Workers Take Wage Cut, Then Get Jobs Cut : Diamond Walnut shows how easy it is to replace workers when they try to recoup lost wages.

A two-year strike by a few hundred California workers--mostly Latinas--against Diamond Walnut Growers Inc. in Stockton offers another compelling reason for the U.S. Senate to pass a pending bill banning permanent replacement of strikers.

This relatively small strike illustrates the difficulty facing President Clinton in his effort to reduce traditional adversarial relations between management and workers and to increase their cooperation.

Ironically, even if House-passed legislation, titled the Cesar Chavez Workplace Fairness Act, is adopted by the Senate, it will not help the “permanently replaced” Diamond strikers, since its provisions aren’t retroactive. The House passed the same bill last year, but it was killed by a Senate Republican filibuster--and is likely to meet the same fate this year.

Still, the strike by members of Teamsters Local 601 in Stockton has become an emotional rallying point for advocates of the ban on permanent striker replacements.

On the other hand, those same elements in the prolonged dispute reinforce the belief that it is extremely difficult for even good cooperative relations to survive a serious labor dispute.

The Clinton Administration can do little to end the strike. Karen Nussbaum, director of the Labor Department’s Women’s Bureau, did meet with company officials and strikers recently. She concluded that the strike is “probably the most extreme example today of the fact that workers just don’t have an equal footing anymore with management.”

In fact, there has never been equality, and there are more egregious examples. But certainly the Diamond dispute clearly illustrates management’s power over workers.

Most of the nearly 500 workers who struck were longtime employees, many of whom started at Diamond as young women and are grandmothers today. They worked hard for relatively low wages and helped the company through some hard times. Now they are out of jobs.

Workers and management had reasonably good relations ever since Diamond voluntarily recognized the Teamsters as representative of its employees in 1956.

Despite the low wages and difficult working conditions, there were no serious problems until the mid-1980s, when the recession hit the walnut industry. To help the grower cooperative, the workers in 1985 agreed to accept pay cuts of 30% to 40% over the following three years. They mistakenly believed that the cuts would be restored when business improved.

The market did revive, and while workers got modest wage increases in 1988, the company took savings from the wage cuts to help buy more efficient walnut-processing machinery, resulting in a substantial increase in productivity that allowed the company to lay off hundreds of workers.

As Diamond prospered, the remaining workers sought to recoup the wages they had given up. The union says that Diamond had a healthy profit in 1991, business is still good and growers got a 30% return on their investment. Diamond admits that it is now profitable but won’t discuss the effect of the strike.

The company offered a three-year contract with increases of only 10 cents an hour, while demanding a monthly worker contribution of $33 for health insurance. Frustrated, the workers went on strike on Sept. 4, 1991. The company quickly hired replacements, which the company now insists are Diamond’s permanent employees. Diamond says they are paid as well or better than workers in other walnut companies--but the other firms are much smaller than Diamond.

The Teamsters Union has asked the company to let a neutral arbitrator settle the dispute, but the company has refused.

In all fairness, the lengthy strike by low-income women ought to help spur Congress into enacting meaningful reforms of our labor laws. A first step, contained in the bill passed by the House, would prohibit companies from hiring permanent replacements for striking workers; this has made the strike an increasingly hazardous undertaking for labor unions. True labor-management cooperation, with greater equality between labor and management, is far better than the adversarial system we are now burdened with. Such a sensible and attainable goal requires strong leadership from the White House, Congress, labor and management. Unfortunately, that kind of leadership is in short supply.