St. Louis Post-Dispatch from St. Louis, Missouri • Page 79

i 1 I i I i "bp, MONDAY, JUNE 3t 1991 ST. LOUIS POST-DISPATCH 1 THE BOTTOM LINE 3 Decline Of Unionism Didn't Start With PATCO Strike I-ZZT1 JOHN I. CRUDELE lines, Pittston, Boeing and, more recently, at the New York Dally News. "We've been through this before," said Hardesty, referring to shifts in industries that hurt unions. Union organizer "Samuel Gompers was a cigar maker and that industry disappeared." "We do know that the worst is over," the AFL-CIO spokesman said.

Unions are pinning their hopes on a new generation of under-paid workers. Unions contend that these minority workers and women which the AFL-CIO says will make up 85 percent of all new entries into the labor force in a few years will embrace the union ideal. Not everyone, however, is convinced that unions are on the verge of a comeback. Leo Troy, an economics professor at Rutgers University in Newark and an expert on unions, thinks unions will take a lot longer to recover. Troy believes unions will continue to suffer loss of membership in private industry.

But unionism in state, local and federal government jobs will improve. "Early in the next century, I'm convinced we will see the composition change," he said. Unions, Troy said, will have only 7 percent of the nation's total workers by the year 2,000. That will be about equal to the number of union members 100 years ago. "They are going to fall back a whole century," Troy said.

As the 10th anniversary of the PATCO strike nears, you'll probably read how the air traffic controllers were to blame for most of organized labor's problems. Now you know better. NO HEAT: Wall Street probably still believes in Santa Claus, too. The summer stock market rally is one of Wall Street's most cherished myths. In the heat of summer, the investment community believes that as trading volume dries up stock prices go up.

Sometimes, the myth goes, stock prices rise quite nicely. The only trouble with the summer rally theory Ten years ago this summer, 13,000 of the nation's air traffic controllers walked off the job because the government wouldn't give them a $10,000 a year raise, a 32-hour work week and a better early retirement package. Within days, newly elected President Ronald Reagan fired all of them and quickly began the tedious process of hiring and training new workers to take over the landings and takeoffs at America's airports. He was successful. Over the last decade the Professional Air Traffic Controllers Association strike which officially began at 7 a.m.

Aug. 3, 1981 has become a symbol of unionism in decline. Corporate chieftains around the country are supposed to have said to themselves: "If the president of the United States has the gumption to stand up to unions, then so do That view is now being challenged. Sure, unionism has suffered a setback. But those who are pro-union and anti-union agree that the PATCO strike while it may have been one of the most publicized union-management confrontations ever didn't initiate labor's problems.

The problems facing labor unions aren't that simple. Demographic shifts, changes in education and the conversion of America from a manufacturing to a service-based economy all started eroding labor unions' support well before Reagan stood up to the unions. The evolution of the auto industry alone has cost unions some 800,000 members. Where the pro- and anti-union voices differ is on the future prospects of unions. Are they becoming unnecessary? Or more necessary? With the country now in a recession that is neither as short nor as benign as most experts had predicted, the debate over the need for unions is likely to intensify.

In rough times, blue-collar and white-collar workers alike tend to need the security of unions and the knowledge that, despite PATCO, it is still harder to fire someone who belongs to a union than a person who doesn't. Union membership actually started to decline before the PATCO strike, said Alvin Bauman, the expert on the labor movement at the VS. Bureau of Labor Statistics. Bauman says union membership peaked in 1979 at about 21 million workers. In 1983, the next year for which the government has statistics, there were only 17 million union members.

Today there still are about 17 million union members, Bauman says. Since the decline in the number of union members happened at about the same time as the PATCO strike, it's not surprising that some people attribute the weakening of unions to that strike. But experts say the strength of unions began to erode well before PATCO. But when union membership is measured as a percentage of the nation's total work force, unionism's erosion of power is seen to have started much earlier than the PATCO strike. Thirty-five percent of all jobs in this country were unionized in 1945.

But as industries were deregulated, new business formed around high-technology products; and as less-educated workers failed to join unions, that number fell steadily to just 23 percent by 1980 and 20.1 percent in 1983. Today, only 16.3 percent of the work force belongs to unions, the government says. The AFL-CIO, the nation's biggest union, blames the shift in thetypes of industry for the lower percentage of unionized businesses. Rex Hardesty, a spokesman for the AFL-CIO, says the PATCO strike was an important event for unions, but so, too, were strikes at Eastern Air is that it really isn't true. Stocks stage at least one rally in almost every season of every year.

Summer rallies, in fact, tend to be weaker than those in the three other seasons. "It's really an illusion that has been perpetuated for 100 years," said Yale Hirsch, who pops the summer rally myth in his book, Stock Traders Almanac. For instance, stock prices have rallied an average of 13.8 percent in the winter since 1964. And spring rallies have averaged 10.2 while fall rallies have been 10.3 percent. Summer rallies, in comparison, averaged just 9.9 percent.

A summer rally is defined by comparing the lowest close on the Dow Jones industrial average in May or June, to the highest close for the blue chip index in July, August or September. It doesn't mean, of course, that the stock market remains at the peak level. Last summer, for instance, stocks staged an impressive 12.4 percent rally only to be bashed down when the nation's economic situation was worsened by the Iraqi invasion of Kuwait. After last Tuesday's "summer rally" prelude, which lifted the Dow nearly 45 points to near-record territory, Wall Street's attention turned once again to the mythical jump in equities when the temperature rises. But is Wall Street paying too much attention to the "fun" and not enough to the "FUN-damentals?" Fundamental number one, of course, is that the nation's economy is still weak and unlikely to have even a shot at recovering until after the summer.

Even then, the economy could falter andihe recession continue. And if the recession does start to end, most experts are predicting a weak recovery. That's because there isn't a whole lot of excess money in either consumer or corporate hands to drive the economy out of the hole. On top of that, long-term interest rates despite the best efforts of the Federal Reserve have remained at uncooperatively high levels. And this situation is likely to continue as long as the federal government continues to sell bonds at a record pace which means it will continue for a long time.

As rates rise, bonds will become more attractive and stocks could become less attractive. So if you are waiting for the upcoming summer rally, throw some cold water on yourself and remember the FUNdamentals. John Crudele is a syndicated columnist for the New York Post. His mailing address is P.O. Box 610, Lincrnft.

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