Labor unions tested by giveback demands

DETROIT — Northwest Airlines' pilots and flight attendants are hardly the first workers to face concessionary demands from their employer.

Demands for givebacks on pay, pensions, health care and other hard-won compensation have been common in the United States for 30 years.

But as flight crews await the decision, due Friday, from a bankruptcy judge on whether Northwest can void its contracts with them, there is a sense across the entire labor movement that events are taking workers to a place they've never been before.

"We've moved into a deeper round where there really is no floor," said Peter Rachleff, a professor of labor history at Macalester College in St. Paul, Minn. "And there is no union that has a strategy for how to withstand management demands for concession. They can go as deep as they are willing to go at this point."

A stunning marker of this new era was the demand by Delphi last fall for wage cuts of more than 60 percent from its unionized workers. Never since the modern union movement rose in the struggles of the 1930s has a major company made that sort of demand. Delphi has since backed off a little, but it still is seeking reductions of more than 50 percent of pay levels.

Northwest's pilots have seen pay cuts totaling 35 percent over the past 15 months but face more demands for concessions from the airline.

In past downturns, workers in various industries — autos, steel, airlines — accepted some belt tightening, either as temporary layoffs or, at worst, wage cuts for a year or two. But there was the knowledge that things would rebound.

"You sort of knew the jobs were going to bounce back when the recession is over," said Mark Gaffney, president of the Michigan AFL-CIO, the state's largest union coalition.

Not only do the cuts go deeper this time around, but in many industries there's an ominous new demand on the table as well — that unions accept a broad outsourcing of their jobs.

At Northwest, the airline wants to set up two low-cost subsidiaries, called NewCo and GroundCo, and shift substantial amounts of work to them that is now performed by higher-paid workers.

Detroit-based pilot John Hooey said workers are willing to help the company but not until Northwest backs off demands that workers consider totally unrealistic.

"There's nothing else left to give," Hooey said. "If we were to allow them to outsource our work, where would that stop? That's a huge fear."

At the same time, workers across a range of industries are seeing their health-care plans and their retirement pensions under pressure as well, as employers such as General Motors and Ford struggle to get costs under control.

Of course, pilots and autoworkers can still exercise labor's classic leverage: a strike. Angry pilots shut down Northwest for more than two weeks in a 1998 walkout, and a strike by workers at two GM plants in Flint, Mich., in 1998 shut down GM's entire North American production for almost two months.

Whether that leverage remains as available in today's world of massive layoffs remains uncertain. Northwest's mechanics went on strike last summer over contract demands. The airline hired out-of-work mechanics as replacements and kept flying.

Moreover, Northwest contends that any strike by pilots and flight attendants would be illegal under federal labor law, and while the unions disagree, the issue has not been tested in court.

Gaffney, like many in the labor movement, said companies are more aggressive about using the bankruptcy code to wring concessions from workers. Northwest and Delphi are in Chapter 11 reorganization.

Rachleff agrees.

"I think the use of bankruptcy is a new tool that the corporations have figured out," he said. "How to manipulate the bankruptcy courts, where they file, what issues they're willing to put on the table, what assets they're able to hide to protect from the bankruptcy process.

"As skillful as their consultants were 20 years ago in figuring out the loopholes in labor law, now they've got a bevy of attorneys and accountants who are helping them figure out the loopholes in bankruptcy law."

And Rachleff sees Northwest's plan to create the low-cost NewCo as part of a broader strategy to beat down higher union wage rates.

"They create their own competitors, then announce that they have to compete with them, and then drive everybody's wages down," he said.

For labor leaders like Gaffney, the solution to the crisis can be found in political action.

"It comes down to what unions have always said: What you win at the bargaining table you can lose in the halls of Congress," he said.

"We know how to slow down the job loss due to free trade: Turn it into fair trade," Gaffney adds. "We know how to better protect pensions in the bankruptcy courts: Change the code so that pensions are higher up the list. That's the quickest and most efficient way to fight this back."

But others are not optimistic that the reduction in workers' pay and benefits can be stopped.

"This is the Wal-Martization of American society," Rachleff said. "And here it comes."