Against the Current, No. 23, November/December 1989
The Collapse of Socialism?
— The Editors
A Salvadoran Fighter's Testimony
— Kathryn Savoie interviews Margarita
Free Cuban Human Rights Activists!
— ATC Editors
New Directions for Auto Workers
— Peter Downs
Eastern: What Should Be Learned?
— Steve Downs
Eastern Strikers Down, Not Out
— Andy Pollack
Pro-Choice Agendas After Webster
— Marlene Fried
Compulsory Heterosexuality & Lesbian Existence
— Ann Menasche
Crisis & Control of Soviet Labor, Part II
— Susan Weissman
Nicaragua: Observations on Economic Policy
— Keith Griffin
Nicaragua: Observations or Fallacies?
— John Weeks
Family Policy and Social Welfare
— Julia Wrigley
Family Policy--A Brief Rejoinder
— Stephanie Coontz
Random Shots: Kampfer's Consumer Guide
— R.F. Kampfer
China: The Roots of Worker Revolt
— Kim Moody
On a Revolutionary Agenda
— Michael Löwy
— Kent Worcester
THIS WAS GOING to be the one that would turn labor around, the one that would end the long streak of defeats since PATCO. To listen to the promises of the AFL-CIO bureaucracy on behalf of the Eastern strikers, this time there would be–to paraphrase a slogan coined in Austin, Minnesota—no excuses, no surrender.
As of early October the strike, after months of withering on the vine, appears headed for defeat under the combined assaults of Frank Lorenzo and his friends among the creditors’ committee, the Wall Street banking and insurance community; and the courts, which continue to chop away at Eastern airline’s assets. The pilots are beginning to drift back to work in alarming numbers, and a movement among the more militant appealing to the Air Line Pilots Association (ALPA) to call an industry-wide poll on a one-day pilot strike of all the carriers was undercut by the ALPA leadership.
Some of the Machinists’ locals encouraged their own union to pledge its support should the pilots walk out Given that the Machinists initiated the strike against Eastern, with the pilots and flight attendants respecting their lines, it’s a pathetic commentary on the International Association of Machinists leadership that militant Machinists had to call on their brothers and sisters to support a last-minute desperate attempt by the pilots to revive the strike.
The IAM national newspaper had pledged before the strike to pull out its members at other carriers and even in other industries-as did the Transport Workers Union. Neither, of course, did anything of the sort As a consequence, having brought the Eastern strikers to the doors of defeat, the LAM went into negotiations with Carl Icahn in an extremely vulnerable position.
Of course Icahn had in his favor at the bargaining table not only the looming defeat at Eastern, but also TWA Machinists’ earlier betrayal of Icahn’s flight attendants, which highlights the larger problem lying behind these tragic events: the sad history of disunity in airline unionism caused by single-craft, single-employer bargaining.
This failure to develop an industry-wide approach has not only made it harder to get other unions to support a strike of any given craft at any particular airline; it has also perverted the demands raised in many strikes Thus even the Eastern strike, whose strategy was forged by a fairly militant business unionist, District 100 director Charlie Bryan, focused on finding a white knight” to buy Eastern from Lorenzo, even if that knight would seek concessions from the members greater than the dragon he was supposedly slaying.
Let’s look at the historical context the legacy of decades of political and organizational divisions among airline workers and the failure till now to find a way to unite on an industrial basis.
Airline unions, unlike most U.S. unions, are not covered by the National Labor Relations Act, but by the Railway Labor Act, which was set up in the 1920s to combat a growing industry-wide, rank-and-file militancy that broke out in nationwide strikes in 1922 and 1926. Shortly before passage of the RLA, William 1 Foster and his Trade Union Education League (TUEL), picking up the legacy of Eugene Debs’ American Railway Union (ARU), had led a movement for “amalgamation” of rail labor into one big union and appeared to be making progress toward this goal. At the same time even the conservative craft-union leaderships, who opposed these militant strikes, supported the “Plumb Plan,” which proposed to nationalize the industry and put it under management of a tripartite board with appointees from labor, business and government.
In response to both these trends Congress, with the help of the conservative craft-union leaderships (whose fear of rank-and-file militancy was greater than their attraction to the Plumb Plan), wrote the RLA in order to maintain permanently single-company, single-craft bargaining. Textbooks on railway labor law say openly that the act is designed explicitly to “prolong” and “delay” the bargaining process in hopes of avoiding strikes. The act provides for compulsory mediation by a national board, and allows strikes only when that board determines no further progress can be made in negotiations and “releases” the union from its obligation to work.
The first unions formed among the pilots in the embryonic airline industry of the late 1920s chose consciously to have the RLA applied to their bargaining. As a result labor relations in the airline industry have mirrored those in rail: each craft has its own union, each company bargains separately, and labor unity is structurally frustrated. The divisions fostered among airline workers by this bargaining pattern hurt them both economically and in the fields of racial and gender equity. Herbert Northrup, in The Negro and the Airline Industry, citing the openly racist decisions of the RLA’s National Mediation Board, points out that in seeking protection under the RLA the early air unions also inevitably helped the companies replicate the racist hiring and promotion policies long standard in rail.
Craft unionism in the airline industry also meant that workers remain pigeonholed in narrow career tracks that are highly segregated; ramp service workers and flight attendants don’t bid on or receive training for mechanics’ or pilots’ jobs. Craft unionism, and its inability to challenge racial inequity, has also meant economic disaster for white workers within each particular job track- B-scales have been introduced in almost all crafts at all airlines, with workers of color tending to disproportionately fill these jobs (except among the pilots); the companies have then used the existence of the B-scale as a battering ram to slash A-scalers’ wages and benefits.
Whereas rail workers experienced the fallout of several nationwide depressions, driving home the need for broader organizing structures, the airline industry was born and grew in size during a period of unparalleled and uninterrupted prosperity for U.S. society at large. The recessions of the last two decades are the first major economic challenges to the industry-, the response of the biggest owners has been to use the new tools provided by deregulation to crush their smaller competitors.
The flipside of airline (and private car and trucking transport) ascendancy has been the loss of hundreds of thousands of jobs in the rail industry, which probably explains why there have been no more industry-wide experiments like the ARU or TUEL in rail. But the economic prominence of the airways, and its first exposure in the 1970s and ’80s to economic crisis, may mean that the militancy rail workers displayed in earlier periods will be transported into the airline industry.
The peculiar conditions under which the industry was built—a high degree of government regulation and protection from destructive competition—further encouraged the growth of a passive union officialdom that never looked beyond its own company walls.
Airline fares and routes were set by the Civil Aeronautics Board, and competition tended to be on the basis of different levels of service rather than price advantage. Peter Cappelli and Timothy Harris point out that although “historically unions had 90% of all revenue passenger miles” in the industry, the unions never enforced uniform contracts across this market.(1)
Compared with the industries in which the massive industrial unions of the 1930s were built, economic pressures forcing the development of a union movement conscious of industry-wide problems were less present in the air. This led to what Cappelli and Harris describe as a “local autonomy, single craft-single employer structure, encouraged by the RLA requirement that representation be by craft” (They add that this craft-minded behavior was not seriously affected by the establishment of a “special coordinating committee of air-transport unions within the AFL-CIO.”)
There was one exception in the pre-deregulation days to this single-employer bargaining in 1966 the Machinists engaged in a five carrier, forty-three day walkout This strike against United, TWA, Eastern, Northwest and National (now part of Pan Am) ended only after a tentative settlement was rejected by members largely because of lack of protection from war-induced inflation, and a better agreement was produced.(2)
During the strike noises were made in Congress about banning multicarrier strikes, but no such legislation was ever passed. The impression among many airline workers is that such strikes are now illegal, but although it is the practice of the National Mediation Board never to “release” more than one carrier at a time from its “cooling off period,” there is nothing in the law forbidding it from doing so.
Deregulation, which occurred in 1978, was touted by its architects as a means to deliver a newly competitive market, with boons for the consumer, and for the first few years a number of new airlines with cheaper fares (but also non-union and low-wage) did spring up. But almost all of them were soon driven under by the major airlines, which, nurtured to their giant size by decades first of government subsidy and then of fare and route protection, are now free to throw around their naked economic might in an openly competitive market As a result the industry is even more concentrated today than before 1978; eight major carriers now control 94% of the domestic market, up from 66% a few years ago.(3)
Neither the recession of the early ’80s nor competition from nonunion upstart carriers led to permanently lower fares. Fares are up 15% in the last year alone For the entire deregulated period the major airlines’ average fares have gone from 8.5 cents per passenger mile (in 1978) to 145 (in 1989). Some 200 new carriers crowded the industry after 1978, but now starting a national car-tier is called in the business press an “impossible dream.”
The newfound power of the megacarriers has been used to demand and receive concessions from the industry’s unions, the leaders of which have claimed there is no alternative for the survival of their individual carrier but to grant such givebacks. As Cappelli and Harris point out, however, “by itself, competition should not necessarily lead to pressures for concessions; after all, the highest union wages and most stable industrial relations have historically been in industries with competitive product markets, some of which were extremely competitive.” But the practice has been the opposite: “Because bargaining is carrier-specific, there is no mechanism to prevent the different local unions from undercutting each other’s labor costs.”
Having merged with or driven under the upstarts of the early 1980s, the remaining giant carriers are enjoying a boom period fueled by the Reagan pseudo-recovery. Passenger-revenue miles are at an all-time high, as are airline profits. But this situation is not a permanent one. When the next recession comes, today’s concessions, intended to finance the wave of mergers and to help the majors drive out the newer carriers, will pale before the concessions demanded to help the industry out of a more general crisis. And in such a situation the need for an industry-wide union response will be even more of a practical necessity for workers’ survival.
Ironically, perhaps no other industry in the country is so well-suited, by virtue of its technological basis and geographic spread, to being organized by its workers under the umbrella of one big union. For the same reasons few industries in the country are as ripe to be taken over by the public and run for the benefit of workers and consumers.
As industries grow in a capitalist society they eventually reach a point where they would function more efficiently if run as one big unit by and for the industry’s workers and public. The airline industry reached that point almost at its birth. The U.S. airlines in fact were only able to survive their adolescence with the help of government subsidies for the carrying of airmail; similar requirements of initial capital outlay and organizational difficulties led to some European countries fostering nationalized airlines from the start (although in the orgy of deregulation sweeping the world many of these have since been denationalized).
The enormous price attached to airplanes is perhaps the most glaring example of the difficulties of running the industry as a private, competitive system. New, bigger, more fuel-efficient, more automated—and much more expensive—airplanes have been developed in successive waves, and when they become available airlines scurry to buy them and rush them into use. When this happens it creates a temporary problem of excess capacity (that is, too many seats) and insufficient capital (not enough cash or loans to finance the planes’ purchase). The industry as a whole is thus even more prone than most to wildly dramatic turns from extreme profitability to cash shortage.
One consequence of this is its dependence upon help from banks, insurance companies and other sources of large amounts of capital. (In Europe most recently some airlines have faced this problem by forming consortiums, such as the one that developed the Airbus, in which private companies from several countries were granted mammoth loans by a pool of governments.)
The development of computerized reservations systems has made even more obvious the objective potential for the airlines to be run for public and not private use. These systems currently allow private airlines to calculate with lightning speed the number of seats they need to earmark at discount fares to attract passengers, and then to lower the number of seats offered at those fares, or to withdraw them altogether, once a certain level of sales has been reached.
Airlines also use their computers to engage in overnight fare wars with each other The media often carries news of one carrier offering a discount to gain entry into the ‘hub” of another; the other airlines retaliate by offering discounts in the aggressive airline’s own hub at an even lower fare, forcing it to withdraw its discount.
But in contrast to the fare wars of robber-baron days where tycoons would spend weeks or months starving out competitors by slashing prices, the fare wars of the airlines can take place in a matter of hours or days, and the battlefield is on the screen of a computer these new technological price wars are so brief that often consumers never even have time to purchase these ‘discount’ fares before they vanish. This capability has also become a weapon of the megacarriers against the smaller airlines that sprang up after 1978: in the words of the former chief executive officer of People’s Express, ‘I’m the world’s leading example of a guy killed by the computer chip.”
The waste for consumers and labor here is obvious; the New York Times estimated that had the proposed merger of Pan Am and Northwest gone through, for instance, $240 million could have been saved mainly by eliminating the duplication of corporate overhead and marketing expenses. Working people also lose thousands of hours of their leisure time attempting to find out the lowest fare.
Ironically, the computer technology that fosters such wastefulness could make the industry amazingly efficient. A unified, public airline could use this massive computer apparatus to calculate costs and schedules in a rational, stable way, as opposed to the fluctuating anarchy now prevalent The savings in time and resources produced by such planning could be devoted to freeing up workers to servicing harried, lost and frustrated passengers, and, most importantly, to increased maintenance, repair and inspection.
Further proof of the ripeness of the industry for public takeover is its geographic spread. The operation of the air-traffic control system by the government as one big public unit is one confirmation of this. The inherent economies of scale flowing from the nationwide structure of air transport has led not only to a reconcentration of the industry in general but to superconcentration in specific cities. The eight majors hold 95% of the available landing slots; in addition, twenty- to forty-year leases on airport gates are not uncommon. These slots and gates are dominated by one or two carriers in each airport.
The General Accounting Office recently found “abnormally high fares” at fifteen airports dominated by one or two carriers. Perhaps the most hideous example of the wastefulness of this private monopolization is USAir’s blackmailing the city of Pittsburgh into promising it would destroy Greater Pittsburgh Airport when the projected new one is completed so as to deny access to these gates to other airlines.(4)
An industry of such size tends inevitably to become dominated by a handful of huge employers, and deregulation, despite the claims that it would lead to more competition, actually helps chive out smaller carriers, because it allows big capital to throw its weight around with greater abandon. The development of “frequent flyer” programs and the payment of commissions to travel agents have also helped the majors in this area. The net result is higher profits for the remaining airlines, but higher fares for consumers. But the newfound prosperity of the megacarriers has meant less, not more, for airline workers, as the massive capital accrued in the shakedown of the industry is used as a weapon against its unions.
To make matters worse, just as the domestic mega-carriers are consolidating their shakeout of the U.S. market, they are girding up to do battle with the emerging overseas majors. In keeping with the trend worldwide of the internationalization of capital, U.S. carriers are both competing furiously with foreign carriers and increasingly collaborating with them (several Western European carriers own major chunks of U.S. reservations systems, and more recently have begun to acquire significant holdings in the corporate parents themselves, for instance, KLM’s shares in Northwest and British Airways’ in United). In this looming internationalization of the industry’s battlefront, U.S. airline unions, which have barely begun to reach out to each other, are far behind the airline owners in forging links with their counterparts overseas (although some solidarity has been expressed by European unionists toward the Eastern strikers).
The fight against the reconcentration of the industry will lead some liberals to call for “trustbusting” measures to “enforce” competition in the industry; others will call for mild re-regulation.(5) The logical solution, on the other hand, is for the industry to be nationalized and then managed by its workers along with input from consumers. Such a solution is not at present, however, being raised by any significant forces, least of all the airline union leaderships, and will probably not be raised until a leadership with an industry-wide vision is developed.
Which brings us back to the starting point of this article, and to the immediate tasks of supporters of the Eastern strike: the need to develop solidarity with Eastern strikers in a way that raises for the first time the broader challenges and opportunities of the industry as a whole.
Although the ability of Eastern itself to survive a competitive war with the megacarriers is open to question, the current conditions of the industry are auspicious for a goal-line defense of the wages and benefits of the strikers. Never has more money been thrown around in the industry either to purchase planes or to finance acquisitions, and there is no objective reason why that money cannot be used to maintain the past gains of Eastern’s unions.
Hiring is at an all-lime high in the industry, as are orders for new planes. The rise of new capitalist powers in Asia, such as Japan, Singapore and South Korea, has fueled massive expansion in U.S. carriers’ Pacific routes.
The stock prices for the majors, especially United and Northwest, have soared as speculators cast their eye at “undervalued” carriers and dream up new takeover schemes.(6) Passenger miles flown have doubled since 1978, and the International Air Transport Association predicts another doubling by the year 2000.
Yet this current abundance of cash in the industry has not stopped even the most profitable from demanding concessions. American and United, for instance, are the two most profitable lines in the industry. Yet American has A, B, and C scales; has tried to cut its workers’ medical insurance in recent negotiations; and uses part-timers to avoid paying benefits. And at United a joint management-pilot defense against a hostile takeover has meant massive cuts for all United workers, although United is one of the airlines whose stock is currently “undervalued” in the market and is thus viewed on Wall Street as a potential mother lode of golden assets.
Wall Street has also taken advantage of the current boom by financing mergers and takeovers. Sensing further expansion possibilities, it is also calling on the government to open its coffers to the carriers. Michael Lexton, senior vice president at the investment banking house of Shearson Lehman Hutton, in the New York Times duly 6,1989), called for the Federal government to assist the airline industry financially in airport expansion, and to grant tax benefits to those (like Shearson Lehman, no doubt) who would lend money for this purpose. He is talking about a need for “major improvement programs” requiring “billions of dollars.”
Cash is currently so plentiful in the industry that the Wall Street Journal, commenting on the rash of takeovers in the airline industry, singled out Pan Am as proof that even a supposed money-loser can find cash when it needs to: “Pan Am, which was close to running out of cash two years ago, is evidence that airlines have surprisingly plentiful access to cash that can keep them operating despite heavy losses.” When Pan Am wanted to buy Northwest, it was willing to increase its debt by 350% (from $1 billion to $3.5 billion), and Prudential-Bache Securities and Equitable Life Assurance would have put $400 million into the Northwest deal, with various banks contributing an additional $2.7 billion.(7)
The most obscene example of the availability of funds, even to the industry’s “losers,” is the announcement by Lorenzo’s Texas Air of a $2.8 billion purchase of Boeing jets. In the face of this purchase, Easter’s presence in bankruptcy court is all too reminiscent of the kid who murdered his parents and then threw himself on the mercy of the court as an orphan.
There is no reason the industry’s workers cannot share in the current prosperity. Furthermore, their only protection against massive cuts when the bottom does fall out in the boom-and-bust cycle is to organize as one in times of opportunity like today.
But unless the rank and file of the industry develop an alternative strategy to that of the leadership, this period of opportunity will be lost Almost every week the newspapers report the inability of the airlines to find enough workers in all crafts to meet their needs, yet the unions’ officials have not taken advantage of this labor shortage to draw the line against concessions in the industry, much less fight for higher wages and benefits.
One of the demands of those Eastern pilots who pushed unsuccessfully for a national one-day “suspension of service” was the right of Eastern pilots to “go with their planes;” that is, as Eastern sold planes to other unionized carriers the pilots should be hired by those carriers. Such a demand points in exactly the necessary direction in this time of industry reorganization: rather than seeking white knight corporate saviors, or phony employee stock ownership plans, airline workers need an industry-wide approach to maintaining, and eventually improving, the existing level of jobs, wages and benefits, regardless of who owns any given carrier at any one time, or of any given carriers’ current profitability. Adopting the demand of “portability” of jobs could be supplemented by drawing up a uniform standard for all airline workers below which wages and benefits will not be allowed to decline.
Rank and filers participating in a discussion of a new approach would have to focus most immediately around the goal of regaining the jobs of the Eastern workers (and the recent announcement that all the IFFA strikers fired by Icahn three years are now back at work should encourage us to maintain this fight). In the process of doing so, discussions can be held about developing an industry-wide standard for wages, jobs and benefits about developing common bargaining strategies and strike deadlines, common expiration dates for future contracts, and eventually one contract for the whole industry. The end goal of these discussions could be a study of the possibilities for organizing one big union for all airline workers.(8)
Developing industry-wide goals would help shift the focus away from individual industry tyrants. No one will dispute that Lorenzo, Icahn, Crandall (of American), Plaskett (of Pan Am) and the rest are all vicious, greedy individuals; but more important than their individual tyranny is their common cooperation in attacking airline labor as a whole, in conjunction with the rest of the corporate community. The banks and insurance companies that the Eastern flight attendants have exposed through their work with Corporate Campaign as backers of Lorenzo—Equitable, John Hancock, Prudential, J.P Morgan and TIAAJCREF—are also assisting other airlines in their anti-labor drives.
Against this unity of airline employers and their financial backers, airline workers must forge their own unity. The AFL-CIO has defaulted on its promise to draw the line against anti-labor attacks at Eastern. But the courage of Eastern strikers should inspire workers throughout the industry and the country both to maintain their defense of the strikers’ rights, and to begin to examine what it would really take to win future battles against all the Lorenzos of the world.
- Cappelli and Harris, Monthly labor Review, Washington, D.C.: Bureau of Labor Statistics, June 1985.
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- During this strike the LAM took great pains to dissociate its strike from any attempt to interfere with the air transport of troops or goods to the war effort in Vietnam; in fact the union tried to draw a link between the anti-labor views of Sen. Wayne Morse, author of legislation seeking to break the strike, and his stand against the Vietnam War. Ironically, two decades later, the IAM is one of the leading anti-militarist unions in the United States while former congressional “doves” of the Vietnam period have in general reassembled behind U.S. militarism. The fact that the IAM bed its fortunes openly in the postwar period to the U.S. war- driven 1wospeiity—and not to a broader social movement;, here and abroad, against capital—is part of the reason It, along with the other airline unions, was unable to develop a winning strategy when that prosperity fell apart.
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- Although the phenomenon of deregulation and the merger and acquisition craze lend this shakeout a unique flavor, the shakeout of the airways and of other U.S. industries in the 1980s cries out for comparison with similar episodes in the history of capital, when crises of profitability have also led, by other means, to the squashing of smaller, less efficient firms.
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- A particularly perverse consequence of this remonopolization under private ownership is the Inconvenience caused consumers by the ‘hub and spoke’ system, which means airlines will try to get passengers to backtrack hundreds of miles through their hubs in order to reach their final destinations.
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- Shortly after the Eastern strike began the Wall St reef Journal pointed out that several of Loeenzo’s key advisers, including his right-hand man Phil Bakes, were former staffers of Sen. Ted Kennedy. The latter of course has long been the darling of liberal union leaders such as the IAM’s William Winpisinger, even though Kennedy, with the help of Bakes et al., was the main congressional architect of the deregulation that is now savaging their members.
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- Even “losing” corporate raiders like Marvin Davis are able to reap million-dollar fees or profits when their takeover bids “fail.”
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- This access to ready cash has not stopped Pan Am from refusing to settle with its reservation agents, represented by the Teamsters, who have been working under an imposed contract since February 1988. Old-timers suffered an 8% pay cut;, elimination of vacation and holidays, and total elimination of their pension plan; B-scalers now start at $6.05 an hour (down from $8) and take fifteen years to reach the A-scale.
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- A few years ago a Coalition of Unions of Flight Attendants was formed, which has engaged in joint lobbying in Congress for uniform rules on scheduling of flight crews to address health and safety concerns. Until now, because of jurisdictional jealousies, the Coalition has not developed into a means to unify the bargaining struggles of flight attendants.
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November-December 1989, ATC 23