THE BLOG

Organized Labor Showing Signs of Life

02/03/2015 12:05 pm ET | Updated Apr 05, 2015
F. Carter Smith/Bloomberg via Getty Images

On Sunday, when 3,800 members of the United Steelworkers (USW) walked off their jobs at nine oil refineries across the country (including two in my home state of California), it marked the first national oil refinery strike in more than three decades, going all the way back to 1980. Congratulations, USW. With this strike, organized labor is finally showing signs of life.

Although industry analysts have pointed out that gasoline prices were already edging upwards several days before the strike, everyone is going to blame the union for any rise in gas pump prices. And why wouldn't they? Unions make excellent scapegoats. Indeed, with the strike only a couple of days old, expect the oil companies to seize this opportunity to raise prices disproportionately.

But the facts tell a different story. Looking back to 1980, the year of the last national refinery strike, Phil Flynn, an analyst with the Price Futures Group, noted that even though that strike lasted a whopping three months, it had little effect on gasoline prices. According to Flynn, it raised prices only "a couple of pennies at best."

The USW called this current strike after rejecting five substandard proposals (the union described the final offer as "insulting") from Royal Dutch Shell, the company acting as lead negotiator for the oil industry. In a strategic move, the USW's walkout targeted specific facilities. Among them are the Tesoro Corporation, Exxon Mobil, Marathon Petroleum, and LyondellBasell Industries, facilities stretching from California to Texas and Kentucky.

Aware that the oil companies and media will try to portray these union members as greedy bastards, USW spokeswoman Lynne Hancock made it clear that, while hourly wages are a component of these negotiations (as they have been in virtually every contract negotiation in every industry in history), they are not central to the bargain. This shutdown isn't about hourly pay. "Wages are not a part of this walkout whatsoever," she said.

Among the issues central to the strike are mandatory employee contributions to medical insurance, continued reductions in headcount (leading to lower staffing, longer hours and more fatigue), and the company's refusal to take seriously the union's request that the membership be trained for jobs that are increasingly being performed by outside contractors.

This outside-contractor issue has become a huge deal to unions everywhere. And when it reaches critical mass, it's going to become a huge deal to non-union workers as well. Based on what's occurring in the marketplace, it's the dream of every company to change the status of their workers from "employee" to "independent contractor," thereby allowing them not to have to pay for insurance, pensions, vacations or holidays.

Once your employees become classified as contractors, all you have to do is give them cash for doing the job. Write them a paycheck and be done with it. And because there's almost always going to be a surplus of workers, market forces are going to constantly drive wages downward.

But even on those occasions when employers are required to pay top dollar for workers, the savings in benefits and administrative costs is going to be enormous, which is why the move toward "de-categorizing" employees has become so popular.

No matter how this USW strike turns out, one hopes it sheds light on what's become a dangerous trend. The notion of loyal employees retiring after working 30 years for the same company is an anachronism. Companies don't want loyalty. They want flexibility. And what they can't get from contractors they'll try and get from robots. It ain't a pretty picture.

David Macaray, a playwright and author (It's Never Been Easy: Essays on Modern Labor [Second Edition]), is a former union rep. He can be reached at dmacaray@gmail.com.