Real Wages, Union Strength Declining as Corporate Profits Rise : Labor: Some say workers’ organizations need a shot in the arm. Upcoming AFL-CIO elections will pit the old guard against a new generation of leaders.


Joann Henry worked at Dixie-Narco Corp.'s plant in Ranson for more than 10 years, building vending machines and earning as much as $11.45 an hour with “wonderful health insurance and all kinds of benefits.”


Today, she works 33 hours a week as a liquor store clerk--for $5.50 an hour. Period.

In 1991, Dixie-Narco closed its West Virginia plant and moved to Williston, S.C., where wages averaged $6 an hour less.

The move mirrors what is happening in industry after industry, economists and labor leaders say. Some note that the decline in organized labor has roughly paralleled the decline in working people’s wages.

“Today, both spouses are working in a family and, between the two of them, they still can’t bring home what one good job paid back in the 1970s,” said George Becker, president of the United Steelworkers of America. “It seems like we’re in a race to the bottom. And, dammit, somebody has to do something.”


To Becker, in office only a year, new leadership is needed, especially at the top of the AFL-CIO, an umbrella organization of unions representing 13.3 million union members in the United States.

In October, the federation will choose its officers from two slates of candidates in a confrontation between its old guard and its Young Turks.

It is the federation’s first contested election since 1894, and the first open leadership split since 1935, when United Mine Workers President John L. Lewis threw a punch at Carpenters Union President William L. Hutcheson.

That fistfight led to a new direction for organized labor, away from the exclusiveness of craft-based unions, which tried to limit membership in the craft, to all-inclusive industrial unions.

“We need inspiring leaders who can create a sense of excitement, who can tell working people, ‘There’s somebody here who will speak for you, believe in you, and take your struggle as their own,’ ” Becker said.

At 62, Henry doesn’t expect she will ever have another job like the one at Dixie-Narco, and her life now reflects that. She gave her new car and $4,000 worth of furniture to her children, who took over the payments. Now, she drives a 1977 Buick.

“It runs,” she said, “and it’s paid for.”

Paul Sprenger, a Washington lawyer who represented the Dixie-Narco employees in a class-action lawsuit against parent Maytag Corp., said the plant was moved for only one reason: lower wages.

In heavily organized West Virginia, Dixie-Narco’s wages averaged $13 an hour, even without a union. In largely non-union South Carolina, the company could get comparable workers for less than half that.

Sprenger said Maytag, based in Newton, Iowa, does not need the money. It had net sales of $3.3 billion, with a gross profit of $876 million, in 1994.

The suit by Dixie-Narco’s 700 former West Virginia workers accused Maytag of fraud and breach of contract for the company’s long insistence that it had no plans to move.

Four days after the start of trial, Maytag agreed to settle the suit for $16.5 million. The settlement included a statement by Maytag that it conceded no wrongdoing. The company said the move was an “economic necessity.”

“We started out thinking we would use both facilities,” spokesman Tom Schwartz said. “But in 1988-1991, the soft drink business went into a tailspin. The vending machine market was much weaker, and we had to match our production to the size of the market.

“We did what we could to keep our employees informed in a responsible way. The closing wasn’t something we desired to have happen, but it was an economic necessity because of business conditions.”

The company settled, Schwartz said, to avoid a lengthy trial in what he called “a hostile environment” in the Jefferson County Courthouse, located just a quarter-mile from the closed Dixie-Narco plant.

Sprenger and other lawyers call the settlement an unusual victory for workers, who usually have little recourse when companies decide another location makes better economic sense.

It has happened time and again, Labor Secretary Robert Reich said in a speech to the United Mine Workers union.

“Productivity improvements are going into corporate profits, not workers’ pockets,” Reich declared.

Take Briggs & Stratton Corp. of Milwaukee, for instance.

The company, which makes small engines used in lawn mowers, tried various ways to reduce costs through the 1980s. It won concessions from unions, invested heavily in automated equipment, opened a plant in Mexico and shifted some production there.

The company returned a record after-tax profit of $13 million in 1994, and so far this year its profits are running 31% ahead of that, Business Week magazine reported.

Even so, Briggs & Stratton announced last year that it would shift 2,000 of its 5,500 jobs to Kentucky and Missouri, where Chief Executive Officer Frederick P. Stratton Jr. said wages and benefits average about half the $21 an hour the company pays its workers in Wisconsin.

Nationwide, after-tax profits reported by U.S. corporations in 1994 were the highest in 25 years, and profits continue to climb this year, according to Lawrence Mishel, research director of the Economic Policy Institute, a Washington-based liberal research organization.

Since 1980, Mishel said, wages have steadily fallen for the 80% of men and 70% of women at the bottom of the wage ladder. Even middle-class men with college degrees have found their real wages have declined as salaries fail to keep up with inflation, Mishel said.

In 1993, for example, the median family income in the United States was $36,959 a year--6.9%, or $2,737, lower than in 1989, Mishel said.

At the same time, the percentage of the work force represented by unions has steadily declined, from 35% of the non-farm work force in 1954 to 23% in 1979 and 15.5% today, according to the AFL-CIO.

“There have been at least four or five good studies that show weaker unions are responsible for about 20% of the decline of wages for men in the bottom three-fourths of the labor market,” Mishel said.

“We’re basically seeing a restructuring of the economy that manages to provide more profits, but no social gains in the way of greater investment or greater productivity growth or higher wages,” he said. “This is a situation where employers are totally dominant in the labor market in every sense.”

Dixie-Narco wasn’t organized, but Henry now thinks a union might have been a good thing.

“We never thought we needed a union. They paid us good wages and gave us good benefits. . . . It was almost like a family,” she said.

“But I’m sure that things wouldn’t have gone quite the way they did if we’d had a union. The union would have been fighting this move long before we realized what was going on.”

Recent surveys indicate a significant part of the work force wants a union but hasn’t been able to get it, Mishel said.

“Some people say that unions are dinosaurs, that they’re outmoded and no one wants them and that’s why they’re dying,” he said. “But if you ask non-union workers if they would want a union tomorrow, or ‘Do you think your co-workers would want a union?’ about a third of them say yes.”

If that one-third joined with those already belonging to unions, the United States’ rate of unionization would match that of heavily organized Germany, Mishel noted.

To Becker, that would be a dream come true.

“We need somebody who can create a movement,” he said, “and that’s what it’s all about.”