The UAW’s recent endorsement of the U.S.-South Korean trade pact illustrates not only the difficulty of navigating the treacherous waters of global trade, but the schizophrenic nature of juggling two contradictory positions — steadfastly refusing to have anything to do with something while, simultaneously, trying to improve it.
Some years ago I was part of a negotiation where we were forced to do exactly that. It was a contract bargain between the Kimberly-Clark Corporation (headquartered in Dallas, Texas) and Local 672 of the AWPPW, the union representing K-C’s Fullerton, California facility.
This bargain began like any other bargain, with each side reading its agenda and making its opening statement. Our agenda was long and ambitious, theirs was short and modest. But after the agendas were read, the meeting took a sobering turn. Management closed their notebooks, put down their pens, looked solemnly across the table, and declared that they would “not be signing any contract that raised the costs of the facility.”
As defiant (and, arguably, as rude) as that statement was, it wasn’t particularly original; indeed, from what I’d been told, K-C management had been making speeches about the importance of cost-cutting since the facility opened, way back in 1956. But because it was uttered with such melodramatic weightiness, it got our attention. And as negotiations dragged on, admittedly, we became increasingly spooked.
Two things bothered us: (1) This was our first contract since a 57-day strike three years earlier, and both sides knew that union members rarely strike twice in a row. This gave the company undeniable leverage. (2) They never deviated from their position. They never modified it, never softened it, never so much as hinted that it could be negotiated away, which made us believe it wasn’t simply a bargaining chip.
Then, in the fourth week they dropped the hammer. They announced that we would be receiving lump-sum payments in lieu of traditional roll-ups. A lump-sum is exactly what it implies — a wad of cash, a one-time payment, something you can easily piss away on a weekend shopping spree. Roll-ups are permanent; lump-sums are transient.
Example: Take a standard 3-year contract with raises of 3-percent per year. If you start at $20/hour, that first raise brings you to $20.60. The second year you get another raise, but it’s computed at 3-percent of the $20.60. That brings you to $21.21. The third year you add 3-percent of $21.21, which brings your total to $21.85. And so on. It rolls up.
Without roll-ups, your wage at the end of three years is still $20/hour. You gain nothing. Roll-ups are also important because vacation pay, holiday pay, medical leave, personal holidays and overtime are computed on your hourly wage. In a facility like ours, where overtime was king, you lose out considerably — not only on your weekly paycheck, but on your pension, which is based on gross earnings.
So when the company announced lump-sums, we emphatically rejected it, using all the above examples to make our case. But as hard as we tried (and we came close to making fools of ourselves), we couldn’t get them to budge. It was clear that lump-sums were going to be included in their “last, best, and final offer,” and there wasn’t a thing we could do about it.
Worse, we all remembered what happened at that AWPPW local who screwed up years earlier. In the early1980s, a union bargaining board in Washington had been so opposed to lump-sum payments, they didn’t even make an effort to get the company to sweeten its offer. The negotiating team didn’t want to confuse the company by appearing to take that first bite of the apple.
Instead, they presented the lowball offer to the membership and urged them to send the company an unambiguous message by rejecting lump-sums on the spot. Unfortunately, fearing that a rejection could lead to a strike, the membership, by a narrow margin, voted to accept it. This meant that a substantial amount of money — very likely several hundred dollars per person, per year — had been left on the table.
Because we couldn’t make that same mistake, we were forced to negotiate on two contradictory fronts. On the one hand, we pounded the table and told the company we had absolutely zero interest in accepting anything even resembling a lump-sum payment; and on the other hand, we kept driving the numbers upwards, insisting that their lump-sum figures were nowhere near high enough.
It’s reminiscent of that old joke about the two ladies complaining about the lousy meal they were just served in a restaurant. “The food was terrible, just terrible,” the first lady says. “I agree,” the second lady says, “and such small portions.”
Although we finally got the company to increase each year’s lump-sum by about 30-percent, we knew we’d been had. We knew it, they knew it, and our savvy membership knew it. But because it was the best deal we were going to get, we ratified the contract, saddled up, and moved on.
Which is what the UAW did with the Korean trade pact.
Instead of continuing to reject every inferior treaty that comes down the pike — and watching those treaties become law — the UAW chose a different tactic. They chose to work within the framework, to chip away at it from the inside, and as a result were able to get some meaningful concessions.
Make no mistake: Unions still need to oppose these one-sided, often rigged trade agreements; but they also need to be nimble enough and willing enough to carve out language that benefits them. It’s a schizo way to do business, but until someone figures out a better approach, it may be their only choice.
Despite the UAW’s woes (among other things, they’ve lost more than one million members) labor critics pounced on them. Apparently, no one seems to care whether or not the UAW stops hemorrhaging. How bad is it for them? Consider: In 2009, GM sold more cars in China than it sold in the United States; and almost all the cars it sold in China were made in China….not Detroit.
Yet the critics piled on. One observer accused the UAW of being “stupid” for jumping the gun on this deal because there is a “burgeoning, grassroots, fair-trade movement in Congress,” which the UAW is either too dumb to recognize or has chosen to ignore.
Really? Congress is poised to abandon these trade pacts — the ones that have ravaged American industry and led to the exploitation of child labor all over the world? That’s terrific news. Presumably, those 63 seats the Republican Party gained in the last election will be filled by pro-labor Republicans willing to lead the charge.