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1976/12/21 - Economic Policy Board
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1976/12/21 - Economic Policy Board
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James M. Cannon Files (Ford Administration)
James Cannon's Meetings Files
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The original documents are located in Box 63, folder "1976/12/21 - 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 63 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
EPB
Tuesday, Dec. 21, 1976
8:30 a.m.
THE WHITE HOUSE
WASHINGTON
FOR EPB EXECUTIVE COMMITTEE MEMBERS
The attached materials are for your
information.
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
December 14, 1976
MEMORANDUM FOR THE ECONOMIC WJU. POLICY BOARD
FROM:
W. J. USERY, JR.
SUBJECT: Continuing Labor-Management Initiatives
Private collective bargaining is an evolving process
which generally operates best with the least amount of
outside intervention. This does not mean, however, that
efforts toward structural reform in especially vital or
unstable industries are foreclosed to intelligent government
involvement.
Two industries, the airlines industry and the coal industry,
have been of particular interest to me for some time. I
believe that serious industrial relations problems in both
industries require continued attention by the Federal
Government. The airlines are more diffused in their interests
and their representation. Therefore, a consistent approach
has not evolved, although various approaches have been
attempted to deal with their special problems. On the other
hand, the coal industry is more uniform in its labor affairs.
As a consequence, a more cohesive program has been possible.
I am attaching, at Tab A, a summary of problems in the
airline industry, and, at Tab B, a discussion of coal
industry issues. The coal industry attachment also sets
forth some principles which, in my view, are essential to
continued constructive action.
Attachments
TAB A
The Airline Industry
Bargaining Structue
Collective bargaining in the airline industry is conducted
on a carrier-by-carrier basis. Most airlines negotiate with
about four to six unions representing the various crafts.
However, there is some multi-craft bargaining where more
than one craft on the same carrier is represented by the
same labor organization. The primary example of such a
structure is on American Airlines where the Transit Workers
Union has six contracts covering different craft units.
There have been occasional efforts in the past to achieve
multi-employer bargaining. Twice during the early years of
the industry the carriers formed committees to make an
effort in that direction but neither effort succeeded. The
only union which has indicated an interest in joint bargain-
ing has been the Machinists. In 1966, the IAMAW conducted
its negotiations jointly with five carriers. However, those
negotiations ended in a 43-day strike of all five carriers
and no efforts have been made since that time toward multi-
employer bargaining.
- 2 -
One factor which probably discourages the carriers from
joint bargaining is the highly competitive nature among the
carriers in routes, types of aircraft, and other factors
which affect scheduling, pay, and fringe issues so that
joint bargaining could present problems of incompatible
objectives. This industry, as is true for all transporta-
tion, is vulnerable to traffic loss as a result of a work
stoppage. Transportation cannot be stockpiled. In order to
protect themselves against strike losses, the carriers
formed the Mutual Aid Pact. The Pact provides that, in the
event of a work stoppage on one of the member carriers,
payments will be made to the struck carrier by the other
members under a formula arrangement.
On the union side there has sometimes been an ability,
through whipsawing, to obtain greater benefits in successive
negotiations with various carriers. This has encouraged the
labor organizations to continue to seek single carrier
bargaining. Moreover, except for the flight crews and
mechanics, the airlines are not yet highly organized. On
Delta Airlines, only the pilots are organized. On others,
although there is a greater degree of organization, union
rivalry and jurisdictional disputes have tended to place a
limit on the development of coordination in collective
bargaining.
- 3 -
New Developments
Since the recent recession and the great increase in
the price of fuel a number of airlines have had financial
problems. The labor organizations have shown a high degree
of understanding of the carriers' problems and in a number
of cases have agreed to forego pay increases for a period of
time to permit an airline to improve its financial situation.
The carriers have responded by modifying plans to reduce
employment.
Another development which indicates that relationships
between the carriers and labor organizations are improving
has been the recent adoption of agreements similar to the
steel industry Experimental Negotiating Agreement. The Air
Line Employees Association and National Airlines have signed
an agreement for the next round of bargaining which specifi-
cally limits to ten the number of issues which each party
may open on. They will negotiate and utilize mediation
under the procedures of the Railway Labor Act, but they have
agreed in advance to arbitrate any issues that they cannot
resolve. The Air Line Pilots Association has negotiated a
similar agreement on Braniff Airlines and is in discussions
on such arrangements with several other carriers.
- 4 -
Both of these approaches to solving problems in the industry
are encouraging evidence of good labor-management relations
in the airline industry. Changes in the bargaining structure
may develop over time if more units of a single carrier
become organized by the same union, as they are at American
Airlines, and a vertical structure of common expiration
dates could be achieved. The IAMAW is the only union up to
this time that has tried a horizontal structure, by establish-
ing common expiration dates on all of the airlines whose
mechanics it represents. As a result, there usually is a
pattern set by the earliest settlements which establishes
mechanics rates for the eight major airlines involved.
TAB B
STRUCTURE OF BARGAINING IN THE BITUMINOUS
COAL MINING INDUSTRY
Bargaining in the bituminous coal mining industry
is conducted at the national level between the Bituminous
Coal Operators Association (BCOA) and the United Mine
Workers (UMW) with ratification by the International Execu-
tive Board and the rank-and-file of the UMW. The current
contract, covering approximately 125,000 employees, will
expire December 6, 1977. This contract provides the employees
with a capped quarterly cost-of-living adjustment (COLA), an
average daily wage of approximately $58.00, plus health and
retirement benefits financed by contributions from the
employers computed on the basis of tons of coal mined
and number of hours worked.
With respect to industry health, in the last 2 years
employment has increased by more than 30 percent, coal
prices have more than doubled, and companies are again
showing profits. Two structural changes within the industry
could signal a change for the future. The first is repre-
sented by the increase in strip mining from less than 20%
total tonnage at the close of WW II to 55% of the 1975 total
tonnage. This leads to the second point; the industry has
been moving west to the northern plain states and the Rocky
- 2 -
Mountain States, where strip mining is the preferred tech-
nique. While 10 years ago the western mining districts
accounted for only 5% of production; today they account for
around 16%. The UMW and the BCOA have yet to solidify their
positions in the western, stripmining sector of the industry.
A possibility is the negotiation of a separate agreement
covering the subbituminous coal and lignite mined in the
west.
History
Labor management relations in the coal industry have
been characterized by periodically intense, and sometimes
violent, strike activity. The UMW has usually experienced a
considerable degree of solidarity, particularly under the
aegis of its former President, John L. Lewis. Even prior to
his leadership, there was a history of militancy at the
local level, primarily as a result of the firm resistance to
organization efforts by the employers. This initial resis-
tance to organization resulted in a high degree of worker
solidarity which enabled small, local strikes to expand,
oftentimes at the direction of the national office, until
much of the industry was on strike. The autocratic style of
Mr. Lewis, including his appointment of district officers,
left the union with no real competence at the mid-line
supervisory level.
- 3 -
Former UMW President Tony Boyle, who was responsible for
the murder of his opponent, Joseph Yablonski, was ousted,
and the current President, Arnold Miller, took office in an
election rerun required by the Department of Labor, under
the Labor-Management Reporting and Disclosure Act. At the
same time some democratic reforms were instituted, including
the election of district officers and ratification of
contracts by the rank-and-file. Disunity within the UMW was
aired during this DOL investigation of internal union
practices, and factionalism continues within the union.
As a consequence of the shift toward more democratic
procedures and also the lack of middle management capabil-
ities in the UMW, the current President, Arnold Miller, has
less control at the district level over such issues as, for
example, the control and the spread of wild cat strikes.
Mr. Miller's authority seems to have suffered a further
erosion during the National Convention of the UMW in Septem-
ber, when the delegates voted to move the Union's scheduled
December, 1977, election up to mid-June and to transfer dues
collection and recordkeeping back to the districts.
- 4 -
Current Issues
In the course of their national negotiations, the UMW
has forsworn its right to strike in return for the establish-
ment of some relatively complicated grievance handling
machinery, the final stage of which involves binding arbitra-
tion. The Union members were never particularly eager to
give up their right to strike at the local level. This
feeling has been exacerbated by some unfavorable judicial
decisions, in particular, the Gateway Coal Company case. In
that decision the Supreme Court held that the mine owner was
entitled to an injunction, under Section 301 of the Labor-
Management Relations Act (LMRA), despite the anti-injunction
policy of the Norris-LaGuardia Act and the Union's claim
that the strike was over a safety dispute which is a protected
non-strike activity under Section 502 of the LMRA. Essentially,
the Court felt that even if this were self-help to remedy
unsafe conditions, it was still an enjoinable strike because
the Union had failed to follow its own grievance procedures
for determining the existence of an unsafe condition.
The Gateway Coal decision points up the need for a
program that would instruct both employers and employees in
the proper functioning of the complicated grievance procedures.
It also demonstrates the need for mid-line supervisors who
- 5 -
can guarantee a smoother functioning of the grievance
procedures. The Federal Mediation and Conciliation Service
(FMCS) has initiated such a training program within the
bituminous coal mining industry. This program is being
conducted with the approval of both the UMW and the coal
companies. It is hoped it can be continued and ultimately
expanded to include all the bargaining units in the industry.
Continuing Initiatives
The FMCS training program is a low-key effort aimed at
educating the mine workers as to their rights under the
contract and as to the procedures they must follow when
filing grievances; in addition, local company supervisors
are being instructed in the proper handling of employee
grievances. The training is conducted at the district level
with FMCS first instructing a small group of union employees
who then, in turn, instruct their fellow employees in the
proper procedures to follow in filing grievances. In this
way, the FMCS is developing a training cadre and, it is
hoped, a framework of mid-line supervisors which will
allow the self-perpetuation of the training program and the
successful employment of the grievance procedures by the
UMW.
- 6 -
It should be stressed that the FMCS program completely
dissociates itself from any interference with internal
union politics. It is felt that the Federal Government,
or any of its agencies, have a responsibility to
refrain from interference with union elections and with
the private collective bargaining process as a whole.
The feeling is that the prior history of government
interference by injunction has created an unfavorable
setting, so that any government interference now is
likely to have the opposite of its intended result.
Interference also could jeopardize the FMCS program.
(Of course, the NLRB is involved in determining
appropriate units for election purposes, the Department
of Labor, under the Labor Management Reporting and
Disclosure Act, investigates possibilities of Union
corruption, and the FMCS mediates collective bargaining
disputes, but these situations are limited and impartial.)
Although this training effort has met with some success,
it should be recognized that it is just getting underway
and that strikes in the bituminous coal mining industry
remain a realistic possibility. Moreover, the June
election could determine the tenor and eventual outcome
of the December negotiations.
- 7 -
Machinery to anticipate and to monitor potential
strikes should be developed. During the period preced-
ing the negotiation of a new coal industry contract it
would be wise to keep track of the inventories of coal
in various affected industries, such as coal-generated
power plants. It would seem that both the Federal
Energy Administration as well as the Department of
the Interior should already maintain some of this
information and probably should be responsible for
keeping closer tabs on coal inventories during the
contract negotiations.
If a strike does actually occur, then its affects on
the overall economy should be monitored. The Department
of Commerce competently performed such a role during
the United Auto Workers strike of the Ford Motor
Company.
o
Finally, the available options for responding to a
strike should be assessed both in anticipation of,
and during, an actual strike.
Through the efforts of the FMCS greater reason can
be brought to the relationship between Labor and Management
in the coal industry. Similarly, effective monitoring
machinery can bring greater realism to the Government's
understanding of and response to strikes in the Bituminous
Coal Mining industry.
EYES ONLY
MINUTES OF THE
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
December 17, 1976
Attendees: Messrs. Seidman, Lynn, Greenspan, Dixon, Zarb, Rogers,
Malkiel, Penner, Jones, Porter, Vetter, Kobelinski,
Droitsch, Kearney
1.
Extension of the Council on Wage and Price Stability
The Executive Committee reviewed a memorandum prepared by
the Office of Management and Budget on "Extension of the Council
on Wage and Price Stability. " The discussion focused on the need
for a decision regarding extension of the Council on Wage and
Price Stability beyond the current termination date of September 30,
1977, for purposes of inclusion in the 1978 budget and the appro-
priate length of such an extension.
Decision
The Executive Committee approved recommending extension of the
Council on Wage and Price Stability for 2 years with no changes
in its substantive authority or responsibility.
2.
Economic Outlook
The Executive Committee reviewed the economic outlook, noting
several recent favorable developments including increases in
retail sales, industrial production, personal income, and housing
starts. The discussion focused on the fourth quarter flash figures
for real GNP, the GNP deflator and final sales and the assumptions
that the Executive Committee should recommend for purposes of
the 1978 budget. The discussion emphasized that the assumptions
for use in the budget should be predicated on our best estimate of
the level of economic activity if the President's policies as outlined
in the budget were implemented.
Decision
OMB and CEA will jointly prepare a paper reflecting the Executive
Committee discussion for consideration at tomorrow's meeting
with the President.
EYES ONLY