Evening star., 1949-09-13
Steel Decision Seen
As Blow 10 Monopoly
Tendency in Unions
Bourd First to Recognize
Industry-Wide Wages
As Bor to Competition
By David La,crence

For the first time an important
blow has been struck at the grow
ing practice of labor unions of
promoting monopolies in big busi-
ness.
In many an industry. labor
union power has reached the point
where wage scales are set on the
basis of the ability of the larger
units in the industry to pay such
wages. This puts at serious dis
advantage the marginal producers
and weaker competitors.
The conclusions reached by
President Truman's fact-flnding
board in the steel industry are the
first to recognize publicly the de-
velopment Of this barrier to free
competition.
Again and again economists have
called attention to the way in
which small producers have been
forced out of business as result
of high wage scales set by labor
unions in their collective bargain
ing negotiations with the larger
companies.
Motivated by Big Unions.
It is not suggested that the
larger companies and the big
unions engage at any time in a
conspiracy to put weaker competi-
tors out of business. though that
is the practical result which often
follows. There are many large
businesses which would prefer to
have their wage scales set on the
basis of what their weaker COM
petitors could pay. because 1t
would give a larger share of prof
its to the larger units. so it is
apparent that the principal mott
vation for the higher uniform
wage scales in an industry comes
from big unions, rather than from
big business.
The steel fact-flnding board is
the first official body to denounce
the practice of uniform wages
within an industry. 1t is worth
quoting here in full the words of
the board, because they will have
a far-reaching effect on collective
bargaining debates in the future,
both inside and outside of Con-
gress. Here is what the Presi-
dents board said on the subject:
"l. In collective bargaining in
the basic steel industry. the prac-
tice has developed by which al
most the entire industry generally
follows the pattern set by United
States Steel Corp. and perhaps a
few of the other large companies
in their contracts with the union.
%. AS result there is fire.
quently little or no serious bar
gaining or discussion between
most of the individual employers
and the union.
"3. This practice is clearly a
variation from the accepted con-
cept of collective bargaining as
defined in the statutes and inter-
pretations: it tends to promote
feeling of dissatisfaction and dis
harmony between the parties
which makes cooperation diff
cult.
"a. Now that the organizational
phase of union activities has been
passed, the field ought to be re-
examined to see whether the pub
lie interest requires any modif1ca-
ton in the definition and theories
of collective bargaining in accord
ance with the new situation faced
not only in the steel industry but
in ether Industries where varying
kinds of industry-wide rather than
individual collective bargaining
have grown up"
Hint for New Legislation.
There is a hint that in the new
legislation that is some day to
replace the Taft Hartley Act con-
sideration should be given to- in
dustry-wide bargaining and its
collateral problems.
Unquestionably industry wide
bargaining has been result OF
big unionism. Naturally the
larger unions would prefer to deal
with a small committee represent
ing all employers than to permit
variations that would apply in
different geographical locations or
In differentiated businesses. But
the trend has been toward setting
wage scales that promote monopo-
lies and what America may get, as
q result of the practice, If it Is not
checked. is series OF cartels
which ultimately could bring Gov
ernment regulation of both labor
unions and corporations.
The smaller units which are
seeking to compete with larger
units frequently do not possess
the machinery or the organiza-
ton to do as efficient a job as
the larger units. Hence. their
costs are higher. If they are COM
PEELED to pay higher and higher
wage rates which are really based
upon the capacity-to-pay of the
larger units, it means that the
smaller and weaker competitors
cannot possibly have enough mar
gin Of profit to refinance and get
better plants and better facilities.
Many small businessmen will be
heartened as a result of the rec
concentrations by the Presidents
steel fact-finding aboard because
they have been clamoring for a
long. long time for just such an
expression from some authorita-
tive source but to no avail.
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