Trump Is No Reagan When It Comes to Union-Busting
(Bloomberg Opinion) -- When Donald Trump won the presidency, some people like the Bridgewater Associates founder Ray Dalio rushed to compare the coming Trump administration with Ronald Reagan's in the 1980s. It seems more likely that Trump will turn out to be the mirror image of Reagan.
Reagan's legacy was burnished early his first term by standing up to the striking air traffic controllers' union in August 1981. After the strike, as inflation began to fall and the economy and Wall Street boomed, Reagan was lionized for being tough on labor and great for business. Trump may soon face a confrontation with labor and business, but because of economic circumstances it could leave him tarnished rather than canonized.
As a candidate going into the 1980 election, Reagan was not an obvious enemy of labor. He promised to be the first president who had previously been the president of a union, the Screen Actors Guild. As governor of California, Reagan had signed the Meyers-Milias-Brown Act, allowing local governments to bargain collectively with their employees. Unsatisfied with their dealings with President Jimmy Carter heading into an expected 1981 negotiation of their contract, the Professional Air Traffic Controllers Organization actually endorsed Reagan in 1980.
The union's problem was it overplayed its hand. It made exorbitant demands at a time when inflation was ravaging the country and voters were getting fed up with union demands. And at the time of the air traffic controllers’ strike in August 1981, the national unemployment rate had been above 7 percent for over a year. After the strike and the termination of all striking air traffic controllers, job applications from prospective replacements flooded in.
Unions were falling out of favor politically, unemployment was high, and a president in need of a political win used the moment to establish an image that then became one of the hallmarks of his presidency: the union president who broke the unions.
Whereas Reagan, given his pro-labor history, could've been seen by some desperate unions as a possible friend, candidate Trump presented an image of being a CEO president. Just this week he tweeted about how rich America has gotten since he became president.
Yet he has a different labor environment on his hands than Reagan did. Reagan took over when unemployment was high and inflation was high but set to recede, but — heading into the midterm elections — Trump's the president of a country with an unemployment rate closing in on 50-year lows, signs of upward inflation pressure, and at the very least strong anecdotes of emerging shortages and bottlenecks in the economy.
The surprise economic story of the year is teacher strikes, many of them in states that are outright hostile to organized labor. A headline that raised eyebrows last week was Boeing machinists organizing in anti-union South Carolina. The combination of fiscal stimulus, historical lows in unemployment, and an administration hostile to immigrants creates conditions more supportive of labor activism than the country has seen in decades.
An unknown is how Trump would respond if he got his own Patco strike moment. Reagan's moment came when the unemployment rate was 7.4 percent. It's possible that Trump's moment could come when the unemployment rate is more like 3.4 percent. When the unemployment rate is this low, you can't fire everybody, as striking teachers made known when they were pushing for higher pay. And while Trump promised to be a great president for business, he also promised to be a great president for workers. It wouldn't be a good look for him to tell workers to stand down and go back to work. Should he side with workers, he might end up making the business community that supported him howling mad — and businesses are already aggrieved because of his push for tariffs and his restrictions on immigration.
Some sort of showdown over labor is likely by 2020. And when it happens, unlike with Reagan, workers are probably going to turn out to be the winners. The only question is how Trump plays it, and how he's remembered afterward.
©2018 Bloomberg L.P.