Business: Effects of Strikes

"The public interest has not been seriously harmed by strikes in steel, or by steel collective bargaining agreements, despite common public opinion to the contrary." So said Harvard Professor E. Robert Livernash last week in a forthright, polemical, 317-page study of collective bargaining in the steel industry and its impact on the U.S. economy.

The conclusions of the report, which was ordered by outgoing Labor Secretary James Mitchell last year in the wake of the record 116-day steel strike, must have come as some surprise to the Secretary. During that strike, he and the Labor Department, which published last week's report, issued warning bulletins on the strike's bad effects. But now the report's thesis that "the economic impact of strikes has been exaggerated" is soundly endorsed by Mitchell in a prefatory note: "Past steel strikes have left no permanent scars on the economy, have had minimal effects on wages and prices."

Since high production before and after the strike usually compensates for the shutdown, there is thus, says the report, little net loss in steel output averaged over a year. Close study of the economic indicators, even during the long 1959 strike, showed little effect of the strike on final sales.

The report also discounts the widely held belief that steel settlements are a major factor in pushing the wage-price spiral higher. Steel settlements in the postwar years were a part of the prevailing wage-price push but not necessarily the first cause in each new round. Even though finished-steel-product prices from 1947 to 1959 rose 109% v. only some 30% for consumer prices, Livernash hypothesizes that if steel prices had risen only as much as overall prices, the consumer price jump would have been slowed by a mere 2.4% through 1958.

On the basis of his findings, Livernash argues for a hands-off Government policy when labor and management are dueling. The mere prospect of Government intervention causes delaying tactics by both sides in negotiations: both sides feel they can get a better settlement through a third party than they can get in a tough clash with each other.