Case Studies

Sweatshop

The sweatshops that emerged in the garment industry in late 19th century really came about because of the industry was intensely competitive and there were large numbers of workers, particularly women and immigrants, who were easy prey for many of the employers. Stiff competition and narrow profit margins gave employers a powerful incentive to get their labor as cheap as possible. The employers had the jobs the immigrants needed and they had millions to choose from. The advent of the "shirtwaist" factories with big assemblies of workers was a prelude to organization of workers. Before the assemblies, workers didn’t know each other…they feared each other. But now they were all on one floor…and because they could talk to each other, they got to know each other which led to organization.

The International Ladies Garment Workers’ Union, the ILGWU, started in 1900…but it took the immigrants almost 10 years for dissatisfaction with low wages and bad working conditions to strike.

After 3 months of closed factories and picket the strike was settled. The workers had won 12% to 15% raises, a closed shop, a 52-hour week, and something else…a role in setting their own wages and conditions.

Comment & Analysis by Richard Gill Certainly one important impact of the unions was on working conditions which were sometimes quite intolerable in those days. Unions, of course, also had an impact on wages. At this very low wage, businesses could hire a virtually unlimited amount of labor. They had no motive or need to pay higher wages. Now what the ILGWU union did was withdraw virtually the entire labor force from the market. Strike. Faced with no alternative, employers decided to settle for this higher wage. But when wages are raised above the market level, the ILGWU found that fewer workers will be employed.

New York Herald Tribune

The death of the Herald Tribune was the climax of the labor-management battle which pitted the paper against the International Typographical Union’s Local 6…"Big 6" to people in the trade, a union one scholar said had the most complete control over job conditions of any union in the world. In 1963, Big 6 President, Bertram Powers, had led New York’s newspapers out on a 114-day strike…a strike which drew fire even from normally close labor allies. Two years later, as 1965 contract negotiations drew near, New York newspapers and their union member employees were starting to feel the bite of computer technology.

Newspaper copy, which took a linotyper hours, would take minutes by computer.

Automated and computerized typesetting machinery could cost the jobs of union printers.

But higher wages without the increased productivity of automation could force the less profitable papers out of business.

The New York Herald Tribune didn’t join the automation trend simply because the unions wouldn’t let them. There was a new contract aimed at preserving jobs by making automation possible but difficult and expensive. The profitable papers, the New York Times and Daily News, swallowed the costly agreement. But on August 16, 1966…in the midst of a 113 day strike, the century old New York Herald Tribune breathed its last.

Comment & Analysis by Richard Gill Here was a shifting of both the business demand curves and the union-determined supply curve in the newspaper industry. When it came to the relatively unprofitable papers like the Herald Tribune, the rise in wages deprived them of any funds to introduce compensating technological changes and increase productivity. Hence, Their costs were too high. They closed.

Chrysler and the UAW

Under the leadership of the United Auto Workers workers’ wages kept pace with automakers’ prices and profits But the Energy Crisis of the ’70’s got the consumers to look and buy high mileage imports. Small foreign cars hit the auto industry like a cyclone. Chrysler was taking on red ink faster than it could bail it out.Lee Ioccoca chairman of Chrysler looked for the money to keep Chrysler afloat and approached Douglas Fraser who headed the United Auto Workers for help. Ioccoca laid out the economic case about the very survival of the corporation and survival of the workers’ jobs. Fighting for survival, union workers agreed to pay-cuts. In return the union was able to get profit-sharing and some assurances against additional plant closings. The union also proposed a structure where the union would have a meaningful voice in all levels of management.

UAW chief Fraser helped Chrysler secure a bailout loan from the US Government for Chrysler through their strong relationship with the Democratic leadership. When the UAW talked about the loss of half a million kobs, Capitol Hill listened…and President Jimmy Carter signed Chrysler loan guarantees into law. By 1984, Chrysler was back in the black and government guaranteed loans were repaid.

Comment & Analysis by Richard Gill There is a trend away from confrontation and toward cooperation between business and US labor unions. The central fact is that union membership as a percentage of the American labor force has been declining for thirty years. The Chrysler case brings out one reason for the growing pressure on unions: The competition of cheaper, and even in some cases more efficient, foreign labor. But there has also been an enormous change in our economy from hard-hat industries to service industries. White-collar workers are being organized by unions in many instances, but not on a scale to match the decline of the traditional union strongholds.

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