the dramatic wage changes reflected in the tables below. The first table lists the average gross wages for a variety of workers in 1960, 1970 and 1977. [TABLE OMITTED]
The second table translates these figures into percentage increases and compares them with the increase in inflation. [TABLE OMITTED]
What these tables show is that unions, by themselves, don't inevitably create outsized wage increases. One of the most striking aspects of the tables, for example, is the rapid advance of government and construction workers in the 1960s and, by contrast, their relatively poor performance in the 1970s. Both sectors have large union components.
But in the 1970s they also encountered significant constraints not present in the previous decade. In constuction, unemployment has been high and, at the same time, a highly competitive non-union sector has emerged. Unionized firms (and their unions) either curb costs or lose business and jobs.
The same thing happened to state and local government workers. In the 1960s employment and government spending expanded rapidly, teachers (half of all local government labor) were in short supply Unions organized and, as Thomas Kochan, professor of industrial relations at Cornell University, put it. "Politicians were less willing to take a strong stance against unions. . ."
Now the public climate - epitomized by Proposition 13 - has altered. "It's much more fashionable for politicians to take a strong line against [public worker] unions" said Kochan.
The big industrial unions distinguish themselves by the lack of comparable constraints. In some cases (steel, autos), unions have organized most of the industry and effectively enjoy industry and effectively enjoy industry wide bargaining; this eliminates labor costs as a competitive factor among firms. In other cases (rail-roads, truckers), regulatory agencies allow firms to pass along higher wage costs in higher prices.
What these sectors need is the cold these wind of competition, but, whenever a draft blows in, unions and companies join - understandably - to close the door. Steel companies and unions equally resist imports. Trucking companies and Teamsters alike oppose deregulation, which would encourage non-union firms.
The self-perpetuating nature of inflation remains the slippery eel that no one can grasp. To think that unions are its sole cause is unfair and wrong. The contemporary idea of "fairness" - which means that most employers grant wage increases roughly in line with inflation - explains much of the inflationary cycle.
But the unchecked power of big unions accelerates the cycle, and an "incomes policy" is a sloppy, probably unworkable, effort to impose artificial restraints. Better to find ways to let in the chilly breeze of competition.