Collective bargaining or "collective begging"?: reflections on antistrikebreaker legislation.

• Author: Estreicher, Samuel

1. OVERVIEW

   Since at least the Supreme Court's 1938 opinion in Mackay Radio,(1) employers have had the right to hire permanent replacements for economic strikers as a means of maintaining operations during a strike. Despite continuous criticism in academic and organized labor circles,(2) this practice did not achieve widespread notoriety and result in calls for legislative change until the 1980s. The Reagan administration's 1981 firing of members of the Professional Air Traffic Controllers Organization (PATCO) for engaging in an illegal strike is often cited as lending encouragement to employers to win labor disputes -- and break unions -- by permanently replacing strikers.(3) During that decade, long-established bargaining relationships -- at Continental, Phelps Dodge, Boise Cascade, and Greyhound, to name a few -- were severed in this manner. In April 1992, only the threat of job loss through permanent replacement persuaded workers on strike at Caterpillar to return to work after five months on the picket line.(4)

   The lesson the labor movement drew from the experience of the 1980s was that its institutional survival required repeal of Mackay Radio. On July 17, 1991, the House of Representatives passed a bill prohibiting employers from hiring or threatening to hire permanent replacements.(5) In June 1992, a companion bill in the Senate failed by five votes to overcome Republican and business community opposition.(6) With the election of a Democratic president in 1992 -- a President who had pledged support for the so-called Workplace Fairness Act(7) -- the effort was renewed in the 103d Congress. On June 15, 1993, the renamed Cesar Chavez Workplace Fairness Act passed the House,(8) but in July 1994 the bill again failed to attract sufficient support in the Senate to terminate a threatened filibuster.(9)

   Despite the emergence of a Republican majority in both houses of Congress as a result of the 1994 election, the striker replacement issue is likely to continue to simmer in public policy debates over reform of federal labor law. Given the union movement's insistent claim that repeal of Mackay Radio is essential to redress a growing disparity in bargaining power between labor and management, and the controversy that continues to envelop labor disputes in which employers attempt to maintain operations by hiring permanent replacements, the question of what are the appropriate ground rules for economic conflict under the National Labor Relations Act of 1935 (NLRA)(10) remains very much alive.

   Ideally, reform of the rules governing strikes should not be viewed in isolation but as part of a comprehensive reexamination of federal labor law aimed at making the system work better in an era of competitive product markets. It makes a difference whether one considers the question assuming the continuation of the existing framework of adversarial labor relations, in which unions view themselves and are viewed by management as advancing an industry-wide wage and job control policy often conflicting with the interests of the particular firm. A different answer might be given in the context of an altered legal regime that promotes a better alignment of interest between the firm and the bargaining agency of its employees.(11) Congress, however, has considered and is likely to continue to take up the strikebreaker issue separately and apart from a broader overhaul of the statutory scheme.(12) The question therefore is, on the assumption that the basic structure of the labor laws will remain in place, is there a case for modifying the Mackay Radio doctrine?

   In my view, existing law should be modified, but not for the reasons typically given in the literature and by advocates of the Workplace Fairness bill. Those arguments ultimately cannot be reconciled with the central premises of the NLRA, and they require a reassessment of first principles that the bill's proponents claim is unnecessary and thus avoid. Any justification for an isolated change of the rights of strikers and replacement workers -- that leaves undisturbed all of the other central features of the scheme -- must be consistent with the existing statutory commitment to the mix of regulation and market forces that is captured by the phrase free collective bargaining. That is, workers have a right to insist on collective bargaining of terms and conditions of employment and to promote their interests by engaging in strikes and other concerted activities, but they have no right as such to pursue their economic goals free of competitive forces in both labor and product markets.

   Continued adherence to the principle of free collective bargaining requires, I argue, rejection of any per se prohibition of the hiring of permanent replacements for economic strikers. If an employer cannot maintain operations by other means or withdraw its capital by relocating operations elsewhere, such a prohibition effectively insulates labor demands from market checks. The unionized firm will continue to face competition in product markets, but its ability to adjust its personnel practices to take account of the labor-cost advantages of competitors will turn on its ability to secure union consent to reductions in labor costs. Some unions may promote industry-wage policies irrespective of the impact on the particular firm. Also, while many unions will not intentionally pursue their dispute to the point of damaging the firm's competitive position, strikes may nevertheless cause such damage because they are often the result of bargaining failures -- poor communication, mistrust, distortions in the incentives of union and management leadership, and the like.

   A flat-out ban on permanent replacements even when they are truly necessary to continue operations would represent an unprecedented instance in which the law gives a particular stakeholder a right to continue its dispute with the firm indefinitely while simultaneously preventing the firm from breaking the relationship and turning to a different party for the same resource. Such a rule would strengthen labor's position in many disputes -- although this might be achieved only by a substantial worsening of the competitive position of union-represented firms. In any event, legal intervention to systematically improve outcomes for labor would require a broad examination of the costs and benefits of wealth redistribution through regulation of this type and reconsideration of the existing regime for collective labor relations. The essentially proceduralist case that advocates of strikebreaker legislation have made thus far is inadequate.(13)

   The question becomes whether under current conditions the statutory commitment to collective bargaining warrants any change in present law. In my view, with the sharp decline in union representation from a high point of 35.7% in 1953 to under 13% of nonagricultural workers in private firms today,(14) unrestricted resort by employers to permanent replacements poses a serious threat to the institution of collective bargaining. Employers who can continue operations at prestrike levels with the use of management personnel or temporary help but who nevertheless hire -- or threaten to hire -- permanent replacements inflict a penalty on their striking employees without economic justification. Strategic use of permanent replacements as a tool for breaking collective organization has always been possible, but in an earlier period of high unionization rates, employers contemplating such a move faced a corresponding disincentive to replace strikers -- the realistic prospect that its work force would ultimately re-unionize irrespective of the outcome of any strike. Under current conditions, the risk of re-unionization has atrophied, and the potential benefits to employers of strategic use of the Mackay Radio doctrine appear increasingly attractive.

   The objective of labor law reform in this area should be, then, to minimize strategic use of the Mackay Radio doctrine, while retaining the beneficial market check on unreasonable union demands that the employer's ability to operate with replacements provides. One approach commonly offered in the literature would be to require a showing by employers that operations could not be maintained by temporary help or other means as a prerequisite to the hiring of permanent replacements.(15) I favor such a prior showing of business necessity, provided, however, that a mechanism is available for a prompt administrative determination early on in the strike and that the inquiry takes account of the employer's customary educational, skill, and motivational requirements for the positions in question.

   For situations in which employers will be able to make a convincing showing that operations cannot be maintained with temporary workers, there is still a need for a moratorium period during which the process of collective bargaining can operate with some insulation from market forces. Here, I would follow the approach that until recently was the law in Ontario: allowing strikers to return to their jobs for a period of up to six months, even if replacements have been hired. Six months is a sufficiently long time to ensure that both sides feel the signaling and informational effects of a strike and to minimize any strategic use of Mackay Radio.

2. FALSE STARTS

   Critics of the existing rule on striker replacements offer some variant of one or more of the following positions: (i) the language in the Supreme Court's Mackay Radio decision recognizing the employer's right to hire permanent replacements should be dismissed as aberrational dictum inconsistent with the fundamentals of the NLRA (the "aberrational dictum" thesis); (ii) the statutory right to strike in sections 7 and 13 of the NLRA(16) is flatly inconsistent with and should override the employer's ability to maintain operations by hiring permanent replacements (the "rights" thesis); (iii) the use of permanent replacements produces...