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The original documents are located in Box 58, folder "1976/04/08 - Economic Policy Board"
of the James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 58 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
AGENDA
8:30 a.m. -
Roosevelt Room
April 8, 1976
1. Report of the Labor Negotiations Committee
Labor
2. Profile of the Unemployed
Malkiel
FORD LIBRARY if 07V838
ONLY
MINUTES OF THE
EPB/ERC EXECUTIVE COMMITTEE MEETING
April 7, 1976
ATTENDEES: Messrs. Seidman, Richardson, Zarb, Robinson, Train,
MacAvoy, Yeo, Zausner, Darman, Hill, Gorog, Porter,
O'Neill, Kearney, Schleede, Leach, Wood, Mitchell,
Penner, Walters, Hardy, Strelow, Peck
1. Clean Air Act Amendments
The Executive Committee discussed the legislative status of
the Clean Air Act Amendments which have been reported in both
the House and the Senate. Floor action in the Senate is ex-
pected following the recess the week of May 5. Floor action
in the House is expected in about three weeks. The discus-
sion focused on the auto emissions and significant deteriora-
tion provisions, the FEA/EPA study of the effect of the signi-
ficant deterioration provisions on power plant siting, and
on the need for further analysis of the impact on economic
growth of the significant deterioration provisions.
Decision
The Executive Committee approved the creation of a small task
group including representatives of FEA, EPA, Commerce, OMB,
Interior, and the Assistant to the President for Economic Af-
fairs to develop a recommended Administration position on the
auto emissions provisions and to further analyze and develop
a recommended Administration position on the significant de-
terioration provisions. The group will report back to the
EPB/ERC by April 14.
2. Oil Divestiture
The Executive Committee discussed the need for an Administra-
tion position on the vertical divestiture bill recently
passed by the Senate Judiciary Subcommittee.
Decision
The Executive Committee approved a question and answer for
the President which is attached at Tab A.
3. Natural Gas
The Executive Committee discussed current legislative alter-
natives to Senate and House passed versions of natural gas
legislation concluding that the possibilities of getting an
acceptable bill from the existing impasse are marginal.
EYES ONLY
FORD & LIBRARY GERALD
EYES ONLY
2
Decision
FEA will meet with appropriate Senate and House leaders to
see if a compromise is possible and report back to the
Executive Committee.
4. Extending the Jones Act to the Virgin Islands for Oil
Products (S. 2422)
The Executive Committee discussed a memorandum prepared by
OMB on "Extending the Jones Act to the Virgin Islands for
Oil Products (S. 2422) " The bill is currently scheduled
for mark-up in late April.
The Department of State indicated that they wish to be re-
corded as opposed to the legislation rather than as having
no objection. The discussion focused on the likelihood of
the bill being bottled up in Committee and the advantages
and disadvantages of the proposed legislation. FEA indica-
ted that they do not intend to use the entitlements program
in order to offset the impact of extending the Jones Act
to the Virgin Islands.
Decision
The Exective Committee approved submitting an information
memorandum for the President on the issue to apprise him
of the current legislative status and of the agency positions
on the bill.
EYES ONLY
RBP
FORD & LIBRARY GERALD
OIL COMPANY DIVESTITURE
Q.
What is your position on the recent oil company divestiture
bill approved by Senator Bayh's subcommittee?
A.
I am very concerned about the thrust of this bill. It
assumes that, by reorganizing a major segment of the
oil industry, we can lower prices and increase secure
supplies.
I have not seen any evidence to indicate that these results
would occur.
If it could be positively shown that divestiture would
improve the delivery of secure volumes of oil at lower
prices to the American people, I would favor it.
The advocates of the bill reported by the subcommittee have
not made that case. There is a good chance that the bill
would retard, rather than expand, domestic production and
actually increase our vulnerability to high priced foreign
sources.
Until it can be demonstrated that divestiture legislation
would improve rather than worsen our energy situation,
I must oppose such proposals.
April 7, 1976
ERC/EPB
FORD is LIBRARY GERALD
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
March 27, 1976
ALAN GREENSPAN, CHAIRMAN
PAUL W. MACAVOY
BURTON G. MALKIEL
MEMORANDUM FOR THE EXECUTIVE COMMITTEE OF
THE ECONOMIC POLICY BOARD
Subject: The Nature of Unemployment, February 1976
We have prepared the following paper which
can serve as the basis of the EPB discussion on
unemployment scheduled for Tuesday, March 30.
Burton Malked
Burton G. Malkiel
Member
a. FORD
ANERICANA REVOLUTION
1776-1976
@
is
The Nature of Unemployment,
February 1976
During the last few months uncmployment has declined and employment
has increased. In February, the seasonally adjusted unemployment rate was
7.6 percent, a decline of 1.0 percentage point since October. The decline
in unemployment was just over 900,000. Since October, employment has
increased by about 1.5 million and the labor force has grown by nearly
one-half million. As the unemployment rate has declined, the characteristics
of the unemployed and the nature of unemployment have changed.
Characteristics of the Unemployed
As indicated in Table 1, the decline in unemployment rates in the
last four months has been widespread among the demographic groups. In
general, unemployment declined more sharply for those groups for whom
the rate increased most dramatically during the recession. This is shown
in Table 1 and Table la by comparing the rise in unemployment among demo-
graphic groups from 1973 (when the rate was 4.9 percent) to October 1975,
with the decline from October 1975 to February 1976. Since October 1975,
the decline in the unemployment rate among Negroes and among teenagers
has been relatively smaller than for other groups, but this tends to be
a typical pattern in the early stages of an economic recovery. As the
recovery continues we would expect the unemployment rate for blacks and
for teenagers to decline more sharply than for the economy in general.
Unemployment rates and the percent distribution of unemployment (Tables
1 and la) by occupation and industry indicate that the greatest improvement
since October 1975 has been in the blue collar jobs and goods producing (con-
CERÁLO FORD
-2-
Table 1
Unemployment Rates
(Seasonally adjusted)
October
December
February
1973
1975
1975
1.976.
Demographic Characteristics
Total, 16 years and over
4.9
8.6
8.3
7.6
Males, 20 years and over
3.2
7.2
6.6
5.7
Females, 20 years and over
4.8
7.9
8.0
7.5
Teenagers (16-19 years)
14.5
19.8
19.6
19.2
White
4.3
8.0
7.6
6.8
Negro and other races
8.9
14.3
13.8
13.7
Household Heads
2.9
6.0
5.7
4.9
Married Men, Wife present
2.3
5.3
4.8
4.1
Full-time Workers
4.3
8.5
7.9
7.1
Unemployed 15 weeks or longer
0.9
2.9
3.3
2.7
Occupation
White Collar
2.9
4.8
4.8
4.6
Blue Collar
5.3
11.6
10.7
9.3
Service Workers
5.7
9.1
9.2
8.9
Industry
Private Nonfarm Employees
4.8
9.2
8.9
8.0
Construction
8.8
18.1
16.6
15.5
Manufacturing
4.3
10.6
9.6
8.0
Transportation and
public utilities
3.0
5.6
5.1
4.7
Trade
5.6
9.1
9.4
8.4
Other Services
4.8
7.0
7.0
6.8
Government
2.7
4.3
4.4
4.4
Source: Bureau of Labor Statistics
is
FORD
GERALD
-3-
Table la
Composition of Unemployment
(seasonally adjusted)
Oct.
Dec.
Feb.
1973
1975
1975
1976
Demographic Characteristics
Total, 16 years and over
100.0
100.0
100.0
100.0
Males, 20 years and over
37.0
46.0
43.3
40.9
Females, 20 years and over
34.5
32.4
34.4
35.3
Teenagers (16-19 years)
28.5
21.5
22.3
23.8
White
79.2
82.5
80.8
78.7
Negro and other races
20.8
18.9
18.9
20.7
Household heads
34.2
39.5
39.6
37.0
Married men, spouse present
21.0
26.5
24.8
23.0
Full-time workers
76.5
83.8
81.8
79.6
Unemployed 15 weeks or longer
18.9
33.7
39.8
35.2
Occupation
Total
(1)
100.0
100.0
100.0
100.0
White Collar
28.3
26.3
27.4
29.0
Blue Collar
39.2
45.9
43.9
41.1
Service
15.7
14.7
15.5
16.2
Industry
Total (2)
100.0
100.0
100.0
100.0
Private nonfarm employees
72.5
77.3
77.2
75.3
Construction
9.3
10.1
9.4
9.4
Manufacturing
21.5
27.6
26.2
24.0
Transporation and public
utilities
3.3
3.5
3.2
3.2
Trade
20.5
19.4
20.7
19.9
Finance and. service
17.4
16.6
17.3
18.4
Government
8.8
8.0
8.7
9.7
(1)
Data for farm workers and new entrants are not shown separately.
(2)
Data for new entrants, farm workers, self-employed and unpaid family
workers are not shown separately.
Note:
Detail may not add to total because of rounding and because the sum
of seasonally adjusted series need not equal the seasonally adjusted
value of the sum.
FORD
Source: Bureau of Labor Statistics.
GERALD
-4-
struction and manufacturing) industries. The decline in unemployment
rates among workers in white collar and service occupations has been very
small. However, the unemployment rate for persons in wholesale and retail
trade and in transportation and public utilities has declined.
Table 2 presents data on the distribution of unemployment by reason
and by duration. In a recession the proportion of the unemployed who are
job losers increases sharply. As the length of an economic downturn increases
the proportion of the unemployed who have been unemployed for a long period
of time (15 or 27 weeks or more) also increases. (Compare 1973 with 1975
in Table 2.)
Since the second half of 1975, the decline in unemployment has been
greatest for persons unemployed because they had lost their job. This is
shown by the declining proportion of the unemployed who are job losers
(as indicated in Table 2) and is largely the result of the recall of
workers previously placed on job layoffs.
The very long duration unemployed, those unemployed 27 weeks or
longer, show a substantial increase in the share of unemployment from
October to February (Table 2). This is the only duration of unemployment
category in which there has not been a decline in the absolute number of
unemployed persons since October.
A frequently cited statistic is the average duration of unemployment
for those currently unemployed. This statistic is easily misinterpreted.
An increase in average duration can occur even if the unemployment situation
improves, if the improvement is greatest for those most recently unemployed.
If the size of new flows into unemployment decrease sharply and the very
is
FORD
GERALD
-5-
Table 2
Distribution of Unemployment by Reason and by Duration
(Seasonally adjusted, percent)
October
December
February
1973
1975
1975
1976
Reason for Unemployment
Total Unemployed
100.0
100.0
100.0
100.0
Job losers
38.7
56.0
51.7
49.1
Job leavers
15.7
10.2
11.3
12.1
Reentrants
30.7
23.4
25.8
26.6
New entrants
14.9
10.4
11.3
12.1
Duration of Unemployment
Total Unemployed
100.0
100.0
100.0
100.0
Less than 5 weeks
51.0
36.9
33.2
38.1
5 to 14 weeks
30.1
29.9
28.1
26.3
15 weeks or more
18.8
33.2
38.6
35.6
15 to 26 weeks
11.0
15.1
17.7
13.6
27 weeks and over
7.8
18.1
20,9
22.1
Average (mean) duration
in weeks
10.0
15.6
17.0
16.2
Note:
Detail may not add to total due to rounding.
Source: Bureau of Labor Statistics.
is
FORD
GERALD
-6-
long duration unemployment declines only slowly, the average duration of
unemployment could increase.
Unemployment and Family Income
Unemployment compensation benefits are generally available for
persons who lost their last job, and in many instances also for those who
voluntarily left their last job. Persons who are new entrants to the
labor force are not eligible, while reentrants are rarely eligible for
benefits. In February 4.3 million persons claimed regular benefits (up to
26 weeks) under the regular state or Federal programs (including SUA) and
1.8 million claimed extended benefits (Federal-State Extended or Federal
Supplemental Benefits), for a total of 6.1 million claimants.
Of the 8.0
million unemployed in the CPS in February 1976, only 5.4 million had
either left or lost their last job and another 2 million were reentrants
to the labor force. Then, for February the ratio of UI claimants to
unemployed job losers and leavers was 1.1 and to all experienced workers
(job losers, leavers and reentrants) was 0.8. The ratio of the number of
claims for extended benefits to the number of experienced workers unemployed
27 weeks or longer was 1.2. The unemployment compensation system appears to
be providing benefits for nearly all unemployed persons with work experience.
1/ Not all claimants receive a benefit check.
2/ The ratio of UI claimants to job losers and job leavers can exceed unity
for several reasons.
1. Some claimants are employed and receive partial unemployment insurance.
2. Some claimants may be reported in the CPS as reentrants (e.g., a person
works for a year, is placed on a layoff, doesn't look for work for a
few weeks and then applies for benefits and starts searching for a job).
3. Some claimants may be reported in the CPS as outside the labor force
because they do not have a job and are not searching for one.
4. There is sampling variability in the CPS data.
Because current data sources do not permit a match up of CPS and UI status,
the magnitude of these factors cannot be ascertained.
RAAD FORD
-7-
It should be noted that unemployment of a family head does not
necessarily imply the absence of any employed person in the family.
In March 1975, the latest data available, among all families in which
the head was unemployed, 42 percent had another member who was employed.
Among husband-wife families in which the husband was unemployed, 48 percent
had another member (usually the wife) who was employed. There has been
an upward trend in the proportion of male family heads with an employed
family member -- from about 40 percent in the late 1950's and early 1960's
to about 49 percent in the 1970's.
Long Duration Unemployment
Some of the long duration unemployed can probably be explained as
so-called "structural unemployment" arising from the lack of appropriate
training or the obsolescence of skill, or from old age. This kind of
unemployment is only very slowly reduced by a strong economic recovery.
Another component might be considered "induced unemployment." This
is unemployment reported by persons who would otherwise be outside the
labor force (due to old age, ill health, family responsibilities, etc.)
if not for the availability of very long duration unemployment compensa-
tion benefits. This problem may be more pronounced in a recession because
of the availability of long duration benefits and the difficulty of
effectively enforcing the work test for unemployment compensation during
a period of high unemployment.
The scanty data that exist for the unemployment compensation system
indicate some tendency for older workers and women to have a greater
frequency of exhausting benefits. It has been suggested that the high
GERALD R. FORD
-8-
unemployment benefits relative to their after-tax earning potential may
have induced this longer period of unemployment. The extent to which
this is in fact the case is still unclear.
Data do not exist for the number of long duration unemployed persons
actually receiving unemployment compensation benefits since neither the
Current Population Survey nor the unemployment insurance system ask
questions that could result in this identification. Therefore, it is
not possible to distinguish among the very long duration unemployed those
for whom unemployment is cyclically induced, those for whom unemployment
can be considered structural and those whose unemployment is induced by
the availability of unemployment benefits.
In February 1976, 35 percent of the unemployed had been unemployed
15 weeks or longer and 19 percent were unemployed 27 weeks or longer
(Table 3). By comparison, in February 1973 when the seasonally adjusted
unemployment rate was 5.0 percent, only 20 percent of the unemployed had a
duration of 15 weeks or more. Long duration unemployment tends to be
relatively more common for older persons. It rises more sharply with age
for women than for men in a recession, but not in a year of low unemployment.
Among all unemployed persons age 55 and over, nearly a half were unemployed
15 weeks or over in February 1976 compared to 35 percent in February 1973.
Among the unemployed, in February 1976 long duration unemployment
was more frequent (Table 4) for men than for women, for blue collar and
white collar workers than for service workers, in manufacturing than among
private sector service or construction workers. These differences by sex,
occupation and industry are much smaller, or nonexistent, for periods, of
lower unemployment (see data for February 1973 in Table 4.) For adult
men and adult women long duration unemployment is far more frequent for
GERALD
Table 3
Characteristics of the Long Duration Unemployed,
by Age and Sex, February 1973 and 1976
Unempl.
Unempl.
15 weeks
27 weeks
GERALD
Unempl.
Unempl.
?
or longer
or longer
All
15 weeks
27 weeks
as percent
as percent
FORD
unemployed
or longer
or longer
of unempl.
of unempl.
Feb. 1976
Feb. 1976
Feb. 1976
Feb. 1973
Feb. 1976
Feb. 1976
Total - 16 and over
8,033
2,793
1,552
20.2
34.8
19.3
16-19
1,654
350
125
13.7
21.2
7.6
20-24
1,838
607
303
16.0
33.0
16.5
25-54
3,768
1,455
881
22.9
38.6
23.4
55-64
595
301
187
35.8
50.6
31.4
65 and over
178
82
57
33.1
46.1
32.0
-9-
Males 16 and over
4,610
1,736
952
22.6
37.7
20.7
16-19
941
224
72
15.0
23.8
7.7
20-24
1,071
393
189
18.9
36:7
17.6
25-54
2,109
886
548
24.7
42:0
26.0
55-64
367
178
105
41.7
48.5
28.6
65 and over
121
57
40
(1)
47.1
33.1
Females 16 and over
3,424
1,058
600
17.2
30.9
17.5
16-19
713
126
54
12.2
17.7
7.6
20-24
767
214
114
12.0
27.9
14.9
25-54
1,660
570
334
20.7
34:3
20.1
55-64
228
123
81
28.2
53.9
35.5
65 and over
57
25
17
(1)
43:9
29.8
(1) Percent not shown where base is less than 75,000.
Source: Bureau of Labor Statistics.
Table 4
3/76
Characteristics of the Long Duration Unemployed,
Marital Status, Occupation and Industry,
February 1973 and 1975
Unempl.
Unempl.
15 weeks
27 weeks
Unempl.
Unempl.
or longer
or longer
All
15 weeks
27 weeks
as percent
as percent
unemployed
or longer
or longer
of uncmpl.
of unempl.
Feb. 1976
Feb. 1976
Feb. 1976
Feb. 1973
Feb. 1976
Feb. 1976
Marital Status
Males - Total
4,610
1,736
952
22.6
37.7
20.7
Married, spouse present
2,139
854
520
24.8
39.9
24.3
Widowed, divorced or
separated
483
232
133
29.3
48.0
27.5
Never married
1,987
650
299
19.1
32.7
15.0
Females - Total
3,424
1,058
600
17.2
30.9
17.5
-10-
Married, spouse present
1,662
539
318
16.3
32.4
19.1
Widowed, divorced or
separated
692
237
135
18.0
34.2
19.5
Never married
1,069
282
147
17.3
26.4
13.8
Occupation
White collar
2,151
780
443
19.7
36.2
20.6
Blue collar
3,754
1,435
807
21.3
38.2
21.5
Service
1,253
359
195
20.6
28:6
15.6
Industry
Agriculture
181
61
22
20.9
33:7
12.2
Construction
1,001
339
175
17.7
33.9
17.5
Manufacturing
2,037
907
571
21.9
44.5
28.0
Transportation &
utilities
329
128
74
27.8
38.9
22.5
Trade
1,650
473
251
19.5
28.6
15.2
Finance & services
1,683
554
289
20.2
32.9
17.2
Public administration
228
92
48
25.8
40:4
21.1
No previous experience
756
185
91
16.6
24.6
12.0
Includes wage and salary workers only.
-11-
persons who lost their last job, particularly in a recession (Table 5).
Among teenagers, who as a group have a low incidence of long duration
unemployment, the reason for being unemployed is apparently unrelated
to duration of unemployment in a recession.
In summary, Tables 3 to 5 indicate that long duration unemployment
during a recession is more common among unemployed persons who are older,
lost their job, had been employed in manufacturing and were blue collar
or white collar workers. In general, blue collar, manufacturing and
prime age workers have been the group that have experienced the most
rapid decline in unemployment in recent months. Further employment
growth is anticipated for these workers.
Policy Implications
The analysis of the nature of unemployment offers some insight into
the likely success of programs to reduce unemployment. Two frequent proposals
are to increase public service employment and to increase public works projects.
These programs tend to have long lead times, particularly public works, and
divert workers from searching for a new job or being available when recalled
part-time or full-time to their previous job. Thus, they are likely to
be most effective if the unemployment is expected to have a long duration,
especially if there is little prospect of returning to one's previous
job.
Even in a recession, however, most spells of unemployment are of
short duration. Among those currently unemployed, long duration unemployment
is disproportionately concentrated among job losers and in the cyclically
The proportion unemployed 15 weeks or longer hardly varies by reason
of unemployment.
GERALD
-12-
3/76
Table 5
Characteristics of the Long Duration
Unemployed, Reason for Unemployment,
February 1973 and 1976
Unemployed 15 weeks
Unemployed 27 weeks
All
or longer as percent
or longer as percent
unemployed
of unemployed
of unemployed
Feb. 1976
Feb. 1973 Feb. 1976
Feb. 1976
tal - 16 and over
8,033
20.2
34.8
19.3
Job losers
4,493
25.6
42.4
24.7
Job leavers
863
19.6
29.7
15.9
Reentrants
1,925
13.5
23.2
11.1
New entrants
752.
16.7
24.7
12.1
ales 20 and over
3,669
25.0
41.2
24.0
Job losers
2,726
26.5
44.3
26.4
Job leavers
311
22.2
33.4
18.6
Reentrants
565
21.8
30.0
15.4
New entrants
66
(1)
(1)
(1)
males 20 and over
2,711
19.0
34.4
20.1
Job losers
1,285
28.7
45.8
28.7
Job leavers
391
22.3
32.6
17.9
Reentrants
922
9.0
20.0
10.0
New entrants
113
(1)
27.4
13.3
enagers 16-19
1,654
13.7
21.2
7.6
Job losers
482
12.6
22.5
4.8
Job leavers
161
9.8
15.3
4.9
Reentrants
438
13.2
21.2
7.7
New entrants
573
15.7
21.7
10.5
1)
Percent not shown where base is less than 75,000.
Source: Bureau of Labor Statistics.
&
FORD
GERALD
-13-
sensitive manufacturing industries. Yet, as employment opportunities
expand in the economy, these are the very groups that can expect the
sharpest decline in unemployment, including long duration unemployment.
The high youth unemployment rate is apparently not due to a small
proportion of youths having an exceedingly long unemployment duration, but
rather to a high incidence of short spells of unemployment. This short
duration unemployment, largely due to labor force entry (both new entry
and reentry) does not reflect chronic labor market problems for individual
youths. It would not appear to be relevant for long-term readjustment
through government intervention via public service employment or public
works.
The groups for whom a long-term adjustment through direct government
intervention would appear to be most relevant are older persons on long
duration unemployment for whom the prospect of being recalled to the
previous job is small. However, the question then arises as to whether
productive public service employment or public works jobs could be
designed for them and whether they would in practice be employed in
such programs. Our experience with the CETA public service employment
programs, for example, indicates that older workers and those with little
schooling are under-represented in PSE funded job slots in relation to
their proportion among the unemployed and the long duration unemployed
(Table 6).
FORE
1/ The proportion of older persons and those with little schooling is
greater for the long duration unemployed than for the unemployed as a
GERALD
whole.
3/76
-14-
Table 6
Characteristics of Participants in
CETA and the U.S. Unemployed,
Fiscal Year 1975
(percent)
CETA
U.S.
Title I
Title II
Title VI
Unemployed
Total -- percent
100
100
100
100
Sex: Male
54
66
70
55
Female
46
34
30
45
Age:
Under 22 years
62
24
21
35
22-44 years
32
63
65
46
45 and over
6
13
14
19
Education:
8 years or less
13
9
8
15
9-11 years
48
18
18
29
12 years or over
39
72
73
56
Note: Titles II and VI are primarily public service employment while
Title I is intended to be primarily job related training, often
on a PSE job.
Detail may not add to 100 due to rounding.
Source: Employment and Training Administration, Department of Labor.
GERALD
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
MAR 25 1976
MEMORANDUM FOR THE ECONOMIC will POLICY BOARD
FROM:
W. J. USERY, JR.
Subject: 1976 Collective Bargaining Negotiations
As you are well aware, in the next year or so a number of
major collective bargaining agreements 1/ will expire,
affecting roughly 4.5 million workers. This memorandum
briefly reviews the characteristics of collective bargaining
in the principal industries affected and the issues that are
expected to dominate those negotiations.
The first major negotiation was concluded successfully on
February 2, when the International Ladies Garment Workers
Union reached agreement with dress manufacturers in eight
states; the three-year contract, covering 65,000 workers,
provides for a pay increase of about 10 percent in the first
year, with lesser adjustments in 1977 and 1978. Ahead and
currently in progress are major negotiations in several
strategic industries:
Trucking
March 31; 450,000 workers
(discussed at TAB A);
Rubber
April 20; 67,700 workers
(TAB B) ;
Electrical
Equipment
June 27, July 7; 155,900 workers
(TAB C) ;
Meatpacking
August 31; 37,500 workers
(TAB D) ;
Automobiles
September 14; 715,350 workers
(TAB E) ;
Farm Equipment
September 30; 100,200 workers
(TAB E) ;
Construction
March-July; 746,000 workers
(TAB F) ;
Retail Food
March-July; 99,100 workers
(TAB G).
GERALD 913 P. FORD
In all, upwards of 40 percent of the 24 million union
members will be working under new collective bargaining
agreements by the end of the year, nearly double the number
affected by 1975 negotiations.
- 2 -
Outlook
There will be a wide range of settlements occurring this
year, reflecting different conditions in the affected
industries and different membership concerns. Although
settlements will vary, the average wage adjustment for the
first year of new contracts is likely to be close to that of
1975 agreements--in the 9-10 percent range, and in the area
of 7-8 percent measured over the life of the contract.
Where cost-of-living adjustment clauses (COLA) have been in
effect, 2/ pressure for catch-up wage increases will be
moderated. However, COLAs typically do not fully compensate
for the rising cost of living; some for example, include a
"cap" (adjustments are limited to a maximum increase) and
in others the adjustment formula does not keep pace with the
CPI. The 1970-75 ratio of escalator wage increases for
workers receiving them to CPI increases is estimated at
0.6; 3/ some (e.g., the Auto Workers), however, benefited
more than others (e.g., the Teamsters). Where contracts
include COLAs, it is likely that the provisions of the
adjustment--as well as catch-up wage increases--will be
important issues. In industries where no escalator clause
exists, such as rubber, strong efforts will be made to
recover lost ground, and this may complicate negotiations.
In addition to wage adjustments, pension arrangements
(partly because of ERISA) and job security (e.g., efforts
to increase employment by a reduced work week with no cut in
pay) are likely to be major topics of bargaining.
1/ BLS defines a "major collective bargaining agreement"
as one which covers 1,000 workers or more.
2/ In 1975, 58 percent of workers in major collective
bargaining units (v. 26 percent in 1970), were covered by
COLA provisions; this figure represents approximately 7.7
million employees.
3/ For major agreements, such as automobiles and trucking,
the ratio is closer to 0.8.
GENALU
TAB A
TRUCKING
The National Master Freight Agreement (NMFA) 1/ covering
approximately 450,000 members of the International Brother-
hood of Teamsters (IBT), expires on March 31, 1976.
Structure of Bargaining
Economic issues are negotiated at the national level with
Trucking Employers, Inc. (TEI), an industry association.
Other contract items, such as work rules and grievance
procedures, are bargained locally. Over-the-road drivers
are paid by the mile for driving time and on an hourly basis
for non-driving time; other workers are paid on an hourly
rate. Compensation for both groups of employees is deter-
mined simultaneously.
These negotiations have been complicated in the past by IBT
locals in Chicago (38,000 members) -which bargain indepen-
dently--and the Chicago Truck Drivers Union (CTDU) (12,000
members) --an independent union which competes with the IBT
Chicago locals. In 1970, after the national agreement had
been completed, the CTDU negotiated a higher settlement,
forcing the Teamsters to reopen negotiations on the master
agreement. In recent years, however, the CTDU has engaged in
joint bargaining efforts with the IBT Chicago locals.
Wage Trends
Average weekly earnings in the trucking industry have
increased more than the national average over the last
decade, but the COLA 2/ in the NMFA has not kept pace with
the CPI during the last two years.
Industry Trends
Operating revenues fell steeply in 1975, and there was a
reduction of about 100,000 workers to the current level of
900,000.
1/ The NMFA is by far the largest agreement in the industry
and sets the pattern for other negotiations which cover
another 250 000 workers.
2/ For hourly workers: $.01 per .3 increase in the CPI
(1957-59= 100) ; for mileage workers: .25 mills per mile
(10 mills=1 cent) for each .3 increase in CPI (1957-59=100).
Guarantee of 8 cents, and a cap of 11 cents.
Key Issues
The IBT has demanded: increases in the weekly employer
contributions to the pension fund, and health and welfare
fund, of $12 in each of the three contract years, the
division of the total $36 increase between the two funds to
be determined during the negotiations (employers currently
contribute $22 per week to the pension funds and $21.50 per
week to the health and welfare fund) ; a substantial increase
in pay ($2.50 per hour for hourly workers and $.18 per mile
for over-the-road drivers over the course of the contract) ;
unlimited COLA.
Outlook
Though there have been local and wildcat strikes, there
has never been a national trucking strike. This year's
negotiations, however, are complicated by the activities of
two independent groups: the Fraternal Association of Steel
Haulers, (who staged isolated strikes in 1973) who have
vowed to operate if there is a strike, and the Independent
Truckers Association, who have threatened to strike unless
the IBT's demands are met. An additional element in the
negotiations is the mid-June elections for IBT officers, at
which President Fitzsimmons is up for re-election.
RALD
TAB B
RUBBER
Contracts at Goodyear, Firestone, B.F. Goodrich and Uniroyal
expire April 20 (General Tire's contract expires May 15)
affecting 67,700 members of the United Rubber Workers.
Structure of Bargaining
The URW bargains with each of the major producers sepa-
rately on a company-wide basis. In the past, the URW
selected a 'target' company (or companies) for serious
negotiations and the settlement reached there set a pattern
for the other major producers. However, at the URW's 29th
Convention in October 1975, a constitutional amendment was
passed removing the 'target' company concept and allowing
for strikes against any of the affected companies. Non-
economic issues are bargained at the plant level.
Bargaining may be complicated by the International Society
of Skilled Trades (ISST) which is trying to organize URW
skilled workers; the NLRB regional office in Cleveland
recently dismissed ISST craft severance petitions for four
of the five major companies, but the ISST plans to appeal
these decisions to the full Board and has threatened a
walkout if the decision is upheld. Interest among skilled
workers in a separate union has been caused by the shrinking
differential between skilled and unskilled workers (since
1967, wage increases have been in cents-per-hour applied
across-the-board).
Wage Trends
Over the last decade, average weekly earnings for workers
in the tire industry have increased less in percentage terms
than the corresponding rate for all manufacturing workers.
The position of rubber worker salaries with respect to those
of auto workers has declined significantly over the last
decade. The current contract lacks a COLA provision.
Industry Trends
During the recession, the Big Five tiremakers, like all
automobile related industries in 1975, had sharply reduced
income ($273.4 million down from $491.5 million in 1974).
Employment in the industry dropped from 102,000 production
workers in July, 1973 to 83,000 in July, 1975.
Key Issues
Catch-up wage increases; absence of a cost-of-living esca-
lator clause (COLA) ; the wage differential between workers
engaged in tire manufacturing and workers employed in other
product lines (currently 26%) (management wants to differen-
tiate between the two types of workers, labor does not) ;
geographic wage differentials; skilled trades differential.
Outlook
Not good.
STATES
FORD
&
CERALD
ELECTRICAL EQUIPMENT
Contracts between the industry leaders, General Electric
and Westinghouse, and a coalition of unions headed by the
International Union of Electrical, Radio, and Machine
Workers (IUE) and the United Electrical Workers (UE)
expire on June 27 at GE and on July 11 at Westinghouse,
affecting 155,900 workers. In addition, bargaining in the
industry will take place at various times in 1976 between a
dozen other unions and many other companies.
Structure of Bargaining
Economic terms are bargained at the national level; other
issues, such as grievance procedures, are negotiated at
the plant level. The electrical unions bargaining position
is relatively weak compared to union strength in trucking or
automobiles; a significant number of GE and Westinghouse
plants are non-union.
Wage Trends
Electrical workers have a "capped" 1/ COLA clause 2/ in
their contract, which has kept their adjustments lower
than those received by auto workers and steel workers,
though slightly higher than those provided under the
National Master Freight Agreement.
Industry Trends
During the recent recession, industry sales fell drastically,
though prices increased. Profit margins for both GE and
Westinghouse declined in 1975. Seasonally adjusted industry
employment sank from 2,083,000 in December, 1973 to 1,712,000
in July, 1975, but has increased to 1,796,000 by February of
this year.
1/ The "cap" each year varied between 5 and 14 cents
per hour.
2/ ($.01 per .3 percent rise in CPI (1967=100) )
FORD
GERALD
Key Issues
Uncapping the COLA; catch-up wage increases; supplemen-
tal unemployment benefits; union shop; improved pensions.
Outlook
Unlikely to present problems; bargaining in 1973 was peaceful.
CORD is
TAB D
MEATPACKING
The master meatpacking agreement between the Amalga-
mated Meatcutters and Butcher Workmen (AMCBW) and
the major meatpackers (Armour, Wilson, Morrell, Cudahy,
Swift) affecting 37,500 workers expires on August 31.
Structure of Bargaining
Bargaining occurs simultaneously among the largest
companies, with the first settlement setting a pattern
for the others.
Wage Trends
The agreement includes a COLA provision, 1/ which has
increased hourly earnings at a rate above the national
average for the private non-farm economy, but has not kept
pace with the CPI.
Industry Trends
Companies enjoyed improved profit margins in 1974 and 1975
on rising sales; unemployment in the industry is below the
national average.
Key Issues
Catch-up wage increases; job security in response to increas-
ingly automated plants; improvements in COLA provision.
Outlook
No problems expected.
1/ $.01 per 0.4 rise in CPI (1957-59) =10. No cap.
GERALD
TAB E
AUTOMOBILES
Contracts between the United Auto Workers and Ford, General
Motors, Chrysler, and American Motors expire on September 14,
1976, affecting 717, 350 workers. In the past, these agreements
have been closely linked with settlements in the farm machinery
industry, where workers are also represented by the UAW;
those contracts expire on September 30, affecting 100,200
workers.
Structure of Bargaining
The traditional UAW bargaining practice has been to select
a "target" company, and use that agreement to set a pattern
for other members of the Big Three; Chrysler was the target
company during the last round of bargaining. This year,
American Motors, which in the past has deviated slightly
from the GM-Ford-Chrysler pattern, will be bargaining
simultaneously with the Big Three.
Wage Trends
The most recent auto workers contract includes a COLA 1/
provision, under which cost-of-living increases have been
nearly double the regular annual increase (3 percent in
1975) provided for in the agreement. The cost of providing
benefits in the last ten years has increased by 240 percent;
benefits currently comprise 33.7 percent of compensation.
Industry Trends
Profits for the automakers fell by 65 percent from 1973 to 1974
and have remained low in 1975, despite a recovery in sales
beginning in the fourth quarter. This decline in profits
is partly due to increased imports which have caused
manufacturers to raise prices less than cost increases,
although sales of American made small cars have recently cut
into this trend. Temporary or indefinite layoffs involved
more than 200,000 workers at their peak in January, 1975 and
have declined slowly. The union petitioned for and obtained
relief under the 1974 Trade Act, which provides compensation
to workers for loss of jobs due to imports. The heavy
layoffs depleted the negotiatied Supplementary Unemployment
Benefit funds at Chrysler and General Motors.
Key Issues
Job security (e.g., shorter work week without pay cut,
voluntary over-time, restrictions on the use of foreign-made
parts) ; financing or restructuring of Supplemental Unemploy-
ment Benefits (SUB) funds; pension improvements; skilled
trades differential; cost of health benefits (industry wants
workers to pay a larger share); retention of the present
COLA clause (industry wants some restrictions).
17 No cap. I cent per .3 rise in combined U.S.-Canada;
on CPI. (U.S. 1967=100; Canada 1961=100, weighted
9 (U.S.) to 1 (Canada))
GERALD
Outlook
Strikes have occurred against the target company in each
of the last three contract negotiations (65 days against
Ford in 1967; 134 days against GM in 1970; 9 days against
Chrysler in 1973). The COLA will moderate wage demands.
But because it applies equally to everyone, the COLA has
reduced the differential between skills and this has caused
some interest among skilled workers in a separate union.
The International Society of Skilled Trades is trying to
organize UAW skilled workers and this could disrupt bar-
gaining.
020020
H TAB
CONSTRUCTION
More than 3,200 collective bargaining agreements covering
1.2 million workers--reflecting the large number of shorter
term contracts negotiated in recent years--will be negoti-
ated during the spring and summer. The 270 major agreements
followed by BLS which expire this summer, involve 746,000
workers.
Structure of Bargaining
Negotiations are typically held between associations of
local contractors and individual building trades locals.
Wage Trends
Construction settlements as a whole were more moderate
in 1975 than in 1974 despite the general absence of COLAs,
partly as a consequence of the severe impact of the recent
recession on the industry. Settlements reported in 1976 so
far have been moderate with the exception of several scattered
settlements on the West Coast.
Industry Trends
The recession coupled with the rising cost of construction
has greatly reduced construction activity. The national
unemployment rate in construction peaked at 21.8 percent in
May, 1975 and currently stands at 16.8 percent, but varies
widely from region to region. Demand is relatively high
in the Pacific Northwest (1975 wage increases averaged about
15 percent), but low in the Northeast (1975 wage increases
averaged about 6 percent).
Key Issues
Pensions, particularly coverage of multi-employer plans;
work rule changes to increase productivity.
Outlook
A variety of factors--low demand, high interest rates,
little capital expansion, and increases in open shop con-
struction--will moderate settlements in most areas; but in
high demand areas --such as the Pacific Northwest and the
Gulf Coast--wage increases may be significant. Most settle-
ments will probably be in the 9-to-10% range for the first
year of new contracts; settlements reported so far have run
slightly lower.
TAB G
RETAIL FOOD
During the year, roughly 70 contracts expire between the
Retail Clerks International, the Amalgamated Meatcutters and
Butcher Workmen, and the Teamsters, and employer associations
of food chains and individual employers, affecting 99,100
workers.
Structure of Bargaining
As in construction, bargaining is highly decentralized.
Wage Trends
COLA clauses have become more common in the food industry in
recent years, and are now included in roughly 50% of the
major agreements. Some of the contracts about to expire
were negotiated under controls, and union attempts at large
catch-up adjustments are likely.
Industry Trends
The return on equity of the five largest retail chains
recently has declined somewhat, although industry perfor-
mance appears to be improving. Unemployment in the industry
is well below the national average.
Key Issues
Employers may try to trade off wage increases for changes
aimed at increasing productivity, for example, more auto-
mated checkout stands. The issue is also important to the
meatcutters in areas where restrictions still exist on
centralized prepackaging of meat.
Outlook
Hard to predict because of the fragmented nature of
bargaining.
is
FORD
CERALD