Arbitration in Transit: An Evaluation of Wage Criteria [Reprint 2016 ed.] 9781512817423

Table of contents :
Contents
Preface
Foreword
Chapter 1. Introduction
Chapter 2. Method of Approach
Chapter 3. The Living Wage
Chapter 4. Cost-of-Living Adjustment
Chapter 5. Productivity
Chapter 6. Ability to Pay: Relevance and Strategy
Chapter 7. Ability to Pay: Measurement
Chapter 8. Wage Comparisons
Chapter 9. Overall Evaluation of Criteria
Chapter 10. Effects of Arbitration on Wages
Chapter 11. Implications of the Nature of Criteria
Bibliography
Appendix

Citation preview

A R B I T R A T I O N IN T R A N S I T AN EVALUATION OF WAGE CRITERIA

ALFRED

KUHN

•

Published for the

LABOR

RELATIONS

COUNCIL

of the

WHARTON SCHOOL OF FINANCE AND COMMERCE by the

U N I V E R S I T Y OF P E N N S Y L V A N I A Philadelphia

1 952

PRESS

Copyright 1952 UNIVERSITY O F PENNSYLVANIA PRESS

Manufactured in the United States of America

Alfred Kuhn is Assistant Professor of Economics at the University of Cincinnati. He was formerly on the instructional staff of the Wharton School of Finance and Commerce, University of Pennsylvania. During the war he served with the Disputes Division of the Philadelphia War Labor Board. He has served as arbitrator of labor-management disputes.

CONTENTS

11 Al'l'Eli Preface Foreword 1. Introduction

PAGE ν

vii 1

2. Method of Approach

30

3. The Living Wage

38

4. Cost-of-Living Adjustment

45

5. Productivity

53

6. Ability to Pay: Relevance and Strategy

64

7. Ability to Pay: Measurement

78

8. Wage Comparisons

92

9. Overall Evaluation of Criteria

113

10. Effects of Arbitration on Wages

137

11. Implications of the Nature of Criteria

161

Bibliography

194

Appendix

199

PREFACE

It is common for students of industrial relations to contrast the widespread use of arbitration to settle grievances arising under a labor agreement with the very limited use of arbitration to resolve differences over the actual terms of a labor agreement. The experience of one industry provides a notable exception to this generality. In the transit industry, the arbitration of disputes over the renewal terms of labor agreements has been more or less standard practice for many years. Arbitration of such matters in transit doubtless accounts for a relatively large percentage of all the arbitrations in this country engaged in over the years. The study of Arbitration in Transit by Dr. Alfred Kuhn, therefore, has a broad significance to all those interested in the subject of labor arbitration. No one can say that the transit experience has proved arbitration of contract terms to be a wholly effective mechanism. As a matter of fact, the dissatisfaction of many a company with the process has "broken out" all over the place in recent years. It seems significant, however, that this dissatisfaction has resulted in greater attention to ways and means of improving arbitration rather than in any widespread conviction that the alternate way of settling contract disputes— the work stoppage—should be resorted to. Out of this situation, interest has been focused upon the possibility of using objective criteria for wage determination through collective bargaining. The Kuhn monograph is, in my opinion, of unusual importance because it delves deeply into the numerous complexities involved in using objective criteria for the precise fashioning of a wage determination. It is easy to say that, by use of such criteria, professional certainty can be substituted for subjective appraisal in the arbitration of wages. To my knowledge, no one before Alfred Kuhn has subjected

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this thesis to critical test by carefully evaluating the actual usefulness of various criteria. Perhaps the author goes too far in concluding that the more-or-less standard criteria, referred to by those in arbitration proceedings, are "useless" in disposing of a wage dispute. But Kuhn certainly shows that a far greater understanding of these criteria is necessary before arbitration of wages can be undertaken with exclusive, or even primary, emphasis upon application of impersonal measures. This study will undoubtedly give rise to wide differences of opinion. The effect of the author's findings upon the development of the arbitration process will have different significance to different persons. Most of the analysis cannot, however, be simply shrugged off. It has been too carefully carried out. Kuhn's study of Arbitration in Transit, it seems to me, is one of the most important treatises in the field that has appeared within recent years. GEORGE W . TAYLOR

Philadelphia July 1952

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FOREWORD

The need to minimize or to prevent strikes in essential industries, without at the same time overstepping the bounds of the democratic process or of a private-property economy, involves one of the most difficult problems in the field of labor relations. Since arbitration almost invariably appears high in any list of solutions offered to the problem, an inquiry into the basic nature of an arbitration decision is germane, if not essential, to a decision whether arbitration is an appropriate substitute for the strike. Knowledge about the nature of an arbitration decision is important to those who are faced with the choice of whether or not to arbitrate. It is doubly important that those who would use the law to require arbitration of other peoples' disputes should know something about the methods used to reach an arbitration decision. Since secondary arbitration, or arbitration of grievance disputes under an existing labor agreement, is already widely accepted and deals with disputes of a type which cause few public emergency strikes, the major concern here is with primary arbitration as a substitute for the strike over contract renewal. The transit industry has engaged in more than six hundred new contract wage arbitrations between 1900 and 1949, inclusive. In the history of these cases, the largest body of primary arbitration experience in the United States is available. It is the purpose of this paper to analyze that experience with a view to evaluating the criteria customarily used in the transit industry to determine basic hourly rates of pay. These criteria, the tools with which a wage decision is fashioned, will be studied to determine how appropriate they are for the purpose, how desirable a result they are capable of producing, and what seem to be the actual effects they have had upon wages. After judgments have been made on this score, [vii]

some of the more important implications of those judgments will be traced. That this study finds objective wage criteria to be of quite limited usefulness in deciding basic wage levels, under the usual circumstances of a transit arbitration, will come as no surprise to many persons who have made such decisions. It is hoped, however, that the present work will make a contribution beyond mere discussion of the problem. For this end each criterion has been examined in considerable detail within the specific framework of its use in this particular industry and with reference to a carefully delimited conception of the arbitrator's function and purpose. It is also hoped that the study will assist in casting doubt upon proposals which assume that the arbitration of wage rates can be made a "scientific," "systematic," "accurate," "economically sound," or even "objective" method of wage determination. The author did not set out to "prove" this point. As a matter of fact, he originally hoped to uncover, in the extended arbitration experience of the transit industry, some formula or system that would assist the impartial arbitrator in making a truly objective determination. One company arbitrator expressed the feeling thus: "Sufficient strides have been made in the formulation of various criteria to assure the establishment of arbitration on a semi-judicial plane, if the determination to make it a semi- or quasi-judicial process be shared by management, labor, and the arbitrators alike." 1 It is not without some reluctance that the writer finds it necessary to disagree with the preceding statement. The transit industry offers an unusually satisfactory laboratory in which to make the study just briefly outlined. The arbitration history of the industry was built up during two major wars and two major wage recessions, and covers transit systems throughout the entire nation. "Experimental" simplicity of the wage issues arbitrated prevails to a degree not to be found in many other industries. The great bulk of wage discussion in the transit industry deals with but one group of 1 Philip B. Willauer, "What Price Transit Arbitration?" Mass Transportation, November 1947, p. 531.

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employees—the operators or platform employees. Many locals of the dominant union include no other employees. This study deals only with the wages of operators. Many companies operate only buses, and even the company in a large city is likely to employ only subway or elevated operators, two-man-car operators, one-man operators, and bus drivers. Since the latter two classes of employees usually receive the same rate of pay, the wage structure of the industry, as seen by an arbitrator, is extremely simple. It involves only one to three job classifications. From the very early days of unionization, the transit industry has generally negotiated and arbitrated only a single wage rate—the highest one—disputes over rate relationships being usually of minor importance or nonexistent. This fact greatly simplifies the application of criteria and the tracing of wage changes. A number of important additional complications prevalent in other industries do not plague the investigator of transit wages. There is, for example, no necessity to compare hourly rates in one area with incentive rates in another, or to compare varying piece rates in different places based upon different methods or efficiencies. Wage rates in transit are universally set on a straight hourly basis. Because the wage structure is so simple and is contained in its entirety in the wage agreement, no adjustments of intra-plant inequities occur during the contract to obscure the effects of the agreement. There are no rate differentials based on quality of performance, and no problems of rate changes connected with styles, grades, sizes, or seasons. Despite some rate problems peculiar to the industry, growing mainly from scheduling difficulties, and despite the usual problems of "fringe" payments, the top wage paid to operators by a particular transit firm defines the wage level of that firm far more precisely than any such single figure would do in most other industries. Furthermore, the unusually high percentage of labor costs, which average 50 per cent or more of operating revenues, makes proper wage determination a matter of deep concern to the industry. [ix]

The transit industry is defined as: "all organized local passenger transportation agencies except taxicab and suburban railroads, sight-seeing buses and school buses. Included are ( 1 ) local motor bus lines, ( 2 ) electric street railways, ( 3 ) elevated and subway lines, ( 4 ) interurban electric railways, and ( 5 ) trolley coach lines."2 This study is centered upon the use of voluntary arbitration in privately owned transit lines. Although material from cases involving interurban bus lines is referred to on occasion, such data are introduced only as contributing to the discussion of local transportation. Similarly, cases involving municipally operated lines and some of the reasoning followed by the War Labor Boards of World Wars I and II have been mentioned where useful. The particular problems of wage setting under municipal operation or by public boards are not specifically dealt with. For simplicity, the terms "company," "line," "installation," or "property," or names of particular companies will normally indicate the total company-union relationship. Unless specifically otherwise stated, the term "arbitration" in this volume will refer only to new contract arbitration. The same union frequently bargains for both operating and maintenance employees, but only the former are considered here. The Amalgamated Association of Street, Electric Railway, and Motor Coach Employees of America will be uniformly designated simply as the Amalgamated, or the AA. Areas in which underlying facts could not be objectively determined, or where conclusions could not be deduced by applying economic logic to generally acknowledged facts, have been omitted, minimized, or treated in a purely speculative fashion. Unfortunately, one such area is the highly important one of "patterns" of wage changes. A study of pattern wage determination could reveal, among other things, whether arbitrated wages are of greater or lesser importance to the industry than the relative frequency of this form of wage setting would suggest. Only with considerable 2 American Transit Association, Transit opening page.

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Fact

Book,

1949,

unnumbered

reluctance did the author abandon several different attempts to trace the influence of negotiated wage settlements upon subsequent arbitration settlements, although such influences almost undoubtedly exist. Not the least of the problems involved was that of determining whether a particular settlement was an imitation of a preceding one or an independent response to the same underlying forces—i.e., the difficulty that pattern following is to an important degree a state of mind rather than an objective fact. Another question which can only be inadequately treated is whether arbitration impedes collective bargaining. The relationship may be affected by the nature of the criteria used in arbitration. Essential information bearing upon such questions is known only to the participants, who have not recorded their knowledge in such a way as to permit generalizations here. Documentation of much of the information which follows, particularly in Chapter 1, is not feasible, since it has resulted from counting and classifying literally thousands of bits of information picked up from page-by-page examination of fifty-year sequences of several periodicals; from unpublished decisions, transcripts, and contracts; and from card files covering thirty-five years or more. The method of citing cases differs somewhat from usual techniques. Each case found by the author has been assigned a number, the system being basically chronological, but alphabetical within a given year. In the Appendix is a list of those cases which have been cited in this volume. Some informal cases and instances where the two partisans made a decision without selecting the impartial chairman are included in the numbering system, but have not been included in any of the statistical studies. A letter attached to a case number indicates only that it was inserted into the list after the original numbering had proceeded too far to justify revision. Since information concerning many cases was taken from unpublished sources, and since citations are often given for the sole purpose of indicating the approximate time or the place or arbitrator, it is felt that no substantial loss is involved if most cases are cited only by number. Where particularly [xi]

important or repeated references are made, more detailed source information is provided. Chapter 1 describes the institutional framework in which transit arbitrations occur, the types of persons serving as arbitrators, the distribution of cases over time and space, and other aspects of factual background. Chapter 2, Technique of Analysis, describes the method to be used in evaluating the usefulness of the wage criteria used in the industry, and notes the more important assumptions underlying the analysis which occupies the succeeding chapters. The inequality of space accorded the different criteria arises from the nature of the material available, the relative difficulty of presenting it, the degree of controversy involved, relative importance, and other factors. The author would like to express his appreciation to those who have assisted in this undertaking. The firm of Simpson and Curtin and the branch office of the Labor Bureau of Middle West, both in Philadelphia, the American Transit Association in New York, and the International office of the Amalgamated in Detroit have all generously permitted the author to make use of facilities which have saved him endless weeks of thankless work. Mr. Hawley S. Simpson and Mr. O. David Zimring, of the first two firms respectively, examined early plans for the study and made valuable suggestions concerning it, and other members of their organizations have discussed various aspects of the transit arbitration problem on a number of occasions. Mr. Morris Edwards, president of the Cincinnati Street Railway and recent president of the American Transit Association, has reviewed some problems with the author. Dr. George W. Taylor is responsible for the suggestion and general framework of the topic. Both he and Dr. Anne Bezanson, also of the Wharton School of the University of Pennsylvania, have read the manuscript at one or more stages, and have assisted considerably in pointing up some of the problems and clarifying some of the concepts for the author, and, it is hoped, also for the reader. The author also wishes to thank those firms which took the trouble to check

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or provide detailed information regarding their arbitration histories. The greatest burden, however, fell upon Nina Kuhn, who typed the manuscript, assisted with much of the detail, and in general took the brunt of the disruptions which arise from such an undertaking. The author regrets such weaknesses of perception or conclusion as may remain despite this generous assistance. ALFRED KUHN

New Richmond, Ohio June 1951

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ARBITRATION IN TRANSIT Chapter

1

INTRODUCTION T H E A R B I T R A T I O N PROCESS

Primary arbitration involves the determination of "interests" rather than of "rights." In terms of the present study, when a labor agreement expires, each party has an "interest" in writing a new wage contract as favorable to himself as possible. Neither party has any generally recognized "right," however, to any particular wage level, and neither has any legally enforceable wage claim against the other. As soon as both parties' signatures are affixed to a wage agreement, each one has definite and enforceable rights with respect to that wage. Under traditional concepts of Anglo-Saxon and American law, contests over rights can be carried to and settled by courts of law. The courts, however, assume that the contract which establishes those rights was the mutually voluntary creation of the two signers, and the purpose of the court is to effectuate that contract in accordance with its own terms. The contract itself is the frame of reference within which the court decides. A court, for example, will decide whether a certain shipment of goods is in accordance with the standards of quality, quantity, and date limitations agreed between the litigants. The courts, however, will not attempt to determine what quality, quantity, or price the litigants should have agreed upon in the past, or should agree upon for the future. On such matters the courts assume that the parties will either agree voluntarily or cease doing business with each other. Nor are the courts concerned particularly with bargaining power possessed by the two parties ( unless coercion, fraud, or other definitely illegal means were used ), or by the costs

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or inconvenience suffered by producers or customers on account of failure to reach a mutually acceptable price. Within this legal conceptual framework, an arbitrator who decides basic wage rates to be written into a contract is not substituting for the court, which would not perform such a function, but is substituting for the process of voluntary agreement. 1 Since the arbitrator of basic wage contracts is engaged to construct an agreement, he lacks the frame of reference of an existing contract, except, possibly, for procedural purposes. In order to reach some rational decision he must acquire a frame of reference, a set of rules, a list of criteria. Restated in these terms it may be said to be the purpose of this volume to evaluate the suitability of the wage criteria customarily used in the transit industry as a frame of reference for the arbitrator. The phrase "customarily used" means merely that the criteria are nearly always introduced in evidence by at least one party and are sometimes accepted by arbitrators. There is, of course, frequently a vigorous dispute about the applicability of some particular criterion. It is normally up to the arbitrator himself to determine which criteria he will use. Only on rare occasions have the parties stipulated a frame of reference for the arbitrator. The substitution of an arbitrator for voluntary agreement when a strike is threatened or in progress may be compelled by law, as in the recent public utility labor relations statutes of a number of states, or the older compulsory arbitration laws of Australia and New Zealand. The present study is not concerned directly with compulsory arbitration. In voluntary arbitration, on the other hand, the parties, failing agreement upon substance, agree upon a procedure which will achieve a determination of their difference and provide the contract terms which they then will sign. The method is most completely voluntary if an agreement to arbitrate is reached after a specific difference has ended in 1 Alexander H. Frey, "The Logic of Collective Bargaining and Arbitration," Law and Contemporary Problems, Spring 1947, pp. 272-73. This distinction is not invalidated by the fact that he may also be serving as substitute for the strike, which serves to induce a "voluntary" settlement.

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disagreement. Much of the voluntary aspect is removed, however, if the parties have committed themselves to arbitrate before the specific dispute has arisen. Under these circumstances, either party has lost the freedom not to arbitrate a particular dispute if the other party wishes to arbitrate it. Such a relationship is similar in some respects to that prevailing under compulsory arbitration. Since the transit industry is ( or has acquired the reputation of being) an essential one, actual freedom not to arbitrate may be inhibited by public pressure against a work stoppage. As a result both of this pressure and of the frequent precommitment to arbitrate in this industry, the conclusions to be reached later may have considerable significance for compulsory arbitration as well, although they grow out of cases that are technically voluntary. Because of the industry's essentiality, one important aspect of its industrial relations is abnormal. In the industrial dispute of a nonessential industry the parties are free to come to such agreement as they see fit, or, failing to agree, to interrupt production until an agreement is reached. The length of time that either party is able to carry on without the other becomes an important determinant of the terms of the settlement. Mere recognition of the cost of failure to agree places strong pressure on both parties to reach agreement. Furthermore, however reluctant one party or the other may be to accept the resulting contract, when it is finally signed there is a sense of its being "in the cards," and it is voluntarily accepted. 2 In the case of an essential industry, the public is frequently not able to dispense with the services of the parties for as long as they are able to dispense with each other. Ability to hold out cannot be effectively tested in this case, and other forces come into play. In a very real sense, the problem of the industry is to discover and develop another 2 George W. Taylor, "Criteria in the W a g e Bargain," First Annual Conference on Labor, N e w York University, 1948, pp. 65 f. See also, by the same author, " C a n Wages B e L e f t to Collective Bargaining?" Wages, Prices, and the National Welfare, ed. University of California Institute of Industrial Relations, 1948, p. 57.

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set of forces which will create the degree of acceptability now accorded the voluntary settlement, achieved with or without the contest of a strike. COLLECTIVE-BARGAINING STRUCTURE

In the transit industry, labor agreements are almost universally negotiated between a union local and an individual transportation company. 3 The companies vary in size and function. One small company listed by the American Transit Association in 1948 had only four platform employees,4 and the largest, the Chicago Transit Authority, had almost 14,000. Types of operations show equally wide variation. Different combinations of motor bus, trolley bus, street car and subway or elevated trains are used. A company may have a complete monopoly on scheduled public transportation, as is the case in many small and medium-sized cities, and it may be the only transit company operating in the central district of a large city, as is the case in Philadelphia or Washington. On the other hand it may be only one of a congeries of companies serving a district, as in the N e w York City area where overlapping of lines or parts of lines is frequent. In any case, the contract is practically always signed between one local ( or a small group of locals ) 5 and one company. When there are several companies in a limited area their contracts are seldom uniform. The importance of these conditions is that the success or failure of negotiations and the subsequent decision to strike or to arbitrate is essentially located in the individual plant. In the case of the Amalgamated, however, pressure for arbitration may be brought by the International, and the tendency to strike may accordingly be reduced. These facts affect the nature, use, and repercussions of the criteria used in wage determinations. A group of companies 3 Monthly Labor Review, February 1940, p. 437. An examination for this study of more than 200 contracts covering (variously) the years 1945 to 1949 and of over 600 arbitration cases between 1894 and 1949 corroborates this statement. 4 Winfield ( Kansas ) Bus Service. "> The Eastern Massachusetts Street Railway, for example, has for many years dealt with about a dozen different locals, usually simultaneously.

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may occasionally let their wage settlements hinge upon a single arbitration, 0 and other companies and their unions may let their wage decisions be made for them by some larger local company. 7 Even in these latter cases, however, an identical wage merely recognizes the dominance of the large firm for wage setting purposes, and does not result in identity of other contract clauses. Two unions negotiate 97 per cent of all the labor contracts in the industry, and represent about an equal proportion of the organized employees. The Amalgamated was formed in 1892, joined the A F L shortly thereafter, and has grown more or less steadily ever since. William D. Mahon, president of the International for half a century, held a strong conviction that his union should settle all possible disputes without causing the public to suffer the inconvenience of a strike, and he fought consistently to make and keep arbitration the "cornerstone" of the union. At an early date the International constitution was drawn so that no authorized strike could be called by any local division until after it had offered to arbitrate. Although this provision has by no means eliminated strikes by the Amalgamated, it has, along with the attitude of the leadership, led to a large number of arbitrations in the industry, and a relatively low strike rate. Until 1935 the Amalgamated was, for all practical purposes, the only union in the industry. In 1948, this union held 570 contracts, or approximately 86 per cent of the total in the industry. The overwhelming majority of arbitration cases on which this study is based were conducted by the Amalgamated. 8 The Transport Workers Union of America is a comparative newcomer to the field, starting among transit employees in 6 For example, the Berkshire Street Railway and firms in Port Chester and White Plains, Ν. Y., prearranged to accept the decision in the Connecticut Company ( C a s e 1 4 2 ) . 7 The California Cable Railway has often followed the San Francisco Municipal Railway, for example, and the Cincinnati, Newport & Covington lines have frequently followed the rates paid by the Cincinnati Street Railway (Case 2 5 6 ) . Various lines in and around Chicago have frequently copied each other's rates, as indicated by the arbitrator in Case 5 0 4 . 8 A detailed history of the Amalgamated may be found in Emerson P. Schmidt, Industrial Relations in Urban Transportation. Chapter X I deals specifically with arbitration.

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New York City in 1933 and eventually receiving a charter from the CIO in 1937. Unlike the Amalgamated, the Transport Workers Union has spread far beyond the jurisdiction of the transit industry, in which it holds some seventy contracts, or about 11 per cent of the total. Although the union has no official policy toward arbitration,9 its locals have engaged in a number of cases. The remaining 3 per cent of contracts in the industry are distributed among the unions of Railway Trainmen, Teamsters, United Mine Workers, Locomotive Engineers, Auto Workers, and possibly others. In terms of Amalgamated policy, the decision to accept or reject certain contract terms is essentially by vote of the local membership but the national union has been able to insure a certain degree of unity of arbitration approach through the presence of International representatives at most important hearings. In addition, the same individual, the chief counsel, represents the union in a large number of important cases. Further unity has been achieved through the Amalgamated's principal journal, Motorman, Conductor, and Motor Coach Operator, which has dealt regularly and favorably with the subject of arbitration since the turn of the century. The Executive Board of the International can bring pressure on a local division to arbitrate, since the constitution prohibits strike benefits unless the strike has been approved by the Board. The Board will normally not approve a strike unless arbitration has been offered and an International representative has tried to obtain management's assent to an arbitration. About half of the approximately fourteen hundred transit firms,10 have contracts with some union. The companies have no organizational connection11 except through the American Transit Association, a trade association which provides 9 Letter from counsel for the union. Information on number of contracts in transit was from the same letter. Facts about the early history of the Transport Workers may be found in James Joseph McGinley, Labor Relations in the New York Rapid Transit Systems, 1904-1944. 1 0 American Transit Association, Transit Fact Book, 1949, p. 1. 1 1 A notable exception to this statement is National City Lines, a holding company which controls more than forty operating companies in as many cities, scattered over the entire nation. See Chapter 7, and Moody's Public Utilities, 1948, p. 647.

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largely for the exchange of information among its members. The industry's principal journal was published by McGrawHill from 1884 until 1942 under varying titles, but known during most of its life as the Electric Railway Journal. Since May 1943, it has been published in considerably altered form by the American Transit Association under the title of Passenger Transport. Both this journal and the conventions of the Transit Association, are typically concerned with technical matterselectrical, mechanical, economic, and managerial. Strikes, arbitrations, and wage changes were reported rather consistently from the very early years, and editorials on the subject of arbitration appeared from time to time ( unfavorable more often than not). Not until after World War II was a special committee established to consider labor relations matters which then became an official and serious part of the Association's agenda. At the 1945 convention, an address on the subject of labor relations was made by William Leiserson.12 A series of five talks was arranged in the following year, starting with "Can the Transit Industry Develop a Labor-Management Policy?" and concluding with "Machinery to Effectuate a Policy."13 Attention to labor relations has been more or less regular ever since. Other than providing a forum for such discussion of policy, the Transit Association does not attempt to exercise control over the content of labor agreements reached by its members. The Association does not participate in negotiations with any union, does not pass judgment on the merits of any company's position in permitting its negotiations to end in a strike, provides no benefits to a struck property, and exerts no pressure on a company to use or refrain from using arbitration. Serious and apparently successful efforts are made, however, to provide the membership with all the information that might be pertinent to its labor relations, including its arbitrations. For example, files of arbitration awards have been kept since about 1913, becoming more and more comAmerican Transit Association, Proceedings !3 Ibid., 1946, pp. 153 ff. 12

1945.

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píete with the passage of years. Similar records have been kept on strikes in the industry. Extensive statistical services are provided, so there is no reason to anticipate that a local management preparing for an arbitration should find relevant information less accessible than does the union. The National Association of Motor Bus Operators is another trade association in the field, but its membership consists primarily of over-the-road companies. Bus Transportation, a magazine published monthly by McGraw-Hill to serve the field indicated by its title, has paid much less attention to labor relations than has Mass Transportation. This monthly, published by Kenfield-Davis Publishing Company and covering the transit field generally, has made strong efforts in recent years to stimulate management into giving more attention to labor policies in general and to arbitration in particular. ARBITRATION PROCEDURE

The typical procedure in a transit arbitration starts with a request from one party to the other to arbitrate certain matters. The request is usually accompanied by the name of the first party's appointee to the arbitration board. The second party then appoints its member and the two arbitrators thus named jointly select a third. A stipulation may define the exact issues in dispute and procedures to be followed, but such specifications may be omitted entirely, depending upon local practices or arbitration clauses. The board then holds hearings at which the parties testify to the matters in dispute, followed by executive meetings of the board, in which any two members can make the decision. In this process, each management is typically "on its own." Repeated use of certain management representatives in recent years and the ready availability of certain information to all companies, however, have provided some measure of consistency in the management approach. The local union will frequently have an International officer available for the hearings, and in a considerable number of recent cases divisions of the Amalgamated have been represented on the [8]

board and/or in the presentation of testimony by the chief counsel for the International. Representation in the proceedings themselves has thus provided a greater degree of uniformity for the Amalgamated than for management. There is no indication that either side desires to depart in any degree from the long-established practice of local negotiation of individual contracts. CONTRACT C L A U S E S ON ARBITRATION

The possibility of having criteria specified by the parties to guide the arbitrator is limited if the agreement to arbitrate is made before the dispute arises. The presence or absence of such a precommitment to arbitrate may, in effect, be used by some arbitrators as a criterion.14 This mutual interaction between criteria and the form of contract arbitration clauses indicates that the latter should not be ignored in the present study. To facilitate analysis, arbitration clauses in transit labor agreements have been divided by the author into six different types, depending on the nature of the provisions in the labor agreement itself for arbitrating future disputes over contract renewal. The six types are: Type 1. Definitely mandatory—the clause states specifically that unsuccessful negotiations for a contract renewal shall result in arbitration at the request of either party. Type 2. Apparently mandatory—the clause does not mention contract renewal, but refers to arbitration of "all questions" or "any dispute, difference or disagreement" in a context that seems to imply the inclusion of contract renewal. An example would be a contract which specifically required arbitration of grievances or contract interpretation or application, but elsewhere provided, as in a "meet and treat" clause, for refraining from strikes or lockouts "at all times" and for submitting "any dispute" to arbitration. Type 3. Indefinite or questionable—these are typically "all questions" clauses, but nothing in the contract elsewhere gives any hint that renewal arbitration is or is not implied. Type 4. Nonmandatory, apparently excluding renewal—arbitration clauses refer specifically and only to grievances or interpre1* See p. 25.

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tation of the contract, or to "differences arising under the contract." Contract renewal is not mentioned. Type 5. Nonmandatory, specifically excluding renewal—the clause states that the arbitration provisions do not cover contract renewal. Type 6. No arbitration provisions appear in the contract. T y p e s 1 a n d 2 a r e h e r e considered as requiring arbitration of a disputed issue o v e r c o n t r a c t renewal. 1 5 I t will b e obs e r v e d t h a t T y p e 2 is n o t so clear c u t as t h e others. F o r this reason, w h e n e v e r t h e indications w e r e n o t quite strong that a c o n t r a c t should b e thus classified, it was p l a c e d in T y p e 3, as indefinite or questionable. T y p e s 4 , 5, a n d 6 w e r e considered definitely n o t to r e q u i r e s u c h arbitration. All six classifications a r e s h o w n in T a b l e 1. C o n t r a c t s other than those of t h e A m a l g a m a t e d h a v e b e e n g r o u p e d since they w o u l d b e statistically insignificant if s e p a r a t e d into thirty-six parts, representing six unions a n d six clause types. 1 5 The Type 2 clause has been upheld in at least one court action, as reported in 18 Labor Relations Reference Manual 2205 in 1946. Section 2A of the contract between Northland Greyhound Lines, Inc., and Division 1150 et al. of the Amalgamated states that: "The Company agrees to meet and treat with the duly accredited officers and committee of the Amalgamated upon all questions relating to hours, wages and working conditions, and should any difference arise between them which cannot be mutually adjusted, the same shall be submitted at the request of either party to a Board of Arbitration to be selected forthwith . . ." The termination clause provided that the contract ". . . shall remain in effect from year to year thereafter unless terminated, changed, added to, amended, or modified as herein provided." Sixty-day notice is required of desire to modify or terminate the agreement at the expiration of its term. The company claim that it was not obligated to arbitrate a contract renewal under these clauses was not sustained by the court. (The case had many complicating factors of no import here.) The United States District Court for Minnesota ruled that, since the contract had not been terminated, it was extended by its own terms, and that the arbitration clause was also extended. By implication, though not by ruling, the court indicated that had notice of termination been served rather than notice of a desire to amend the contract, the company would not have been obliged to arbitrate. Some contracts provide only for renewal with changes, making no reference to termination. Whether arbitration clauses of Types 1 and 2 provide for voluntary or semivoluntary arbitration would thus seem to depend to a considerable extent on the nature of their termination clauses, and whether the parties give notice of intent to terminate or modify. Clauses have not been further subdivided by type of termination clause, since there is no evidence that such clauses have been a substantial factor in deciding whether to arbitrate or not.

[10]

TABLE 1 TYPES OF ARBITRATION CLAUSES IN TRANSIT LABOR CONTRACTS

1945-49 Clause Type

Amalgamated Number Per Cent

Other Number Per Cent

Number

Total Per Cent

1 2 3 4 5 6

60 31 16 45 12 8

35 18 9 26 7 5

3 3 2 8 5 7

11 11 7 28 18 25

63 34 18 53 17 15

32 17 9 26 9 7

Totals

172

100

28

100

200

100

CLAUSES AND CASES

Over 50 per cent of the contracts held by the Amalgamated and about 20 per cent of the contracts with other unions in the industry commit the parties in advance to arbitrate future unresolved contract disputes. Arbitration may also occur, of course, in the absence of such clauses. In Table 2, transit arbitration cases since 1940 have been classified according to type of clause under which they occurred. If the percentage of cases occurring under a given clause type is divided by the percentage of such clauses, the quotient may be viewed as the arbitration rate for that type of clause. A given clause contributes more than its proportionate share of arbitration cases if that ratio is more than one, and less than its proportionate share if the ratio is less than one. The arbitration rate is shown as the final column of Table 2. With the exceptions of Type 2 and Type 6 clauses, there is a definite relation between the number of cases processed and the "favorability" to arbitration of the contract under which they occur. Since Type 6 represents noncommittal as well as negative attitudes toward arbitration, it is not surprising that it shows an arbitration rate lying between the "indefinite" group and the "prohibitive." To reason in the reverse by interpreting the classification by the performance, the complete absence of an arbitration provision (Type 6) indicates stronger opposition ( or weaker inclination ) toward [Π]

TABLE 2 ARBITRATION CASES SINCE JANUARY 1, 1 9 4 0 , CLASSIFIED BY TYPES OF ARBITRATION CLAUSES UNDER WHICH THEY OCCURRED Clause Type

Number of Cases*

Per Cent of Cases

Arbitration Rate

1 2 3 4 5 6

91 20 13 28 5 6

56 12 8 17 3 4

1.75 .71 .89 .65 .33 .57

Totals

163

100

* Includes only those arbitrations for which corresponding contract clause types could be determined.

arbitrating a new contract than does accepting arbitration for grievance purposes only (Type 4 ) . It represents weaker opposition (or stronger inclination) than does a clause specifically prohibiting such arbitration. The figures show that contracts specifically committing the parties in advance to arbitrate if negotiations fail ( Type 1 ) are more numerous than any other type, constituting onethird of the total sample and appearing about four times as often as those which specifically exclude contract renewal from the obligation to arbitrate (Type 5 ) . Among Amalgamated contracts the proportion is five to one. Well over half the arbitration cases in the past decade have been conducted under Type 1 clauses. While parties whose contracts have specifically excluded the obligation to arbitrate frequently do arbitrate, they do so less than one-fifth as often proportionally as those who have committed themselves in advance. Since the former type of contract is found infrequently to begin with, the cases growing from it are even more rare, constituting only 3 per cent of the total. Other types of clauses contribute cases in rough proportion to the favorability of their reaction toward arbitration. The data of this chapter do not in themselves indicate whether strong precommitments to arbitrate produce a higher arbitration rate at the expense of successful negotiations or of strikes. Other data, however, show these same [12]

clauses to have a strike rate only about one third that of the other clauses, and about one half that of the industry as a whole,16 indicating rather strongly that the arbitration clauses to a considerable extent discourage strikes rather than successful negotiations. Of particular importance to the practice of wage arbitration is the fact that none of the arbitration clauses specify what, if any, criteria are to guide the arbitrator in his wage decision, or to indicate even that the parties are to attempt to provide such criteria. Since very few of the contracts limit in any way the nature of the subjects that may be submitted,17 either party to a Type 1 contract may be legally bound by a decision concerning any aspect of its labor relations which the other party sees fit to submit. Decision may be made by the arbitrator, moreover, by reference to any particular set of standards that he may care to apply. These arbitration clauses do not indicate that either party is justified in refusing to arbitrate unless criteria are specified in advance of the hearings, nor are there generally any restrictions on the type of person who is to occupy the arbitrator's chair. The resulting situation is frequently described as "unrestricted arbitration." BOARDS OF ARBITRATION

Before examining the criteria used in wage arbitration it may be well to consider what kinds of persons arbitrate the actual wage decisions, and under what circumstances. Table 3 indicates the relative numbers of cases decided by different types of boards. The three-man board with one impartial arbitrator and one representing each party 18 dominates the 16 P. 28. Although the Amalgamated follows a general policy of not submitting the question of recognition to arbitration, it has done so on several occasions (Cases 3, 62, and 9 2 - B ) in the more distant past, and has also arbitrated the question of union security (Cases 4 4 9 , 5 3 2 , and 5 7 7 , for example). It has also arbitrated the related question of scope of the bargaining unit at times (Cases 224, 244, and 2 5 9 ) . 1 8 Although occasional contracts—of which those of Shenango Valley Transportation Company, Youngstown Municipal Railway, and San Antonio Transit Company are examples—describe them as "disinterested," it is usually understood that these two persons are definitely "interested" agents of their principals. 17

[13]

arbitration practice of the transit industry. The relative decline in use of the three-man board, largely in favor of the single arbitrator, has resulted largely from the increase in cases involving the Transport Workers Union. The majority of the classification "State Boards" are boards of arbitration and conciliation, although a few older ones are regulatory bodies having power to decide wages and fares simultaneously.19 As to the impartial arbitrators, public officials in general and judges in particular served in 72 per cent of the cases before 1940 for which this type of information was available. Clergymen, professors, and attorneys, in declining order of frequency, handled practically all other cases. Since the beginning of 1940 about two-thirds of all impartial arbitrators have been persons who could be classified as professional or semiprofessional arbitrators with considerable experience. There are two arbitrators who have decided nine or more cases each, and some forty or more who have decided two or three cases each, but the great majority of the impartial arbitrators in transit cases have served only once in the industry. Those arbitrators who handle more than a single case deal almost exclusively with moderate-sized or small installations. Among medium or larger cities, only firms in Pittsburgh, Twin Cities, Trenton, and Washington seem willing to accept single impartial arbitrators who have already served in the industry. The permanent umpireship in Cleveland is the most outstanding exception to general practice, and even there the umpire issues advisory opinions, not decisions. When it is recognized further that the transit industry contributes a substantial proportion of all primary arbitrations in the nation, it can reasonably be concluded that most of the wage awards in the industry are made by arbitrators who have had little or no previous experience making primary decisions. Since 1940, the employers have appointed an official of the local firm, a vice-president more often than not, to serve as 19 E.g., Cases 102, 128, 134, 175, 253, and 265.

[14]

TABLE 3 TRANSIT ARBITRATION BOARDS, CLASSIFIED BY SIZE AND COMPOSITION, BEFORE AND SINCE JANUARY 1, 1 9 4 0 Number and Type of Arbitrators per Case*

Cases before January 1,1940

Cases since January 1,1940

Number

Per Cent

Number

Per Cent

1 — impartial 3 — 1 impartial 3 — 3 impartial 5 — 1 impartial 5 — 3 impartial State Boards

9 189

4.0 80.6

7 2 28

2.4 0.9 12.1

39 173 2 3 1 15

16.7 74.3 0.9 1.3 0.4 6.4

Totals

235

100.0

233

100.0

• "Informal" arbitrations in which no impartial representative was selected are not included.

partisan arbitrator in a majority of cases. Attorneys predominated before 1940, but in each period attorneys plus company officials accounted for three-fourths of all company arbitrators. In contrast, the union seems to have consciously avoided its own officials, and shows a definite preference for attorneys, who served in a plurality of cases before 1940 and in about 80 per cent of the cases since then. More important than the difference of occupation is the extent to which partisan arbitrators have had repeated service, and therefore, presumably, become experienced and skilled in representing their principals. For example, Edmund L. Jones, Joseph F. Berry, Fred A. Cummings, Bernard J. Fallon, and W. H. Lines have represented management from three to seven or more times each; while Charlton Ogburn, David E. Fitzgerald, A. B. Galloway, W. E. Kimsey, John A. Goldie, and others have represented the union in similar numbers of cases. However, another phenomenon has appeared on the union side which has not been matched (or is only beginning to be matched) by management. Reference is to the intensive representation by a single individual orfirm.Between 1914 and 1929 the same attorney, James H. Vahey, is recorded as union arbitrator in no less than twentythree cases. Judging from the meagerness of the available record covering that period, he presumably participated in

[15]

many other cases for which names of partisan arbitrators have not survived. It was apparently under Vahey that a particular practice started and gained considerable usage, namely presentation of the case by the partisan arbitrator who served, so to speak, as both judge and advocate. Although such duplication of function was practiced most frequently by the union, 20 management has also engaged in it occasionally. 21 The role of spokesman for the union was taken over by O. David Zimring from about the time of Vahey's death in 1929. Because of the small number of cases during the 1930's, Zimring's really active participation did not begin until about 1940. Because of the interchange of experiences and probable coordination of policy within a small group, it seems reasonable to describe the activities of his firm, the Labor Bureau of Middle West, rather than those of the individual who heads it. Members of this firm have served as union arbitrators in 25 per cent or more of the transit arbitrations since 1940. They have presented the union arguments in hearings in at least an additional 8 per cent of cases during the same period. Including cases prior to 1940, Mr. Zimring or a member of his firm have represented the Amalgamated in one or both capacities in more than one hundred cases. These figures should be considered as minima, since the list of cases is reasonably complete, whereas the record of names of participants is not. The same observation applies to the figures on management representatives which follow. The only approach to widespread representation of management by a single person or firm that could be detected in this study was that undertaken by the firm of Simpson and Curtin of Philadelphia. Up to the latter part of 1949, members of this firm had appeared in at least ten cases as company arbitrators and in at least four additional cases as attorneys. This largest single management representation is a negligible fraction of cases, viewed in the longer run, as 20 For example, in Cases 239, 253, 275, 331, 341, 398, 502, 505, 506, 5 1 0 522 559 563 2Í For example, in Cases 154, 194, 210, 449, 506, 563.

[16]

compared to the union, and represents only about 10 per cent participation ( in either capacity ) since 1946 when the firm's first cases appear. However, it is a substantial showing in light of the recent appearance of this organization, and must be appraised primarily in terms of its future potentialities. Generalizing from the foregoing description, a "typical" transit arbitration board has tended to consist of a union representative well versed in both the industry and its methods of arbitration, a management representative well acquainted with the industry but with little or no experience in arbitration, and an impartial chairman who has little or no experience with the transit industry or its particular arbitration problems, although he may have had considerable experience in grievance arbitration in other industries. CHRONOLOGICAL DISTRIBUTION OF C A S E S

Often in the course of arbitrations it is important to know whether existing wages have been negotiated or arbitrated. The overall approach to arbitration may differ when arbitrations are the exception from when they are the rule. For such reasons the ratio of arbitrated to negotiated (including struck) settlements is examined, along with tendencies toward concentrations of cases in single firms. The transit cases have been distributed through time and space according to several observable patterns. Figure I includes a curve representing the total number of cases arbitrated by the Amalgamated in each year, and a second curve representing 5 per cent of the total number of Amalgamated contracts in force during each year. It will be observed that the latter curve appears to be very much like a freehand smoothing or averaging of the former, indicating that there is a fairly consistent long-run tendency for the Amalgamated to arbitrate one contract for each twenty in force, meaning that roughly 95 per cent of the wage settlements are negotiated. The number of cases is primarily a function of the number of contracts. The first notable exception occurs in the years 1927 to [17]

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