TWO EXTRAORDINARY labor contract negotiations--one covering the trucking industry, the other the automobile industry--now promise real progress in holding back inflation. These negotiations are not cheery news in the conventional sense, for they involve a retreat from wage concessions won in the past. But they represent an important, and perhaps historic, halt to the automatic process by which a lot of working people were unintentionally pricing themselves out of their jobs.
The Teamsters Union and the trucking industry have reached a national agreement that apparently includes a wage freeze and, even more surprising, an extensive abandonment of traditional featherbedding rules. In Detroit, the United Auto Workers are talking with General Motors and Ford about actual cuts in compensation. Both unions are under extraordinary competitive pressure, the truckers through the process of transportation deregulation, the auto workers from the Japanese imports.
These two unions differ in most other respects, but they have both been highly important in establishing national patterns in wages and fringe benefits. Big unions like these two set the pattern for the smaller ones, and that pattern in turn tends to influence wages among the large majority of American working people who do not belong to unions. Both the UAW and the Teamsters signed their last contracts in 1979, and both of those contracts called for wage and benefit increases of about one-third over three years. Those fat settlements proved expensive to more people than the employers alone.
Especially the auto contract talks, and the possibility of pay cuts there, constitute a useful--and necessary--acknowledgment by both companies and labor that American competitive performance is related to prices, and prices are related to wages. In the past couple of weeks, American automobile production has been barely half the volume at this time last year. At GM, the average production worker earns $20.83 an hour in cash and fringe benefits. The company has apparently said that if its employes will accept a rollback of $5 an hour, it will drop its prices by $1,000 a car. The UAW is not likely to accept the principle that the whole price differential between American and Japanese cars should be resolved at the expense of labor. But it now seems evident to everybody, on both sides of the table, that car sales won't go up until car prices come down.
It was clear that this year would be a signal one for labor contracts. The biggest of them were to be the Teamsters in the spring and the UAW in the autumn. The UAW talks are still only getting under way, and the Teamsters' agreement has yet to be ratified by the membership. But it may turn out that both of them are settled within the first few weeks of the year. That would be an extraordinary contribution to an early end of the recession and to a declining inflation rate throughout the year.