During a union-management contract negotiation it’s illegal for a company to “plead poverty.” They can’t legally tell the union reps that, as much as they’d like to give them those pay raises and improved benefits, they simply can’t afford it, because, alas, the additional costs would very likely bust them.
Why is that tactic illegal? For the simple reason that it’s a show-stopper, an H-bomb being dropped, an impossible bluff to call. What union in its right mind is going to insist on wage and benefit increases that will risk bankrupting the employer and causing the facility to shut down?
Which is why a third party is brought in. A company that plays the poverty card is required to open its books to an independent accounting firm which, in turn, reports back to the union. While it doesn’t happen often, in virtually every case where the books are fully (as opposed to partially or selectively) audited, the company is shown to be telling the truth. After all, no one’s going to strip themselves naked unless they absolutely have to.
This happened in my own International, back in the late 1980s. A tiny Japanese-owned paper mill (less than 50 employees) announced that it was losing upwards of $100,000 a month, and was only staying in business for the “prestige” that came with owning an American company. When the negotiators requested an independent audit, the company stunned them by inviting the union itself to inspect the books. That’s when the Local knew the jig was up. Even with massive union concessions, the plant closed within a year.
So what does a company do, on the eve of contract negotiations, when the Wall Street Journal reports their profits to be in the tens of millions of dollars? It puts them in a very awkward position. Obviously, even if the tactic were legal, they can’t plead poverty—not after their financial health has been exposed—and just as obviously, they aren’t going to get out their check books and give the workers generous raises.
To maintain leverage, a company resorts to what’s called “whip-sawing.” It’s where they pit one facility against another by ominously suggesting that, while the corporation as a whole is doing quite well, certain high-cost facilities may not be able to say the same. In fact, one or more of the plants may have to be shut down. Their unmistakable message: Don’t ask for too much….you could be one of those plants.
I once sat across the table from a management negotiating team that claimed, with a straight face, that they honestly didn’t know whether or not their plant was making a profit. Here we were, doing our best to exploit the fact that they were rolling in dough (indeed, the facility was setting production records month after month), and here they were, refusing to admit that the place was even making money.
When we reached the point where frustration trumped civility, we spoke crudely.
“You’re shitting us, right?” we asked. “You’re going to sit there and tell us that you honestly don’t know if the fucking place is making a profit?”
The company spokesman answered calmly. “We’re not shitting you,” he said. “We honestly don’t know.” After nearly four months of this, the union went out on a 57-day strike.
There’s some truth to that old adage: Scratch a liberal deeply enough and you’ll reveal a union-hater. For whatever reason, liberals tend to find lots of reasons for staying clear of organized labor. While they’ll offer their heart and head to any progressive movement that comes down the pike, when it involves working men and women seeking to improve their economic lives, these same “progressives” express either apathy or resentment.
We saw this in Detroit during the 1990s and early 2000s, and we’re seeing it right now in Wisconsin. Instead of pinning the blame where it belongs, people focus a jaundiced eye on the workers themselves. Which brings to mind Gore Vidal’s trenchant observation: “Unlike Europeans, Americans have never hated the rich, only envied them.”
DAVID MACARAY, a Los Angeles playwright, is the author of “It’s Never Been Easy: Essays on Modern Labor”. He served 9 terms as president of AWPPW Local 672. He can be reached at firstname.lastname@example.org