THE HAPLESS steel industry has now arrived at another huge wage settlement raising its labor costs probably by 40 percent over the next three years. Over the past decade, wages in the steel industry have gone up faster than the American average, and evidently they are now going to go up faster than ever. In an industry with little growth in productivity, those rising labor costs will make American steel still less competitive against foreign producers. The industry's demands for protection against foreign imports will get louder. There will be more mill closings, and the social distress will be real. But the companies and the unions, together, are bringing this on themselves.
The companies explain -- bitterly and accurately -- that because theirs is a product basic to many others, they have traditionally been under fierce political pressure to avoid strikes. This year's contract was negotiated under a no-strike agreement that guaranteed a high settlement. The process seems to have become uncontrollable.
There's beginning to be an unhappy resemblance between the steel and automobile industries. Both are in the middle range of technology, both have been raising wages far faster than the average, and both are losing important shares of their markets to imports. When you read about the tremendous layoffs in the automobile industry, and the closing of Ford's big plant in New Jersey, you cannot help feeling sympathy for the unemployed workers. But before you join the United Auto Workers' crusade for import quotas on Japanese cars, you might want to consider for a moment those outsized wage increases that the UAW won last fall.
In these mature industries, disproportionately high wages inevitably mean fewer jobs. It's a choice, and the unions have chosen the wages. That's fair enough -- but it's not fair to force consumers, through import restrictions, to pay for high-cost domestic products when there are less expensive alternatives.
President Carter was exactly right when he told the automobile industry, in his press conference yesterday, that there would be no protection from imported cars. Import quotas on foreign automobiles would be intolerably inflationary, and would remove the only real source of competition in the American market.
The steel settlement illustrates a disquieting pattern of wage increases that roll along under their own momentum regardless of economic conditions. The country is probably entering a recession, and the steel companies have a lot of aging and unneeded capacity. But wages are leaping along as though these were boom times in a rapidly growing industry. These very large wage increases are only accelerating the decline in jobs for steelworkers. It's sad. But if the unions and the companies aren't going to do anything about it, taxpayers and consumers don't have much responsibility to bail them out.