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the prestigious new york herald tribune closed during a strike. did the union kill the herald tribune? for 40 years, united auto worker presidents walter reuther, leonard woodcock and douglas fraser won higher pay for their members. why in 1979 would fraser agree to take less? employers and labor unions like buyers and sellers, try to make the best deal for themselves. labor and management: how do they come to terms? with economic analyst richard gill we'll examine that question on this edition of economics usa. i'm david schoumacher.

fewer than 1/3 of american workers are covered by union contract. but organized labor's strength at the economy's pressure points-- the big smokestack industries, the arteries of transportation and communication-- make them a force to be reckoned with. for more than 75 years labor unions have been a fact of american economic l how did they get pow? we are childn ofmmigrants.

the largest number came here around the turn of the century. millions, most of them jewish or italian, unskilled and uneducated settled in new york city's crowded tenements. what kind of work did america offer? fannie susskind remembers. we came with the needle in our hand. i've worked since age 12 when i arrived. union newspaper editor leon stein. the history is one of a sequence of newcomers to america who stepped foot into america and the sweatshop, almost simultaneously. it was a cesspool. lint and dust in the air darkness or inadequate lighting, crowded machinery, dirty floors men and women stripped to the waist, bending over their machines, children lolling about. a scene out of hell. joann argersinger, professor of history

at the university of maryland, baltimore county. the sweatshops in the late 19th century came about because of the industry's structure. there was a chaotic industry. it was intensely competitive. there were a large number 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. employers had millions to choose from. could these young girls possibly even the odds? it started with the shirtwaist, a kind of blouse whose nationwide popularity turned the women's garment industry from hand stitching to mass production. with the advent of the shirtwaist, you began to get factories big assemblies of workers. up until this time

workers didn't know each other. they feared each other. "how much is he asking in other departments?" now they were all on one floor. because they could talk to each other even though they were forbidden, they got to know each other the prelude to organization. the international ladies' garment workers union started in 1900. but it took the immigrants unsure of themselves almost 10 years for dissatisfaction with low wages and bad working conditions to burst into flames. there was no use asking the boss for a raise. he used to laugh at you. and piecework, when we used to work it used to be worse. the year was 1909. a notice had been issued of a meeting of all the shirtwaist makers in cooper union on november 22.

at that point, a little girl-- that's the way it's generally told-- raised her hand and said "i want to talk." they lifted her up. she said "i've heard enough." she worked in diamond waist company. she says, "it's time for a general strike." benjamin feigenbaum stepped forward, against the applause and said, "do you mean it?" "do you mean it?" he said. "if you mean it, raise your right hand and take the ancient hebrew oath." "may this right hand wither if i betray the cause, my tongue cleave to the roof of my mouth." ♪ let's put a stop to the sweatshop ♪ ♪ let's end the evil of the age ♪ ♪ fight to the finish ♪ ♪ we'll win the war we're waging ♪ ♪ for a decent living wage ♪ ♪ must we sew and sew solely to survive

♪ ♪ so some low so-and-so can thrive? ♪ ♪ no! ♪ ♪ he'll fry in hades if it's up to the ladies ♪ ♪ waistmakers union local 25 ♪ ♪ unfair! unfair! unfair! unfair! ♪ after three months of closed factories and picket lines in mid-february of 1910, a compromise. the strike was settled. the workers won 12% to 15% raises, a closed shop, a 52-hour week and a role in setting their own wages and conditions. how could new york garment manufacturers afford the better wages and conditions? the larger inside shops could afford larger wage increases because they produced year round. most of the times, they weren't affected by the seasonality. they had a standardized relationship with the textile firms providing raw materials.

all these factors allowed them to give wage increases. also, wage increases would be immediately reflected in the price increases in the garments. the waistmakers had made their point. one worker asking for a raise could always be replaced with someone else. but workers bargaining together and, if necessary, striking, could win a share of the fruits of their labor. the unions had made them strong. we asked economic analyst richard gill how the ilg used demand to get wage raises. one important impact of the union was on working conditions, which were sometimes intolerable in those days. unions, of course, also had an impact on wages. to analyze their effect, you must compare wage determination according to ordinary supply and demand

with wage determination when unions intervene. basically, without unions, wages would be determined by the intersection of business firms' demand curve for that particular kind of labor and the supply curve for such labor. this demand curve reflects two things. consumer demand for the product, and the productivity of the labor employed-- roughly, how much each added laborer will contribute to increase garment production. the supply curve reflects the availability of this particular kind of labor and workers' willingness to supply their labor at various wage rates. supply and demand are equated at this intersection of the two curves. we get an equilibrium wage here, and the quantity of labor that will be employed here. in the garment industry, what you had was an enormous availability of cheap immigrant labor

willing to work at virtually any wage in order to survive. you had a supply curve of labor that looked like this. at this very low wage, businesses could hire a virtually unlimited amount of labor. naturally, they had no motive to pay higher wages. they would operate here. what the ilg did, in effect, was simply to insist that the wage be raised from here to say, here. if employers objected, the union was capable of withdrawing virtually the entire labor force from the market, which is what strikes attempt to do. so the employers decided to settle for this higher wage. the employed garment workers' standard of living improved, through at a certain cost. other things being equal when wages are raised above the market

level fewer workers will be employed. in our diagram employment has now fallen from here to here. few people doubt that the growth of unions had mainly beneficial effects in the early sweatshop days. even then, however there were some costs. in later decades, these costs sometimes became substantial. august 16, 1966. vietnam war protestors clash with the house un-american activities committee. the prime interest rate rose to 6% and willie mays hit his 534th home run. [telephone rings] [ring] the new york herald tribune didn't report these, because as of 5:00 p.m., august 16, 1966, in the midst of a 113-day strike, the century-old new york herald tribune

breathed its last. there's no sense screaming about who did it. i mean, it's all gone. it's all academic now. the paper's gone. there's nothing else to say. clay felker ran the herald tribune's sunday magazine. the whole place was a ferment of creativity. it had very high standards and it emphasized good writing. it was in the business of discovering and supporting journalistic talent. and there were a wonderful collection of writers. when an honorable old paper like the herald tribune goes down in a strike, people start questioning union responsibility like "who killed the herald tribune?" the herald tribune's death was the climax of the paper's labor-management battle against the typographical union's local 6,

"big 6" in the trade. a union, one scholar said, with 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 on a 114-day strike, a strike drawing fire even from labor allies. it is clear that the local of the international typographical union and its president, bertram powers insofar as anyone understands his position are attempting to impose a settlement which could close several newspapers and throw thousands out of work. the printers returned to work in april 1963, but two years later, as 1965 contract negotiations neared new york newspapers and their union member employees were feeling the bite of computer technology. newspaper copy which took a linotyper hours

would take minutes by computer. automated and computerized typesetting machinery could cost union printers jobs. but higher wages, without automation's productivity, could force less-profitable papers to close. that would mean jobs, too. what would the union do? printers' union chief bertram powers. we were faced with the demand for the use of computerized typesetting and film a complete revolution in composury. we understood we'd have to handle it and work with them. we wanted to. we got into a dispute with the publishers about the introduction and about job protection. there never was a refusal to automate, but there was an inability to agree on how to handle the impact that would result from automation. but a.h. raskin, the new york times' labor reporter

saw it differently. the new york newspapers didn't join the automation trend because the unions wouldn't let them. and in 1965, after many efforts to break through the publishers, for reasons that remain incomprehensible gave bert powers of big 6, the typographical union here in new york an absolute veto power which he wanted. so that he then had the whip over automation in the composing. you could not move toward improved technology except with a green light from the union. this new contract aimed at preserving jobs by making automation possible, but difficult and expensive. the profitable new york times and the daily news swallowed the costly agreement. but for the herald tribune the outlook was red ink.

after the 1965 contract, the herald tribune desperate to cut costs threw in its lot with the journal american and the world-telegram and sun. the papers' workers paid the merger's price. over 2,000 layoffs including more than 400 big 6 printers. the contract designed to save jobs had, many thought wound up costing jobs. april 25, 1966 was to have been the newly merged papers' first day of publication. instead, it was the first day of another newspaper strike. by the end of may, big 6 had signed a contract with the world journal tribune, but the other unions hadn't. following tradition, printers refused to cross picket lines. the newsroom was empty the presses silent. meanwhile, the times, the post and the news

carved up herald tribune readership. at 5:00 p.m. on august 16, time ran out. what made the difference between life and death for the herald tribune? did the union kill the herald tribune? the issue wasn't really wages or cost of labor. if the printers had worked for nothing the paper would have closed. there is no way to let the unions off the hook as the ones who put the knife to its throat. who pulled the knife? they did. the new york times and daily news prospered even as the herald tribune expired. we asked richard gill why. here was a shifting of both the business demand curves and the union-determined supply curve in the newspaper industry.

for a prosperous paper its situation before the settlements would appear like this. its demand curve is strongly affected by the printers' productivity. the supply curve is really the union-determined wage. we have equilibrium at this wage with this number of printers. now two things happen. unions demanded higher wages. so the supply curve of labor shifted up here. but also the times introduced more highly automated typesetting machinery. this greatly raised the productivity of printers. since the demand curve for labor reflects printers' productivity, the new demand curve might look like this. here's the final situation. the times is basically ok. wages are higher. employment is lower.

but the productivity increase made possible by automation leaves the firm profitable. when it came to relatively unprofitable papers like the herald tribune however, the situation was quite different. they were fairly close to the margin to begin with. the rise in wages deprived them of any funds to introduce compensating technological changes. with no great upward shift in their demand curve for labor and high costs they collapsed. fortunately, there have been some recent cases where unions have actually helped prevent the collapse of employers. when early labor leader samuel gompers was asked what labor wanted, he answered in one word-- "more." under united auto workers presidents walter reuther, leonard woodcock and douglas fraser auto workers' wages kept pace

with auto makers' prices and profits. i'm never satisfied. did you need more time? no. there's always a next time. but big 6 printers had gotten more and seen their employer go under. a manufacturer trying to turn red ink into black could cut costs by cutting pay. but why would union members take less? in the sixties, general motors ford, and chrysler the so-called big three, dominated the auto shows and the roads. as in many basic industries, lack of competition allowed them to keep raising prices. consumers trading up had to pay up. but the sixties brought something new to the highways. at first, american drivers and producers couldn't be bothered. 30-cent gas made gas guzzlers a cheap luxury.

then came the energy crisis. consumers looked again at high-mileage imports. they were looking and buying. foreign cars hit the auto industry like a cyclone. chrysler was taking on red ink faster than it could bail it out. m.i.t. auto industry expert harley shaiken. when the oil embargo hit they were stuck with huge chrysler automobiles that got very poor mileage and were virtually unsellable at any price. they were making cars no one wanted. iacocca, i think when he first assumed the presidency of chrysler wasn't fully aware of the damage. the company needed money to survive. where could lee iacocca look for the money? douglas fraser headed the united auto worker it was 1979. i was president of the union.

we had already settled with gm and ford. iacocca asked to meet with me. he says, "after all these years "we no longer can afford in chrysler "to follow the pattern that's been established in ford and in general motors." he laid out the economic case, and it's convincing. you're talking about the very survival of the corporation. much more important to me was the survival of the workers. fighting for survival, union workers agreed to pay-cuts more than $450 million worth. but what could chrysler give the union in return? we had to make horrendous concessions and in those negotiations, we were able to get profit sharing. and we were able to get some assurances

against additional plant closings. we wanted a voice in the decisions that affect the lives of our members. they proposed to offer the union a meaningful voice in all levels of management, including the board of directors. chrysler needed more than cost cuts to design and build and market cars america wanted. it needed credit. chrysler's troubles had cut it off from traditional credit sources. so, like other borrowers with bad credit, chrysler chief iacocca asked a relative to guarantee a loan-- uncle sam. big business bailouts usually don't interest democratic congresses and presidents but the uaw and democratic leaders were old allies. when uaw chief fraser talked about the half a million jobs at stake

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. i knew how close we were to bankruptcy, but seeing things work like that where the government takes a hand and you formulate a constructive strategy where we had the equality of sacrifice. the uaw and chrysler resumed opposing positions when contract time rolled around again. but something had changed. at chrysler and around the country struggling companies and their workers set aside old antagonisms in the interest of survival. we asked one of the nation's best-known labor economists,

university of wisconsin professor jack barbash were we seeing a basic change? i think a basic change. the adversarial interest was pushed too far at the expense of this narrow community of interests. and what we're seeing now, from a broad analytical standpoint, is some enlargement of that area of common interest, like profit sharing, like worker involvement, like quality of work like employee ownership, illustrating the basic principle of cooperative relationships. a business-as-usual wage increase and price hike could have sunk chrysler. but government loan guarantees, the uaw's agreement to temporary pay-cuts, and chrysler's willingness to give the union unprecedented access to management's top councils

kept chrysler going. they had discovered that staying afloat could sometimes force two old antagonists to take the same tack. we asked richard gill what accounts for the trend away from confrontation and toward cooperation. the change is quite dramatic. the central fact is that union membership as a percentage of the american labor force, has been declining for 30 years. the chrysler case brings out one reason for growing pressure on unions-- the competition of cheaper foreign labor. but there's also been a change in our economy from hardhat industries to service industries. white-collar workers are being organized by unions, but it doesn't match the decline of traditional union strongholds. things are obviously changing. besides foreign competition,

the chrysler story also suggests another change. the occurence of actual cooperation between labor and management from opposite sides of the bargaining table. does this herald a new era in which unions and management place common interests above conflicts? maybe not, but one can dream, can't one? the immigrant garment workers who made the ilg learned the lesson that workers bargaining collectively can even the economic odds. but as other union workers found out, bargaining power is like a hammer. swinging it too hard may bring the whole business down. but used carefully it can build or even repair a solid structure on a firm foundation. for economics usa, this is david schoumacher. captioning is made possible by the

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