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CAC Document No. 2 56 



Energy, Ecology, and the Steel Industry 
An Industrial Relations Perpsective 



by 
Jack Fiorito 



Center for Advanced Computation 
University of Illinois at Champaign-Urbana 
Urbana, IL. 61801 



November 197 7 



ABSTRACT 

The relationships between energy, ecology, and economics 
has received much attention in recent years. In this paper, 
the author attempts to clarify the issues by examining a single 
industry (steel). John T. Dunlop's industrial relations system 
framework is applied. Changes in energy-related and ecological 
circumstances are treated as contextual changes which, in turn, 
impact the processes and outcomes of the system. Outcomes 
such as employment and income are considered. OSHA is discussed 
as the author notes that "ecologists" often neglect the human 
ecology of the workplace. Recognizing that the actors in the 
system have capacities to modify the contexts, their attidudes 
are highlighted. Results of the author's survey of Steel- 
workers local union officials attitudes are interspersed in 
the text. Complete survey results are presented in an appendix. 



11 



TABLE OF CONTENTS 

Page 

Introduction 1 

Energy and Ecology in Steel — Overview 2 

Applying the Industrial Relations Framework 4 

The Technological Context and OSHA 5 

The Market Context and Energy 10 

A. Conservation 11 

B. Energy-Labor Substitution 15 

An Empirical Note 21 

Concluding Note on Energy and Steel 22 

The Community Context and Ecology 22 

The Steel Industry, Commons and Labor 24 

The Community Level: Examples 26 

Conclusion 31 

Footnotes 33 

Appendix 37 

Appendix Table of Contents and List of Tables 38 

LIST OF FIGURES 

Figure Page 

1. Percentage of Total Steel Production by 

Weight for Each Process, 1963 - 1975 14 



2. Relative Prices of Electricity, Labor and 

Capital, 1947 - 1975 18 



111 



In t rogue ti ^a 

A substantial oody ot literature concerning interrelations 
between energy, ecology, and economy has appeared in recent 
years. iMuch, it not most, of tnis literature nas aevoted atten- 
tion to aggregate pnenoinena, ana very general observations and 
analyses. A few stuaies nave examined tne impact ot changing 
ecological or energetic contextual variaoles on employment and 
industrial relations, or, tne attitudes ot tne actors ana tneir 
potential impact on policy cnoices made in response to ecological 
or energetic factors. 

Tne present stuuy is an attempt to clarify tne issues oy 
focusing upon a single industry; steel, w tn particular attention 
to tne impact on and role of steel industry employees. Original 
survey results of local bteelworkers officials' opinions about 
energy ana ecology issues are interspersed in tne uiscussion. 
(Complete results are presented in tne appendix.) To speaK of 
"steel" as an maustry may be somewnat misleaaing. It snould be 
made clear from tne outset tnat manageability rather than preci- 
sion is tne aefinitional concern. One can surely expect that 
diversity of prooucts ana conoitions witnin the "industry" will 
result in aiverse interrelations ana attitudes. For example, at- 
titudes toward the "bottle bill'' woula certainly depend on wheth- 
er one workea in a oeverage container plant or a bottle crown 
stamping plant, wnile ooth are steel products. 



-1- 



Energy ana Ecology in Steel — Uver vie w 

The steel inaustry is a niajor torum in tne debate ana ais- 
cussion over environmental and energy policy goals. Tne reasons 
tor steel's central position are numerous. 

Steel is conventionally thought ot as a key industry. Tne 
industry employs about a naif-million persons, and its products 
are substantial inputs to many otner sectors of the economy. The 
average automobile contains about one ton of steel and each mile 
of highway requires about 55 tons of steel reinforcement. Col- 
lectively bargaining agreements ana pricing decisions in steel 
often set the pace for much of the economy as a result of the 
industry's size and the importance of its products as intermedi- 
ate goods for other inaustries. Tne economic scale of steel 
manufacturing makes steel plants dominant institutions in many 
communities. 

The industry consumes approximately 16% of all energy used 
in U.S. manufacturing, aoout 4-6% ot all U.S. consumption. Tnus, 
the steel industry is a prime target tor conservation policies. 
A study by Battelle Columbus Laboratories estimates the potential 
savings at 15%. Saving 10% of the energy consumea woula provide 
enough energy for all U.S. manufacturing ot aluminum, copper, 
zinc, and leaa. 

The steel industry also accounts for substantial proportions 
of environmental degradation. In 1968 steel production accounted 
for some 20% of all industrial particulate pollution, more tnan 
twice the contribution of any other single manufacturing indus- 



-2- 



12 
try. Production also requires annual use ot 4.4 x Iw gallons 

ot water, most Decoming contaminateu witrt soiias, acias, neat ana 

deadly poisons like arsenic, cadmium, ai»j cyanide oefore 

discharge. Solia wastes in tne torm ot slag ana mine tailings 

and aiscarded steel products are also serious problems. Approxi- 

3 
mately 7% of all garbage is composea ot steel proaucts. 

The workplace environment is also a controversial area. 
Steel manutactur ing provides some ot the most dangerous occupa- 
tions in the economy. All major sectors oi steel proauction nave 
recordable injury ana illness rates in excess ot total private 

economy rates. Typically, injury rates in a given product-line 

4 
are three or tour times the rates for tne rest ot the economy. 

Labor certainly iias a airect interest in tnese issues. Em- 
ployment, wages, working conditions, ana non-work environment are 
all likely to be affecteu oy changes in this context. The vestea 
interests of the inaustry will also aetermine, to some aegree, 
the nature of tne context. Thus far, tew persons outsiae the in- 
dustry have been seriously concerned with these issues. Further, 
little is known ot how those in tne industry view them, aside 
from official statements in the news meaia or inaustry publica- 
tions. For example, the aforementioned Battelle report on energy 
conservation in the steel industry (a aocument about three- 
fourths of an inch tnick) incluaes one-naif page on the 
"Viewpoint ot Organizeo Laoor , " including: "Apparently the 
energy-conservation actions of tne steel companies to date have 
arawn little attention from union officials... . It is likely, 
however, that tnere will be situations where the energy- 



conservation actions of specific steel companies may draw the at- 
tention of organized labor. "^ 

Applying the Industrial Relations Framework 

Professor John T. Dunlop has constructed the most widely ac- 
cepted framework or conceptual model of industrial relations sys- 
tems, emphasizing rules. Three abstract contexts (technological 
characteristics, market constraints, and the locus and distribu- 
tion of power in the larger society) are described as "... de- 
cisive in shaping the rules established by the actors... ."^ This 
typology is generally useful in studying the system and its out- 
comes, but like any abstraction, it creates problems as a by- 
product. One can envision neat categories of technological and 
market factors, but reality does not generally accommodate itself 
so well. John R. Commons' classic case-study of labor organiza- 
tion emphasized how technology determined the extent of markets. 
Yet it is market factors that largely determine the technology to 
be employed and the research efforts that lead to new technolo- 
gies. To further complicate the (chicken and egg) problem, the 
actors are often able to unilaterally or jointly determine con- 
textual factors to varying degrees. Work rules are often expli- 
cit modifiers of the technological context, etc. 

The point of this discussion is not to attack the Dunlop 
context concept, but simply to note its limitations prior to im- 
plementing the contextual framework in subsequent analysis. Ex- 
ample: It is not obvious whether the issue of energy/labor sub- 



-4' 



stitution should oe considered a teen .oiogicai factor or a market 
factor. Market factors drive employer decisions as to tne op- 
timal combination oi product factors — mcr'^'^^ses in the price of 
energy relative to labor should lead to substitution of labor tor 
energy. Technology still determines the short run substitution 
possibilities to a large extent. human labor is not a very good 
substitute for the massive quantities of process heat requirea in 
steel-making. This ana other issues will be treated as one or 
another type of contextual factor, but tne categorical decision 
will necessarily be somewnat arbitrary, host of the energetic 
and ecological issues in the steel maustry can be treated as 
contextual matters, but the appropriate distribution of issues 
among contexts is uncertain. 

The Technological Context anu u SHA 

"The technical context orients or places workers and 
managers in a specific place of work in which they perform cer- 
tain particular operations ana functions."' Tne technology of 
steel production, like mining, logging ana longsnoring, has trad- 
itionally resulted in some of the deadliest occupations in Ameri- 
can industry. The massive machinery ana hot, polluting, 
processes utilized probably account tor the horrendous statistics 
shown below: 



-5- 



Injuries and Illness -- Incidence per 100 full time workers 



8 



Total Private 

Non-farm 
Economy . . . 

Blast Furnaces 

and 

Basic Steel . . . 

Iron and Steel 
Foundr ies , . . 



Total Lost 

Recordable Workday 

Injuries Cases 



10.5 



16.7 



31.6 



3.2 



3.8 



9. 



Total Lost 
Recordable Workday 
Illnesses Cases 



.1 

.1 
.2 



Industry certainly doesn't desire to subject its employees to 
illness and injury, but all other goals, including the social 
responsibility to provide pleasant and safe working conditions 
are subordinate to the organizations' drives for survival, 
growth, and profit. Workmans' compensation laws have indirectly 
given employers incentives to improve safety and health condi- 
tions by basing insurance rates on employer experience. But just 
as the earlier common-law remedies were found inadequate, the 
statistics above indicate the preventative effects of workman's 
compensation have been insufficient. The theory of prevention 
through disincentive (workman's compensation) seems sound, but 
should not allow the very high injury and illness rates evidenced 
in steel and some other industries. Thus, the National Safety 
and Health Act of 1970 was passed to create a safer work environ- 
ment by directly prescribing numerous aspects of working condi- 
tions, to prevent injury and illness rather than ensure after- 
the-fact compensation. 



-6- 



USHA has been widely criticized since its inception. Labor, 
and particularly management cnarge the Act's administrators with 
being petty, bureaucratic, ana inetl .icti ve . Field administrators 
find the law too unrealistic to be enforceable. vvhile employers 
complain most loudly of how OSrtA's red tape ties their hands and 
burdens them with unnecessary costs, labor's chief complaint is 
that OSHA isn't doing enough. In a recent survey of Steelworkers 
local union officials, 91% of the respondents said that OSHA was 
not doing enough to improve the workplace environment. Can labor 
and management be talking about the same thing? Obviously they 
are, and perhaps Labor Secretary Marshall's recent announcement 
that the efforts of OSHA would be redirected away from its 
comprehensive approacn to one of concentrating on the most 
dangerous industries will appease tne criticism of both sides to 
some degree. Tnis redirection couplea with experience may move 
OSHA "in practice" closer to its intended purpose. 

The steel industry, due to its hazardous employment condi- 
tions, has been and will continue to be a major battleground of 
occupational ecology. Safety equipment has been a major issue. 
I.W. Abel asserted in 1976, that "despite long known evidence, 
OSHA has consciously chosen to take no action oy inspection, no 
action through new standards for safety equipment and no testing 
or certification program. OShA, in effect, condones blatant law- 
lessness."^ Mr. Abel is referring particularly to National Insti- 
tute for Safety and health (NIOSH) tests which revealed 
widespread failure of safety equi^iient to meet OSHA standards as 
advertized. Some of the NlOSh results include: 



-7- 



Twenty of 21 models of randomly selected Class B hard 
hats are deficient in one cj more ways. 

One-third of the models of safety shoes fail. 

Of 22 models of glass goggles, 11 fail the impact test 
their makers advertise as meeting the OSHA-required 
test. 10 



The most controversial of health issues in steel has been 
that of coke oven emission standards. An extensive 10-year study 
concluded in 1971 found that coke plant workers had twice the 
lung cancer rate of all steelworkers , and that those with five or 
more years duty on the "topside" of coke ovens had lung cancer 
rates ten times as high as all steelworkers. This setting led 
to a bitter debate over appropriate standards in 1975 and 1976. 
Typically, the industry acknowledged that emission standards 
needed to be set, but that OSHA's advisory committee recommenda- 
tions were unrealistic and too expensive. J. Munson, U.S. Steel 
Company and industry member of the advisory committee, critized 
the standards as "beyond the stated capability" of the steel in- 
dustry. -^^ The United Steelworkers of America gave the recommended 
standards complete support. OSHA diluted the advised standards 
and issued its own proposals. I.W. Abel blasted the proposed 
standards, saying they were "based on political considera- 
tions. "-'■■^ (The Deputy Assistant Secretary of Labor for OSHA at 
the time was a former member of a law firm retained by two steel 
companies.) Abel also claimed that the industry had accessed 



-8- 



draft regulations two weeks betore they were issued and had 
pushed through aesired changes. The Cost ot Living Council be- 
came concerned about intlationary impacts m 1976, tmding OShA 
impact statements inadequate. The Council estimated the annual- 
ized total cost of ObhA's proposed stanuaras at 241 million dol- 
lars, and deduced that by a cost-oenetit criteria the minimum 
value UShA was placing on a numan life was $4.5 million, far in 

excess of values conventionally usea. Abel cnarged the Council 

1 4 
had "flagrantly abused its authority." ubtiA issued its final 

emission standards in 1976, ana estimated their annualizea cost 

at $200 million. The Steelwor Kers ' legislative airector said the 

union "feels very gooo" about the imal standards. ■'■-^ The steel 

companies have subsequently challenged the standards in court. 

Coke ovens are probably the outstanding example of nazardous 
working conditions in steel. Safety equipment may be second or 
high on tne list. liowever, tne small numoer of steelworkers em- 
ployed on coke ovens ana tne limited coverage ot the best safety 
equipment suggests tnat many other areas will oecome 
battlegrounds before tne record of the industry appreciably im- 
proves. 

Much of the impending aeoate will revolve around costs 
versus benefits. k-mployers will prooaoly attempt to convince la- 
bor that the costs will mean lost jobs. Local Steelworkers union 
officials reject this argument by a 2 1/2 to 1 margin. Employers 
will also emphasize tne inflationary impact of safety ana health, 
but the puolic is skeptical of sucn arguments and dislikes having 
to make tradeoffs between aollars ana lives. At any rate, the 



-9- 



policy choices will not be easy. They are likely to be decided 
with mandatory standards set by government with input from labor 
and management. (Collective bargaining has long dealt with safe- 
ty, and arbitration was implemented to decide coke oven standards 

17 
at U.S. Steel's Clairton Works. ) However, a major principle ot 

a "Just Wage" is that wages should not be used to oftset hazar- 
dous conditions. (Yet it has been empirically demonstrated that 

climate and other "quality of life" factors like air pollution do 

1 8 
substitute for wage rates.) Collective bargaining, and the in- 
herent horse-trading of intraorganizational bargaining is likely 
to downplay the interests of minorities like coke oven workers. 
Thus, the labor movement is most likely to continue to emphasize 
the legislative route to occupational health and safety. 



The Market Context and Energy 

The allocation of this issue is motivated primarily by the 
expectation that the steel industry and the rest of the economy 
will adjust to the changing energy situation (voluntarily or not) 
through reactions to market mechanisms. Conservation is a 
response to factor market price increases (and perhaps altruism). 
The decision to substitute one factor of production for another, 
while limited by technology, is based on relative factor prices. 

The issue of energy-use is almost inseparable from that of 
environment: The consumption of energy creates pollution — al- 
most by definition -- and its major uses, in "heat engines" (au- 
tos, homes, power plants, and industry) must yield pollution by 



-10- 



the Second Law of Thermodynaniics . The artificial separation used 
here is not recommended for general consumption. 

The steel industry's interest in energy issues is clearly 
enormous. In addition to using 5-6?- of all U.S. energy, direct 
energy costs (not including the energy embodied in purchased 
goods and services) are about 10% of total costs, including pro- 
fit and taxes. Employment cost forms about 35% of the total. 
Though economic theory predicts no strong relation between an 
industry's magnitude of consumption and cost-sensitivity, it cer- 
tainly does predict that the proportion of total cost directly 
affects price sensitivity. Due to their unique importance, an 
examination of energy-related issues in steel may overstate their 
relevance to the economy. At the same time, in these matters the 
industry may be a bellwether for other industries. 

A. Conservation 

The steel industry has two major concerns with energy con- 
servation. First, the enormous quantities of energy used (more 
than any other industry) have made the industry extremely sensi- 
tive to possible savings, and steel began its own conservation 
policies long before October, 1973 (the "embargo-crisis"). Ener- 
gy use per ton of steel dropped from 47 x 10" Btu's oer ton in 
1950 to 35 X 10^ Btu's per ton in 1973.^^ Even after intra- 
industry policies, energy consumption by steel is conspicuous 
enough for government policy-makers to take a hard look at addi- 
tional potential savings. Second, conservation aimed directly at 



-11- 



some other targets will hwe substantial impacts on steel. For 
example, attempts to increase auto's mileage per gallon is a con- 
committant attempt to eliminate high-density materials, i.e. 
conventional steel. 

Returning to the first category, the Federal Energy Adminis- 
tration (FEA) commissioned a major study of the "Potential for 
Energy Conservation in the Steel Industry." The (Battelle study 
concluded the potential savings are on the order of 15%, almost 
1% of U.S. consumption.^^ 

The Battelle report also identified several important relat- 
ed issues. An important possible trade-off is noted: One and 
one-half to 2 percent of steel's total energy is consumed for en- 
vironmental control equioment. Increasing steel imports also 
reduces energy consumption, but each percentage point of the U.S. 
market lost to imports costs about 7,500 U.S. jobs in steel. 

A study by the American Iron and Steel Institute identifies 
specific energy-saving technical proposals illustrating the 
micro-economic relation between conservation and jobs. One of 
the conserving proposals is to use water heated in the cooling of 
furnaces to supply other plant steam requirements. In an illus- 
trative calculation of costs and benefits labor constitutes 80% 
of annual costs. The net benefit/cost ratio of the project is 
over 3 to 1.^-^ Another project, installina radiant heat recupera- 
tors in flues yields a 40.2% rate of return. Labor comprises al- 
most 20% of the initial capital and installation cost for this 
project.^'' Thus, it is clear that energy conservation by the 



-12- 



steel industry can create jobs in the industry. Conservation 
does not mean eliminating jobs. 

A University ot Illinois study ^t alternative steel-makmg 
processes and their respective energy-intensities found steelmak- 
ers shitting away trom more energy-intensive open-hearth technol- 
ogy and toward basic oxygen and electric arc technology. This 
shitt is illustrated in Figure 1. The study concludes that the 
trend would result in a 2 1/2 to 5% (roughly) reduction in the 
energy-intensity ot steel. ^ Employment effects are anticipated 
but not estimated. 

Conservation measures outside the industry will also affect 
steel employment. Lighter autos are only one example. The so- 
called "bottle bills" are aimed at energy conservation as well as 
to reduce litter. Returnable bottles require far less energy per 
beverage unit than one-way containers. Thomas Wilson, Senior 
Vice-President of the American Iron and Steel Institute (AISI) , 
pointed out the implications for steel: "if steel can-makers lose 

this market, it could mean the loss of 50% of our tinplate 

24 
sales." Several studies have founa net employment would in- 
crease substantially (by over 100,000 jobs, nationally) as a 
result of bottle bills, but they usually acknowledge steel indus- 
try jobs would decrease. Not surprisingly, tne Steelworkers • Un- 
ion has been one ot the strongest opponents ot these bills. 



-13- 



iOO 


- 




90 


OH 




80 


- "^ 


^v^^^ 


70 


- 


N. BOF 


^60 

z 

Ul 

O50 
u 

Q. 
40 

30 


EA 
BOF 


\^ ^ ^' 


20 


y '^ 


10 





n 


1 


i. L 1 1 i 1 1 1 .1 ..I ., I 1 



1963 64 65 66 67 68 69 70 71 

YEAR 



72 73 74 1975 



OH - OPEN HEARTH 

BOF - BASIC OXYGEN FURNACE 

EA - ELECTRIC ARC 

Figure 1. PERCENTAGE OF TOTAL STEEL PRODUCTION BY WEIGHT 
FOR EACH PROCESS, 1963 - 1975. 



Source: Center for Advanced Comoutation 
University of Illinois^^ 



-14- 



Many of steels' competitors require larger requirements of 
energy to produce. Aluminum and cement are prime examples and 
prime substitutes for steel. Increases in energy prices will 
likely ennance steels' competitive position. A recent study of 
the impact of energy prices on the economy and employment of cer- 
tain occupations found steel output increases as energy prices 

27 
rise. Specifically, a price of $11 per oarrel of oil (1973 dol- 
lars) , compared to a price of $7 would result in an estimated 
iy% increase in the demand for steel in 1985. The same higher 
price results in an estimated decrease in demand for aluminum of 
10% in 1985. The corresponding employment estimates, however, 
show lower steel employment for the occupations studied. This 
does not mean total employment would fall, and the magnitude of 
the decrease for those occupations is easily within a margin of 
error — less than 2% of projected employment. 

B. Energy - Labor Substit ution 

Tne issue of factor substitution has unavoidably been raised 
in the discussion of energy conservation. The two conservation 
investment examples would yield less attractive returns with 
lower energy prices or nigner labor costs. However, the substi- 
tution issue by itself raises such fundamental questions tnat it 
must be explicitly examined. 

The conventional production function utilizes two conceptual 
factors of productions: labor and capital. Land has been 
dropped from most non-agricultural analyses. Theoretically, 



-15- 



these tunctions should depict every input required to produce a 
unit of output. The purpose ot this discussion only requires 
that energy be identified as one such factor. (Raw materials 
constitute a fifth major class of inputs, in addition to land, 
labor, capital and energy.) The unique role of energy results 
from its non-renewable nature. With enough energy, the other 
factors can be recycled within a closed system. 

The profit maximization condition for factor utilization re- 
quires that each input be rewarded according to its contribution 
to production. In effect, each factor is used increasingly to 
the point where the marginal revenue derived by its use (marginal 
revenue product) equals the input's price (actually, marginal 
cost). Different input proportions are utilized to produce 
identical outputs where the relative factor prices vary. Where 
labor is cheap, labor-intensive production processes are used, 
etc . 

It has been argued, from this framework, that the long-term 
decline in the price of energy relative to wages has induced em- 
ployers to substitute energy for labor in the production pro- 
ng 
cess. In this reasoning it is important to distinguish the 

short-run from the long-run. Obviously a given technology places 
the factors in a complementary juxtapostion . Last winter's na- 
tural gas shortages resulted in layoffs rather than increased 
hiring. (Interestingly, the AFL-CIO's legislative report of 
January, 1977 attacked the gas industry and the Administration 
for "what were later proved to be groundless charges ot forthcom- 
ing winter shortages of natural gas, causing thousands of lost 

-16- 



29 
jobs ...' ) Demand-depressing short-run impacts ot higher energy 

prices also reduce employment. The longer term (and less than 
Keynes' morbid long-run) provides substantial substitution possi- 
bilities. A thorough empirical study of a iuur-tactor (land ex- 
cluded) production tunction tor all U.S. manufacturing, 1947-71 
found ; 

i) labor and energy are substitutable, 

ii) labor and capital are subst itutable , 

lii) energy and capital are complementary. 



Figure 2 charts the relative prices of energy, labor, and 
capital in the steel industry tor the years 1947-75. (This 
graphic analysis is adapted from Bruce Hannon's work. See note 
28.) While this graph does not indicate the extent to which sub- 
stitution has occurred, the long-term rising trend of the 
wage/energy-price ratio suggests that employers have been re- 
quired to increase the marginal revenue product of labor in order 
to maintain the prof it-maximizing condition that equates a 
factor's cost to its contribution. This has been done by using 
less labor and more energy. One study claims that steel industry 

"employment declined from 450,000 to 100, 000" from 1959 to 1969 

31 
"as production increased 45% and energy use increased." While 

the direction of this assertion is probably correct — employment 
would have increased more with higher energy prices — this au- 
thor was unable to locate data substantiating the magnitude of 



-17- 





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-18- 



this claim. The Bureau ot Labor Statistics pegs basic steel (in- 
cluding rolling and drawing) employinent at 510,000 m 1976. For 
primary metal industries as a group, employment rose trom 1,182.6 
thousands in 1959 to 1,360.8 thousands m 1969.^^ 

One of the noteable features ot Figure 2 is the turnaround 
in relative price ratios since 1973. Wage increase no longer 
lead energy price increases. The implication is for employers to 
reverse their historical trend ot substituting energy for labor. 

This reversal will certainly be favorably received by labor, 
or will it? The Steelworkers have been very concerned about em- 
ployment security, and it was reported to be a major bargaining 
goal in the recent steel negotiations. Yet, the Steelworkers 
have consistently advocated lower energy prices and have been one 
ot the strongest lobby groups opposed to deregulation of fossil 
fuel prices. Most local Steelworkers officials believe inexpen- 
sive energy is needed to reach and maintain full employment, 
although 34% do not. More than 85% do not believe that higher 
energy prices mean more jobs in the steel industry. The superfi- 
cial paradox is dispelled by re-examination of the production 
function. Assuming a two-factor function simplifies, but does 
not distort, the essential point: 



a_,6 



(1) Q = AL^E^ 0<a,8<l 



(positive productivities and 

constant returns to scale) 



-19- 



where; Q is output, 
L is labor, 
E is energy, and 
A is some constant. 

Dividing both sides by labor (L) yields output/per unit of 
labor, or productivity, on the left. 



(2 ) 



Q/L = AL°'^= T-l f,r^ 



L^- (AL^E^) = AL^-1 E^ 



The effect of increasing the quantity of labor on produc- 
tivity is given by the partial derivative of productivity with 
respect to labor: 



(3) 



6 Q/L 



6L = (a-l)AL E^ <0 



or, with very plausible assumptions about the production func- 
tion, productivity falls. 

Economic theory thus predicts that increasing the quantity 
of labor would result in lower wages. From an institutional per- 
spective productivity is a key bargaining issue and is often used 
to justify (or attack) wages increases. Thus the Steelworkers • 
efforts to keep energy prices low may reflect a rational decision 
to forego increased employment to maintain high labor productivi- 
ty and high wages. Without knowing the exact nature of Steel- 
workers' preferences between employment security and wages, and 
the exact nature of the production function, it is not possible 



-20- 



to determine at what point the Steelworkers would no longer advo- 
cate lower energy prices. 

About 3 ot 4 local Steelworkers' ottici^^ls believe the union 
should take an active role in obtaining an energy policy that is 
best tor steelworkers (those with employment security?), but ot 
those who perceive an energy proolem (66%), only 33% advocate 
lower energy prices to solve the problem. The same percentage 
advocate higher energy prices. 

An Empirical Note 

The year 1967 marks the beginning ot a sharp decline in the 

3? 
ratio of steel wages to coal prices. Since about 60% ot the 

energy used directly by the steel industry is from coal, one 

might conclude that labor has since been substituted tor (coal) 

energy. If this is so, it is not evident that productivity has 

suffered as a result. Productivity rose rapidly from 1967 to 

1973 (over 23%) in the steel industry, and has only recently 

3 R 
Stalled. The only obvious conclusion the data support is that 

the aforementioned relation between energy prices and productivi- 
ty is not clear and decisive. Of course, numerous other influ- 
ences may have obscured a strong relation. Capacity utilization 
and the industry is productivity committees are two such factors. 
The mere existence of the committees suggest the importance of 
the productivity issue to both parties, and thus the importance 
of potential energy/labor substitution. 



-21- 



Concluding Note on Energy and Steel 

To the extent that energy prices are exogeneously deter- 
mined, they will probably increase, resulting in more steel in- 
dustry jobs from: 1) substitution of labor for energy; 2) the po- 
sitive elasticity of demand for steel with respect to energy 
cost; and 3) an enhanced competitive position relative to im- 
ports. The net effect on the Steelworkers ' bargaining power is 
uncertain. While product demand influences will increase their 
relative power, factor market effects will probably slow produc- 
tivity gains while increasing employment. If the latter effects 
dominate, the contribution-compensation nexus (marginal produc- 
tivity theory) may be increasingly attacked, and/or the scope of 
bargaining may be widened to accommodate more non-compensation 
issues. 

The Community Context and Ecology 

The issues surrounding environmental degradation are, in at 
least one sense, appropriately considered in the community con- 
text. Many if not most ecological issues are inherently communi- 
ty issues, for the environment is the ultimate example of what 
Garrett Hardin calls "the tragedy of the commons. "^^ Briefly, the 
tragedy develops as follows: A resource is owned by the communi- 
ty rather than private interests (air, water, etc.). As rational 
beings each individual attempts to maximize personal gain. This 
is accomplished by utilizing the community resource to the 
greatest extent possible, while the cost of utilization to the 



-22- 



user is only a traction ot the cost to the community. (Tne pol- 
lution from steel mills accrues largely to those downriver and 
downwind rather than the mills Lnemsel v^". . ) The community 
resource is exploited by private self-interest until its value is 
destroyed by over-use. 

Tnus far we have only approached the conclusion of the 
Tragedy in most cases. A few horror stories, such as tnose of 
rivers catching fire, suggest that we have come very close to in- 
dividual Tragedies, wnile the system on the whole may have suc- 
cessfully made the crucial turn in the late 196fe)'s. As a result 
of the Environmental Protection Agency (EPA) , state and local 
government, and community awareness, some "commons" have actually 
been upgraded in recent years. 

A more conventional basis tor this contextual classifica- 
tion, and perhaps more relevant to steel, can be derived directly 
from the Industrial Relations framework: The extent to which a 
community is dominated by an employer or industry is decisive for 
defining the roles ot the actors. Steel moustry locational re- 
quirements have resulted in inaustry-aominatea communities in 
Pittsburgh, Gary, Youngstown, ana Steubenville, to name a few. 
This domination has a tremendous impact on the actors' roles con- 
cerning environmental issues, especially at local levels. 

Finally, certain environmental issues' strongest influences 
on the industrial relations system will be those for diversity of 
interest within the labor movement. The "dottle Bill" and possi- 
ble energy policies (ooth, as mentionea before, are intertwined 



-23- 



with ecological issues) have differential impacts for very 
specific factions of labor, creating diversity between unions 
within unions, and between regions, as well as between labor and 
other groups. 

The Steel Industry , Commons and Labor 

The enormity of the steel industry's contribution to en- 
vironmental pollution is undeniable. Steel accounts for roughly 
twice the contribution of any other manufacturing industry and 
20% of all industrial particulate pollution. U.S. Steel's 
(U.S.S.) Gary Works alone dumps as much as 7,000 pounds of 
cyanide into the Grand Calumet River, a Lake Michigan tributary, 
every day.^^ 

The obvious obstacle to industry clean-up is cost. Limited 
amounts of internal and external capital are available. Stewart 
Cort, former Chairman of AISI estimates that steel companies are 
spending more that 12% of their total capital outlays on environ- 
mental controls . ^-'^ A study by A.D. Little, Inc., puts the figures 
at $12 billion by 1983, raising the percentage of total capital 
expenditures close to 25%.^^ Cort and other industry representa- 
tives are quick to point out progress made thus far, and that the 
diversion of funds away from capacity expansion may cause shor- 
tages. In 1973, a year of high steel demand, pollution control 
equipment makers complained of steel shortages. "^. A possible 
energy-environment tradeoff adds another complication. F. 
Jaicks, 1976 AISI Chairman claims that EPA regulations reduce en- 



-24- 



ergy conservation potential by 50%: Scrubbers and precipitators 
require electricity. Cort urges: "(Tne Government] should 
separate environmental goals that are critically important from 
those which are only cosmetic...". 

The Gary Works example suggest that the industry has a long 
way to go before it approaches "cosmetics" questions. Gary works 
officials are still seeking extension for standards that were to 
take effect in October, 1974. In upholding the current July, 
1977 deadline, the judges cited a Supreme Court ruling that, "li- 
tigation ... is carried out on the polluter's time, not the 
public's. "^^ 

The labor movement has traditionally been a "progressive" 
environmental force. The most recent AFL-CIQ Legislative Report 
shows labor at the national level supporting recycling (except 
for a "bottle bill" amendment), extension ana improvement of the 
Clean Air Act of 1970, ("with compromise language allowing indus- 
try and auto manufacturers unable to meet emission standards un- 
til 1979 to come into compliance") and tough federal strip-mining 

controls (which would promise continued demand for organized 

47 
eastern underground miners). The non-profit group. Environmen- 
talists for Full Employment (EFFt) , was organized in 1975 "to 
publicize the fact that it is possiole simultaneously to create 

jobs, conserve energy and natural resource, and protect the en- 

48 
vironment." There are certainly many instances where these 

simultaneous possibilities can be exploited: Sheetmetal workers 
are understandably strong proponents of solar heating develop- 
ment; displacea aerospace workers could apply their technical ex- 



-25- 



pertise to energy and environmental problems; an insulation re- 
trofit program would give construction workers increased employ- 
ment, reduce energy demand, and slow environmental degradation, 
etc. But without questioning the validity of this simultaneity 
assertion, it is apparent that short-run self-interest provides a 
consistent accounting of labor's political behavior, perhaps more 
so than altruism. 

Clearly, organized labor reflects its members' desire for 
quality of life improvements. However, these desires often 
quickly dissipate when jobs are put on the line. Leonard wood- 
cock explained: "Philosopnically , there is no reason to see any 
conflict between jobs and environmental protection" ... "Philoso- 
phy aside, there can be no question that there is a sometimes 
delicate relationship between working people and environmental- 
ists." ^ Woodcock later noted, in discussing a double standard of 
environmentalists, that concern about highly toxic PCB's did not 
arise until the chemical showed up in birds and fish after 1966, 
while the hazards it created in tne workplace were discovered in 
1933. The AFL-CIO's Tom Donahue, Executive Assistant to George 
Meany, notes that the primary function of the labor movement is 
to provide jobs for its members, ana unions can get involved in 
"social unionism ... only as long as that primary function is 
carried out."^*^ 

The Community Level ; Examples 

At the community level the conflicts are far more apparent. 
Th«! EPA still rates Steubenville, Ohio one of the dirtiest cities 



-26- 



in the nation. In 1971 Lhe FlPA declared it the dirtiest. The 
area death rate is 15% higher than the rest of the state. The 
steel industry directly provides 15,000 jobs for the area's popu- 
lation of 160,000. The North Ohio Valley Air Authority has 
granted postponements for compliance with air pollution stan- 
dards. City officials admit that cleanup progress is very slow, 
but some say that pollution is such a sensitive issue, they fear 
loss of their own jobs it they crusade for clean air. 

In Youngstown, Ohio, on the Mahoning River, a Steelworkers 

Union official asks: "Vvhat good is a clean river if you've got 

52 
no jobs?" In what has been called a "classic confrontation" 

between the environment and jobs, the companies that own Mahoning 
Valley's eight steel mills have threatened to close their plants 
rather than install more pollution control equipment. (The eight 
mills owned by U.S. Steel, Republic Steel, and Youngstown Sheet 
and Tube daily dump 158 tons of oil, grease, cyanide, and metal 
particles in the Mahoning River.) A resultant labor-industry al- 
liance persuaded the EPA to grant the Valley a reprieve from wa- 
ter pollution standards. An EPA official stated "... The Mahon- 
ing Valley was one place where jobs were on the line, and relief 
from our time frame for pollution control was needed. "^"^ The EPA 
reported that as many as 50,000 jobs might have been jeopardized 
by applying the legislated discharge standards. The State of 
Pennsylvania has appealed the Mahonino exemption on behalf of 
downstream Pennsylvania residents. 

A taconite mine in Silver Bay, Minnesota was ordered closed 
as a result of water pollution standards. ^^ The mine supplies 15% 

-27- 



ot U.S. - produced iron ore. Betore the mine was reopened upon 
appeal, 3,100 workers had been laid-otf. 

Visitor Charles Dickens described lyth Century Pittsburgh as 
"hell with the lid 1 itted. '• -^-^ Recently, a steel industry publica- 
tio.i claims the city has been transformed trom the "smokey city 
into the "renaissance city." While the claims are probably exag- 
gerated, it seems the city, with much steel industry support, has 
made substantial progress in its cleanup efforts. The article 
includes no mention of jobs lost as a result of the cleanup. 

The contrast between the last example and those of Steuben- 
ville, the Mahoning River Valley, and Silver Bay, results from 
the centralization of most steel industry corporate functions in 
Pittsburgh. Works Manager Gene Lane of Jones and Laughlin's 
Cleveland Works thinks that steel companies could go a long way 
towards improving their community standings if they "fully 
delegated social responsibility as well as business responsibili- 
ties to those in charge ot non-hometown plants."-^" Mr. Lane makes 
the point that headquarters operations are putting on a facade 
and getting the gravy. This certainly seems to depict the Pitts- 
burgh situation. U.S. Steel's Gary Works generates more pollu- 
tion than any other entire steel company and 40% of the City ot 
Gary's particulate pollution, yet. United State Steel's new 64 
story triangular corporate headquarters building is lauded in the 
aforementioned industry article as part of the "new" Pittsburgh. 

Returning to the jobs-environment conflict, conspicuously 
absent from the industry propaganda piece, it is only jobs in 



-28- 



"old, marginal'" non-hometown facilities that seem threatened. 
Environmentalists might ask, "Didn'c these old marginal tacili- 
ties help finance the 64-story United States Steel triangle and 
the Pittsburgh cleanup?" A more objective soudy of Oregon's Wil- 
lamette River cleanup reports: "Initially, Oregon lost industry 
because of its tight waste-discharge standards. But now such re- 
gulations are enforced elsewhere as well, and other areas have 
the same problems at higher costs." (The Willamette cleanup 
dates back to 1938.) Federal standards will tend to negate the 
cost-impact of environmental controls, just as the NLRA aimed 
(indirectly) at taking wages out of competition. The Council on 
Economic Priorities' study of over forty individual mills con- 
cludes "no steel mill operated by a major steel producer will be 

closed in the next tew years soley because pollution control 

58 
costs have rendered it unprofitable." 

Organized labor does not unquestionably support industry's 
attempts to evade environmental standards. Its support of the 
Clean Air Act (even with compromises) evidences this. Environ- 
mentalists and Steelworkers joined forces in proposing legisla- 
tion to end what they call "" environmental blackmail" — the 
threat of job losses to prevent enforcement of pollution stan- 
dards. This three-part proposal would: 1) make it illegal for 
employers to fire or otherwise discriminate against employees who 
aid in implementing environmental standards; 2) prevent the use 
of job-loss threats by giving the affected employees the right to 
call a public hearing and have the EPA subpoena corporate records 
(an extension of present Water Pollution Control Act provisions) ; 



-29- 



and 3) special assistance to affected workers in instances where 
there is a genuine job loss due to environmental controls, (The 
proposals were defeated in Congress.) Local Steelworkers offi- 
cials reject the idea that environmental controls on steel com- 
panies reduce steel industry employment by a nearly 3 to 1 mar- 
gin. 

A recent newspaper article captioned, "Despite Backers, 
Ecology Bills Losing," explains that, "Tne big reason is that a 
former ally, labor, is frequently joining up with an old enemy, 
industry." In a noteable and recent defection, the UAW success- 
fully led a lobbying effort against tougner auto emission con- 
trols. Environmentalists have apparently been unsuccessful in 
their efforts to convince labor that the ecology - jobs conflict 
issue is a phony. There are several likely reasons for this 
failure. First, environmentalists nave not been completely 
honest. While eager to point to ecology-sound jobs gains, en- 
vironmentalists are slow to acknowledge that the employment gains 
are very likely to result in lower paying, less prestigious jobs. 
For example, bottle bills increase employment, but the gains oc- 
cur largely in retailing while the losses occur in high-paying 
container manufacturing. Environmentalists are also usually (but 
not always) ready to ignore short-run dislocations that mean li- 
festyles and breau and butter to the dislocatea. Second, as EFFE 
coordinator Kicharo Grossman acknowledges, environmental groups 
largely represent the white miadle-class ana are run by the sort 
of youth George Meany hated when they opposed the Viet Nam War. 
"They haven't been sensitive enough to the fears and problems of 



-30- 



workers and the unemployed." Leonard woodcock's reference to a 
"aouble standara" (mentioned earlier) ot environmentalists re- 
flects labor's perception of tneir msensitivity . Finally, the 
Carter Administration's early conflicts with laoor make it diffi- 
cult for labor to be sympathetic to Carter-backed energy and 
ecology efforts. if the proposed ecology/energy policies con- 
tained some clear and substantial benefits for workers and unem- 
ployed, such as a massive insulation retrofitting program ratner 
than tax credits to consumers, labor might find it easier to 
resist the temptation that nuclear power plants, oams, and big 
cars provide — jobs now. 

Conclusion 

The preceding discussion, evidence and analysis has identi- 
fied and, hopefully, clarified some of the energy and ecology is- 
sues' potential and actual impacts on Steel's industrial rela- 
tions system. There are probaoly many interrelations wnich have 
been overlooked. quantitative estimates of various impacts 
should be developed, as should estimates of the net impact of 
various counter-influences. (Tne Council on Wage and Price Sta- 
bility is current conducting a 2-year study of regulation's im- 
pact on the steel industry. The Conference Board will begin a 
similar study ot OPEC, OSHA, EPA, and tEA impacts late in 1977.) 

The central economic role of the industry, and its distin- 
guishing energetic and ecological characteristics guarantee that 
it will continue to be a central forum in the accommodation of 



-31- 



industry and employment to public policy, or vice-versa. Making 
OSHA work, the energy situation and energy policy impacts, and 
ecology-jobs conflicts will all provide decisive influences and 
fundamental challenges to the system's actors and the rules they 
develop. The outcomes in Steel may foretell the likely impacts 
of energetic and ecological influences, and the future course of 
events in the broader industrial relations system. 



-32- 



w 



FOOTiviUTLo 



1. J. Cannon, iinvironmental Steel / Washington , D.C., Council on 
Economic Priorities, 1973, p.l. 

2. Battelle Columous Laboratories, "Potential tor Lnergy Con- 
servation in the Steel Industry," (Report for FLA), 
Columbus, 1975. 

3. J. Cannon, op cit, pp. 1-2. 

4. U.S. Department of Labor, Bureau of Labor Statistics, "Occu- 
pational Injuries and Illnesses oy Industry, 1972," (Bul- 
letin 1830), U.S. DOL: Washington, D.C., 1974. 

5. battelle, op cit, p. VII-13. 

6. J. Dunlop, Industrial Relations Systems , Holt and Co.: New 
York, 1958, p. 9. 

7. Ibid, p. 34. 

8. BLS Bulleti n 183fe3, op cit. 

9. I UP Spotlight on health a nd Safety, "OSHA Refuses to Enforce 
the Law," Industrial Union Department, AFL-CIO, Fourth Quar- 
ter, 1976, p. 2. 

10. "Defective Equipment Widespread," lUD Spotlight on health 
and Safety , lUD of AFL-Clu, Third Quarter, 1976, p.l. 

11. W. Lloyd, "Long Term Mortality Study of Steelwor kers. Part V 

Respriratory Cancer in Coke Plant Workers," Journal of 
Occupational Kedicine , February, 1971, cited in: wT Weiss, 
"Occupational health and Safety, The United Steelworkers and 
Safety," (unpuolished paper), 1977, p.l. 

12. Daily Laoor Rep ort, bureau of National Affairs: Washington, 
D.C., May 27, 1975, p. A-9. 

13. Daily Labor Report , August 4, 1975, p. A-7 . 
■^^* t^ai-l-y Labor Report , ^Jay 12, 1976, p. A-2. 

15. BtiA OSHA Reporter , October 28, 1976, p. 620, cited in Weiss, 
op cit, p. 11. 

17. U.S. Bureau of Labor Statistics, Department of Labor, 
honthly Labor R eview , December, 1974, (convention coverage). 



-33- 



16. M. Fogarty, The Just Wage , Chapman: London, 1961. 

18. I. Hoch and J. Drake, "Wages, Climate, and the Quality of 
Life," Journal of Environmental Economics and Management , 
No. 1, 1974, p. 268. 

19. Battelle, op cit. 

20. Ibid. 

21. American Institute of Iron and Steel, "Energy Conservation 
in the Steel Industry," AISI: Washington, D.C., 1976, 
p. 133. 

22. Ibid, p. 147. 

23. J. Broderick, "Energy Conservation and Employment Impacts of 
Changes in Technology and Consumption," with B.M. Hannon, 
B.Z. Segal, C. Ford, J. Joyce, P. Kakela, and H. Perz- 
Blaneo, Annual Progress Report, ERDA COO-2893-3, Section 
IIB, May, 1977, to be published as an NTIS report. Center 
for Advanced Computation, University of Illinois, Urbana, 
May, 1977 (draft). 

24. "Bottle Bills ...," Business Week , McGraw-Hill: New York, 
February 21, 1977, p. 84. 

25. J. Broderick, op cit. 

26. B. Commoner, "Economic Growth and Ecology - A Biologist's 
View," Monthly Labor Review , U.S. Bureau of Labor Statis- 
tics: Washington, D.C., November, 1971, p. 9. 

27. H. Folk, et al, "Scientific and Technical Manpower Require- 
ments in Energy-Related Industries," Center for Advanced 
Computation, University of Illinois, Urbana, 1977. 

28. B. Hannon, "Energy, Labor, and the Conserver Society," 
Technology Review , M.I.T.: Cambridge, March/April 1977, pp. 
47-53. 

29. "Labor Looks at the 94th Congress," AFL-CIO: Washington, 
D.C., 1977, p. 34. 

30. E. Berndt and D. Wood, "Technology, Prices and the Derived 
Demand for Energy," FEA: Washington, D.C., May 1974, pp. 
15-16. 

31. Dollars and Sense , September 1976, cited in R. Grossman and 
G. Daneker, "Jobs and Energy," Environmentalists for Full 
Employment , (newsletter), EFFE: Washington, D.C. , Spring, 
1977, p. 2. 

32. U.S. Bureau of Labor Statistics, Handbook of Labor 
Statistics, 1975, p. 106. 



-34- 



33. 
34. 

35. 
36. 

37. 
38. 

39. 

40. 

41. 

42. 

43. 

44. 
45. 
46. 
47. 

48. 
49. 
50. 
51. 



Ibid, p. 250. 

Historical Statisti :s of the Electric Utility Industry 
Through 1970 , Edison Electric Institute: New York, 1970, p. 
131 and supplements. 

Moody 's Industr ial Manual , 1976 , "Yields on Aaa Industrial 
Bonds," Vol. 1, pp. a36-a37. 

U.S. Bureau of Labor Statistics, "Wage Chronolgy: U.S. Steel 
Corporation and U.S.W.A, March 1937-April 1974," BLS, 1974, 
p. 9. 

Battelle, op cit. 

U.S. Bureau of Labor Statistics, "Productivity Indexes for 
Selected Industries (Bulletin 1938)," 1977. 

G. Hardin, "The Tragedy of the Commons," in H. Daly (ed.). 
Toward a Steady - State Economy , W. H. Freeman: San Francisco, 
1973, p. 133-48. 

B. Ingersoll, "Gary Works Cleanup Date Upheld," Chicago Sun 
Times , May 14, 1977. 

S. Cort, "We Must Review Our Environmental Goals," Steel 
Facts , AISI: Washington, January, 1974, p. 2. 

E. Bowers, "Steel Can't Buy Air Pure Enough for U.S. Rules," 
Iron Age , May 26, 1975, p. 27. 

T. Dulaney, "Smog's Big Enemy: Steel, Not Energy," Iron Age , 
June 24, 1973. 

Iron Age , May 17, 1976, p. 27. 

S. Cort, op cit , p. 2. 

B. Ingersoll, op cit. 

AFL-CIO Department of Legislation, "Labor Looks at the 94th 
Congress," AFL-CIO: Washington, D.C., January, 1977, p. 
43-5. 

"Who We Are ...," Environmental ists for Full Employment , 
EFFE: Washington, D.C., November, 1975, p. 1. 

"Woodcock Sees No Ecology/Jobs Conflict," Environmentalists 
for Full Employment , Spring, 1976, p. 1. 



"The Spirit of Black Lake," 
Employment , Fall, 1976, p. 2. 



Environmentalists 



for 



"Town Won't Trade Prosperity for Clean Air," 
Champa ign - Urbana Courier , February 4, 1976. 



-35- 



52. "Safe Water of Jobs? A Classic Confrontation," U.S. News 
and World Report , February 1, 1977, p. 47, 

53. Ibid. 

54. Iron Age , June 24, 1974. 

55. H. Howard, "Pittsburgh — A City that Gave Up Smoking," 
Steel Facts , January, 1974, p. 20. 

56. "Pollution Can be Licked: Three Areas Show How," U.S. News 
and World Report , February 7, 1977, p. 48. 

58. J. Cannon, op cit, p. 15. 

59. "Employee Protection from Environmental Blackmail Proposed," 
Environmentalist for Full Employment , November, 1975, p. 5. 

60. "Despite Backers, Ecology Bills Losing," Chicago Tribune , 
May 31, 1977, p. 5. 



-36- 



APPENDIX 



LOCAL STEELWORKERS' UNION OFFICIALS' OPINIONS 
ON ENERGY, ECOLOGY, AND THE STEEL INDUSTRY 



37 



TABLE OF CONTENTS 

Page 

Introduction ... 39 

Note on Methodology 39 

Results ko 

Concluding Remarks 56 

Footnotes 57 



LIST OF TABLES 

Table Page 

1. Actions to Solve Energy Problem favored by 

Respondents (Percent) Ul 

2. Actions to Solve Environmental Problem Favored by 

Respondents (Percent) k3 

3. Respondents Opinions on Statements Concerning Energy 

and Environment Issues (Percent) h^ 

h. Value of Steel per Dollar of Two Industries' Output .... 50 

5. Percentage Distribution of Response to the Statement: 
"The Nation and the Government Should Emphasize the 

Development of 53 

6. Proposed ERDA Budget by Technology 5^ 



38 



APPENDIX 

I . INTRODUCTION 

In late April, 19TT, approximately 130 officials of local Steelworkers 
xmions (USWA) attended a conference on safety and health sponsored "by the 
University of Illinois' Institute of Labor and Industrial Relations' Labor 
Extension Division. Most of the attendees were presidents, vice-presidents, 
stewards and grievers, etc., of Illinois and Indiana locals. During the 
conference a voluntary opinion survey on energy and environmental issues 
was distributed to approximately TO of those present. The survey was vol- 
untary and in no way related to the Labor Extension program, and potential 
respondents were so advised when the surveys were distributed. Forty sur- 
veys (31%) were completed and returned. 

The survey contained sections on respondents' general characteristics, 
perceptions about the energy and environment problems, possible solutions, 
and various sources of energy. The typical respondent (mean or mode scores 
as appropriate) was hf years old, had completed 12.5 years of school, a 
machinist or skilled tradesman, local union official, and had worked in the 
rod and wire products sector of the steel industry for 22 years. No attempt 
was made to assess characteristics of nonrespondents . 

Responses to substantive questions were restricted to agreement, dis- 
agreement, or no opinion. Space was provided in the instrument for remarks 
to elaborate or clarify responses. Several respondents offered interesting 
comments . 

II. NOTE ON METHODOLOGY 

The results for each of the opinion questions and statements are 
presented individually. An attempt has been made to examine the major 

39 



interrelationships "between various responses . This effort has "been limit- 
ed primarily to these relationships e^diihiting statistical significance to 
avoid innundating the reader and thus obscuring the mos-^ important and 
certain relations. This limitation also raises the prospect that a rela- 
tion which was not statistically significant at the confidence level adopt- 
ed here, but nonetheless important, has been omitted from the analysis. 
Also, the observation that two phenomena are associated statistically does 
not indicate, necessarily, whether they move together most at low values 
or high values. This for example, does not allow easy differentiation 
between the case where respondents favor two statements strongly or oppose 
two statements strongly, and the case where both are true. Finally, the 
two-dimensional analysis does not reveal more complex multi-dimensional 
relations and thus may lead to erroneous interpretations. 

III. RESULTS 

The first question was "Do you think there is an energy problem?" This 
question was followed by several possible choices of actions that the re- 
spondent could agree or disagree should be taken to solve the problem. 
Sixty-six percent of the officials think there is an energy problem while 
Z% had no opinion, (interestingly, a recent (June) Gallup poll found that 
52^ of the general public think that the U.S. imports oil.) An occasional 
explanation offered by those who don't perceive a problem attributed the 
energy situation to "monopoly," but most offered no comment. Younger and 
more educated officials tended to perceive that the U.S. has an energy 
problem. This direct relation between education and the recognition of an 
energy problem was statistically significant (95^) confidence level). The 
possible solutions and the percentages associated with each are shown in 

Table 1. 

UO 



TABLE 1. Actions to Solve Energy Problem 
Favored "by Respondents 'Percent) 



^Develop domestic energy supplies 
^Conserve energy 

Lower energy prices 

Raise energy prices 
*No action needed 

Rationing energy 

Other 



AGREE 

96. U^ 
8U.0 
33.3 
33.3 
6.3 
36. U 
12.5 



NO 




OPINION 


DISAGREE 


% 


3.6^ 


U.O 


12.0 


U.8 


61.9 


5.6 


61.1 





93.8 


18.2 


U5.5 


NA 


NA 



NA: Not applicable 

* : The "average opinion" is significantly different from neutral 
(95^ confidence level). 



Domestic development is the obvious choice. The close second for con- 
servation is slightly surprising, considering that our national policy 
response to the energy crisis first emphasized independence and only re- 
cently began to emphasize the elimination of waste. Another interesting 
result is the response to the price questions. Price manipulation in 
either direction is equally disfavored by nearly 2 to 1 margins. Further, 
equal proportions favored lowering or raising energy prices. This last 
res\ilt suggests a substantial niomber of respondents think of the energy 
problem as more than higher energy prices. 



*[N0TE: President Carter's first energy policy address was given approx- 
imately ten days prior to the survey.] 



1+1 



The only significant relation between these actions and age or 
education occurred "between age and lower energy pricer . This may 
reflect the fact that the elder respondents face the prospect of fix- 
ed incomes in the near future, and are thus more sensitive to infla- 
tion. Yotmger workers tended to favor raising prices as did the more 
educated, but these relations were not statistically significant. 

Those who favored domestic development also tended to favor con- 
servation. Those who favored conservation opposed lowering prices and 
favored rationing. Opponents of raising prices also opposed inaction 
and rationing. (These are the only statistically significant relations 
between the choices of actions . ) 

The comments offered in this section concerning the energy situation 
included: 



— Sell our products to other countries for oil and 
other energy. 

— Wipe out energy eaters . 

— Improve the way we use it. 

— Use foreign energy, conserve our own. Time 
is on our side 

— Government shoiiLd get after manufacturers . . . 
so you can get 25 to 30 miles a gallon... 
foreign cars do... Oil companies don't want 
that. All they want is big profits. 

— Develop hydrogen technology. 



k2 



The second question was "Do you think there is an environmental 
problem?" Like the first question, those who answer:! in the affirmative 
were asked to indicate whether they agreed or disagreed with possible 
courses of action aimed at solving the problem. Ninety-seven percent of 
the respondents think that there is an environmental problem, and only 
yfo think there is not. The difference in environmental and energy problem 
perceivers is somewhat surprising. Perhaps the degree of agreement on the 
environment question can be explained by the fact that the Steelworker 's 
officials and their constituents live in steel-producing areas, or by 
the fact that the environmental crisis was widely recognized a few years 
earlier than the energy crisis. The candidate solutions and the percent- 
age distributions associated with each are shown in Table 2. 



TABLE 2. Actions to Solve Environmental Problem 
Favored by Respondents (Percent) 

NO 

AGREE OPINION DISAGREE 

*Fine polluters 87-5^ 9 .\% Z.Vfo 

*Set tougher pollution standards 81+. 8 12.1 3.0 

*No action is necessary 12.5 87-5 

^Government should clean up pollution 63.0 lU.8 22.2 

Other 15.0 NA NA 



NA: Not applicable 

* : The "average opinion" is significantly different from neutral 
(95^ confidence level) . 



U3 



The results show a fairly hard-line attitude towards polluters. 
Again, it is very likely that the issue is "close to home" for these 
officials and their constituents. The bulk of opinion seems to he that 
pollution costs should be paid by those responsible, but a substantial 
number of respondents think it is governments' responsibility. The 
only significant relation between age or education and these solutions 
is between age and the fining of polluters. Older workers tended to 
favor fines. The only significant relation between solutions is that 
between the fining of polluters and setting tougher standards. Comments 
concerning the environmental situation under the "other" category include: 

- - All clean up pollution. 

- - Hire unemployed to clean highways and streams. 

- - Subsidize. Example: The steel industry for anti- 

pollution devices through tax credits. 

- - Don't pollute air and water. 

- - Those who create the pollution should clean it up. 

- - Set standards, but let people do the job. 

The third question was "Do you think OSHA is doing enough to improve 
your workplace environment?" Only Q% of the respondents answered in the 
affirmative, while the remainder thought OSHA is not doing enough. Some 
of the comments on this question include: 

- - Safety should be improved. 

- - Congress doesn't support or fund OSHA sufficiently. 

- - To do enough, better enforcement is needed. 

- - Set more rigid standards. Enforce the standards now set 

more rigidly. 

- - I woiild like to be able to refuse to work in an unsafe area 

and be able to shutdown a piece of equipment if it is unsafe. 



The next section of the survey instriiment consisted of eleven 
statements with which respondents were askeJ to agree, disagree, or 
indicate no opinion. The results for this section are shown in Table 3. 



TABLE 3. Respondents Opinions on Statements Concerning 
Energy and Environment Issues (Percent) 

NO 
STATEMENT AGREE OPINION DISAGREE 

1. Inexpensive energy is necessary 

to reach and maintain full employ- 
ment 51.1% Q.6% 3i+.3^ 

2. *Higher energy prices mean more 

jobs in the steel industry 2.9 11.8 85.3 

3. *Higher energy prices may mean 
more jobs in the steel industry 
but they wouldn't pay as well as 

present jobs 5-9 20.6 73-5 

h. ^Environmental controls on the 

steel companies reduce employment 

in the industry 25-7 2.9 71.^ 

5. *The union should take an active 
role in obtaining an energy policy 

that is best for steelworkers 76.3 7.9 15.8 

6. Pollution control equipment re- 
quires large amounts of steel 28.1 28.1 US.B 

7. Electric power plants require large 

amounts of steel 30.3 21.2 U8.5 

8. ^Inflation is a more important 

problem than unemployment 28.6 8.6 62.9 

9. *OSHA costs employers money and 

causes them to eliminate jobs 25.0 19.^ 55.6 



h5 



TABLE 3. Continued 

NO 
STATEMENT AGHEE OF^NION DISAGREE 

10. *Conservatlon is an import- 
ant source of additional energy- 
supplies 85.3^ 2.9^ 11.8$g 

11. The energy policy that is best 
for the nation is probably the 

best for the steelworkers 6l.3 6.5 32.3 



*: The "average opinion is significantly different from neutral 
(95^ confidence level) . 



The first statement ("Inexpensive energy is necessary to reach and 
maintain full employment.") represents a rather common piece of "conventional, 
wisdom". Its validity is questionable for at least two reasons. First, 
economic theory of firms predicts that energy eind labor are substitutes in 
the production function. Second, international comparisons show that 
some industrialized countries pay more for energy and have lower unemploy- 
ment and higher living standards. On the other hand, it is true that in 

the short run higher energy prices soak up consumer demand and thus worsen 

2 
unemployment — as occiirred after the October 1973 embargo and price hikes . 

It is also apparent to the employee that natural gas shortages , perhaps 

erroneously associated with expensive energy, cause layoffs. Perhaps 

the most interesting feature of this tabulation is the divergence of opinion. 

Older and more educated respondents tended to agree with this state- 
ment, although neither relation was statistically significant. Those who 
agreed with this cheap-energy /full employment relation also tended to 



k6 



advocate fining polluters in the earlier question on environment. While 
this relation is statistically significant, there is no obvious basis 
for interpretation. 

The second statement ("Higher energy prices mean more jobs in the 
steel industry.") was strongly rejected by the Steelworkers ' officials. 
The negative consensus may result from a belief that there is no relation 
between energy prices and steel industry employment, but it is probably 
due to the post-embargo experience, where insufficient demand and higher 
gasoline prices depressed auto sales and other cons\mier durable pur- 
chases and thus steel demand. This is however, a short-run relation, 
and it may be that over a longer period of time higher energy prices lead 
to greater demand for steel. A recent study of energy prices' impact 

on the economy found that the demand for steel did increase as energy 

3 
prices rose. This result is quite reasonable when the substitutes for 

steel are considered. Aluminum is such a product. Steel production 

requires only about 10^ of the energy per ton that alumin\im production 

k 
requires. Thus it is not difficult to imagine that after the initial 

impact higher energy prices would result in more steel production and 
less aluminum production. Also, higher energy prices errode the competi- 
tive position of foreign producers in U.S. markets since energy is such 
a high proportion of transportation cost. 

The third statement ("Higher energy prices may mean more jobs in 
the steel industry, but they wouldn't pay as veil as present jobs.") was 
also strongly rejected, but the results are not easily interpeted. In 
retrospect, the statement is poorly worded — the first part can be reject- 
ed without consideration of the second, and therefore only agreement is 



hi 



readily interpretable . The similarity of response to that of the previous 
statement's suggests that it may have teen only the first part of the present 
(third) statement which was considered. 

The fourth statement ("Environmental controls on the steel companies 
reduce employment in the indiostry.") was re,jected by a significant margin. 
Employers often complain that excessive controls prevent other investment 
projects from being undertaken. Certainly investment in pollution con- 
trol devices creates employment, and it is not clear which type of invest- 
ment results in more net steel indiostry jobs. 

The majority of respondent opinion rejects the notion that steel compan- 
ies are likely to close down otherwise profitable operations because of 
environmental restrictions. While employers have occasionally enlisted 
organized labor's support against environmental restrictions (environment- 
alists have charged some employers with blackmailing labor by threatening 
closings ), the response on this item seems to indicate these local union 
officials will not easily be blackmailed. 

More educated respondents tended to reject this (fourth) statement more 
often than less educated respondents. Industry-specific responses were 
also strong. Officials in the can and container industries unanimously 
agreed with the statement , while those in railroad equipment , bottle mold 
and crown manufacturing and basic steel unanimously rejected that statement, 
which may have been strongly associated with controversial "bottle bills." 
Those who rejected the earlier notion that no action is needed to solve 
the energy problem also rejected this statement, as did those who think 



U8 



there is an environmental problem. Both of these relations were statis- 
tically significant. 

Statement five ("The imion should take an active role in obtain- 
ing an energy policy that is best for steelworkers") vas strongly en- 
dorsed by the local officials (approximately 5 to l). It is not clear 
whether those rejecting the statement thought the imion should not be 
involved in energy policy or that they were opposed to the policy they 
expect the \mion to advocate. Those endorsing this statement also tend- 
ed to advocate lower energy prices as a solution to the energy problem 
and rejected the earlier (third) statement to the effect that higher 
energy prices mean more low paying jobs in the steel industry. 

Statements six and seven ("Pollution control equipment and elec- 
tric power plants [respectively] require large amoionts of steel") were 
both rejected by similar insignificant margins. Neither statement can 
be attributed any precise meaning since the term "large" is not defined, 
One very crude way of evaluating the statement is to define "large" to 
mean the dollar value of steel needed to produce a dollar's worth of 
electricity or pollution control equipment. Unfortunately, there does 
not seem to be any good data or the steel requirements of pollution con- 
trol equipment. However, much of this eqmpment is manufactTired in the 
blower and fan industry. Using this as a proxy for a true pollution 
control equipment "industry" yields the results shown in Table h. 



U9 



TABLE k. Value of Steel per Dollar of Two Industries' Output 



BLO^-.^RS AND FfiNS 

(SIC 3569) 



ELECTRIC POWER 
(SIC 1+91) 



S.I.C. 


STEEL INDUSTRY 




331 


Blast furnaces and basic 






steel products 


12. T<^ 


332 


Iron and steel foundries 


1.9<^ 


3391 


Iron and steel forgings 


.34 


3399 


Primary metal products , 





n.e . c . 



1.0(^ 



Standard Industrial Classification number 



.9^ 
M 
less than .1^ 

less than .1(^ 



Source: U.S. Dept. of Commerce, Bureau of Economic Analysis, 
(data rounded to nearest l/lO cents) ' 



Those who rejected either statement tended to reject the other. 
Yoimger and more educated respondents tended to agree with both state- 
ments, but of these only the relation between youth and agreement with 
the statement about electric power plants was statistically significant. 
Those with more industry experience also tended to endorse this state- 
ment (number seven), while those in the rod and wire products industry 
tended to reject it. Respondents who favored tougher pollution standards 
tended to disagree with the statement to the effect that large amounts of 
steel were required for pollution control equipment. Those who rejected 
the notion that no action was necessary to solve the environment problem 
also tended to reject this statement. Both these relations seem co\mter- 
intuitive, but like any interrelation between questions, may result from 
observing complex relations in only two dimensions. (This caution must 
be applied to those relations that make sense as well as those that don't 
of coiirse . ) 



50 



statement eight ("Inflation is a more important problem than 
unemployment.") was rejected by a significant margin (approximately 2 to l) . 
Older respondents, perhaps more concerned with fixed pensions than job 
opportunities, tended to reject the statement less often, but this relation 
vas not significant . The response to this statement appeared to be 
very neutral with respect to respondent characteristics and other opinions. 

Statement nine ("OSHA costs employers money and causes them to 
eliminate jobs".) was rejected by a significant margin (over 2 to l) . 
Higher level local officials and those with most experience in the industry 
tended to reject this statement most strongly. One of those rejecting 
this statement explained: "OSHA saves workers' life or limb which in 
return saves the employer money." 

Statement ten ("Conservation is an important source of additional 
energy supplies.") was endorsed by a significant margin (almost 8 to l). 
This was the most popular of all the statements (but it was not as un- 
popular as the notion that higher energy prices mean more steel industry 
jobs). Those who agreed with the conservation statement also tended to 
reject rationing to solve the energy problem and the statement to the 
effect that inexpensive energy was needed for full employment. They 
also rejected the previous statement about OSHA costing jobs. 

Most respondents endorsed statement 11 ("The energy policy that is 
best for the nation is probably the best for the steelworkers."), but not 
by a statistically significant margin. A substantial minority expect 
national and steelworkers' interests to diverge over energy policy. More 
educated respondents tended to reject this statement most often. Those who 



51 



endorsed this statement (believe steelworkers ' and national interests 
coincide) also endorsed the previous statement that conservation is 
an important energy source, and rejected the notion that inexpensive 
energy is required for full employment. The relation between this 
statement (ntunber 11) and the role of the lanion on energy policy 
(statement 5) was not statistically significant at the statistical 
confidence level used throughout this text. The negative relation 
was still fairly strong (significant at 88^ confidence level). This 
suggests that those who thought the union shoiLLd take an active role 
on energy policy for steelworkers didn't necessarily think that role 
would be in behalf of the national interest as well. 

The final section of the survey instrument asked respondents to 
rate the importance of various energy sources for the nation's and 
government's emphasis on development, i.e. — which sources shotild be 
emphasized. The percentage distribution for each sovirce and its rat- 
ings are shown in Table 5. Respondents were asked to rate each source, 
Thus if all respondents thought all sources were "most important" each 
source would have 100^ of the response londer "most important". 



52 



TABLE 5. Percentage Distribution of Response to the 
Statement: "The Nation and the Government 
Should Emphasize the Development of. «...." 







MOST 




NO 


NOT VERY 


LEAST 






IMPORTANT 


IMPORTANT 


OPINION 


IMPORTANT 


IMPORTANT 


*Oil 




Gl.Qfo 


29. i+^ 


0% 


8.8f. 


0% 


*Natural 


gas 


69. T 


27.3 


3.0 








*Coal 




5U.8 


32.3 





9.7 


3.2 


*Nuclear 














energy 




62.1 


31.0 


3.U 


3.h 





*Solar 














energy 




68.8 


21.9 


3.1 


3.1 


3.1 


*Wind 














energy 




38.7 


29.0 


12.9 


12.9 


6.5 


^Conservation 50.0 


28.1 


6.3 


12.5 


3.1 


Other 




12.5 


2.5 


82.5 





2.5 



*The average opinion is significantly different from neutral 
(95^ confidence level) 



The striking feature of these results is apparently equal importance 
attached to all the candidate sources. The highest ranking, for natural 
gas, probably stems from the closings of plants during recent gas shortages. 
The close second for solar energy is somewhat surprising. The rankings of 
Table 5 contrast sharply with the proposed Energy Research and Development 
Administration (ERDA) budget for fiscal year 1978: 



53 



TABLE 6. Proposed ERDA Budget by Technology 



MILLIONS OF DOLLARS PERCENT OF BUDGET 

Conservation 2i+i+ 7.8^ 

Fossil Fuels 522 l6.T 

Solar 250 8.0 

Nuclear Power 210? 67.5 

o 
Source: National Resources Defense Council 



Those favoring the development of oil energy sources also favored 
domestic development as a solution to the energy problem and tougher poll- 
ution standards to solve the environmental problem. These respondents 
also thought the Nation's and the steel workers interests in energy policy 
coincide. 

Respondents favoring emphasis on natural gas development tended to 
be less educated than those opposing it, and also favored tougher pollu- 
tion standards to solve the environmental problem. They tended to dis- 
agree with the statements that higher energy prices meant more low-paying 
steel industry jobs and that the union should pursue the best energy pol- 
icy for the steelworkers. They also favored the development of oil energy 
sources. 

Respondents favoring emphasis on coal development were generally less 
educated and thought development of domestic supplies and conservation 
were important solutions to the energy problem. They also favored tough- 
er pollution standards and thought that the best energy policy for the 
nation was the best for steelworkers. 

5U 



Proponents of nuclear power disagreed with the notion that no 
action was necessary to solve the environmental problem. They also 
favored the development of coal energy sources. 

The respondents who favored the development of solar energy so\irces 
thought there was an energy problem, and that domestic development, 
conservation, and higher energy prices were needed to solve the problem. 
Solar proponents also favored tougher pollution standards, nuclear energy 
development and coal energy development. 

Wind energy proponents thought there was an energy problem, and 
disagreed with the notion that no action was needed to solve the environ- 
mental problem. They also agreed with the statements that higher energy 
price mean more jobs in the steel industry, that the union should advocate 
an energy policy that is best for steel workers and that electric power 
plants require large amounts of steel. Other energy sources they favored 
were nuclear power and solar. 

Proponents of conservation as an energy source disagreed with the 
idea that the environmental problem required no action, and disagreed that 
the xonion should take an active role in obtaining an energy policy that is 
best for steelworkers . These respondents also favored nuclear power 
development and wind energy development. 

Those favoring "other" sources disagreed with the idea that no action 
was needed to solve the environmental problem. They disagreed with the 
statement to the effect that environmental controls on steel companies 
reduced steel industry employment, and agreed with the statement that 
electric power plants require large amounts of steel. These respondents 
also favored wind and nuclear energy development. 



55 



IV. CONCLUDING REMARKS 

The preceding resiilts clearly demonstrate the danger of sweeping con- 
clusions. Though these local union officials occasionally expressed vir- 
tual \ananiniity, the diversity of opinion was extensive. The results hard- 
ly evidence a stereotypical respondent. Age, education, and other identify- 
ing characteristics were often instrumental in explaining observed differ- 
ences of opinion. 

From a policy perspective, the results suggest substantial room for 
common ground between these labor leaders and energy or ecology-conscious 
interest groups. Like these latter interest groups, these respondents are 
highly skeptical of "employer economics" — a doctrine which almost invariably 
concludes that any attempt to improve environmental quality or use energy 
more carefully will destroy the American economic system and eliminate 
Jobs. At the same time, the response indicates areas where the mutual 
interests of environmentalists, the energy-conscious, and organized labor 
remain to be explored. 



56 



FOOTNOTES 

[l] For an empirical treatment of energy/labor subs oitut ion, see: 
E. Berndt and D. Wood, "Technology, Prices, and the Derived 
Demand for Energy," FEA Office of the Assistant Administrator 
for Economic and Data Analysis and Strategic Planning (xerox). 
May, 197^.; and for discussion: H. Daly, "Electric Power, 
Employment and Economic Growth", in Towards a Steady State 
Economy , San Francisco: ¥. H. Freeman & Co., 1972. 

[2] G. Perry, "The United States", in E. Fried and C. Schultze 

(eds.), Higher Oil Prices and the World Economy , Washington, 
D.C. : Brookings Institution, 1975, p. 88. 

[3] H. Folk et al., "Scientific and Technical Personnel in Energy- 
related Activities: Current Situation and Future Requirements", 
Champaign: Center for Advanced Computation, 1977, p. 135. 

[h] Battelle Columbus Laboratories, "Potential for Energy Conservation 
in the Steel Industry", Columbus: BLC, 1975. 

[5] S. Cort , "We Must Review our Environmental Goals", Steel Facts , 

Washington, D.C: American Iron and Steel Institute, January, 197^, 
p. 2. 

[6] "Employee Protection from Environmental Blackmail Proposed", 

Environmentalists for Figll Employment (EFFE newsletter), Washington, 
D.C: E.F.F.E., November, 1975, p. 5. 

[7) U.S. Department of Commerce, Bureau of Economic Analysis, Input- 

Output Structure of the U.S. Economy: I967-V0I. 3 , Washington, D.C 
1974, from Table 3. 

[8] T. Cochran, An Analysis of the Carter Administration FY I978 Budget , 
Washington, D.C: National Resources Defense Council, February 
25, 1977. 



57