JEFFREY BROWN: And we turn to the problems of labor unions on this particular Labor Day, as "NewsHour" economics correspondent Paul Solman reports on a workplace battleground. It's part of his ongoing reporting on Making Sense of financial news.
PAUL SOLMAN: While doing a story on worker burnout for last Friday's broadcast, we ran into a highly unusual sight, given the army of unemployed Americans on the sidelines these days: a labor strike.
It seemed worth a story of its own. The strike is at a Mott's plant near Rochester, New York, which processes half the state's apples into sauce and juice. Some 300 workers walked out on May 23. They have stayed out in a broiling-hot summer, protesting cuts in pay and benefits, indignantly.
SHELLY SNYDER, Mott's worker: Without the workers, without labor, where would their company be?
PAUL SOLMAN: A company the workers here in Williamson, New York, depict as an inflatable raft, their symbol for Mott's owner, Dr. Pepper Snapple of Plano, Texas, a conglomeration of 50 brands created from Britain's Cadbury Schweppes.
Senior vice president Robert Callan speaks for the company.
ROBERT CALLAN, Senior Vice President, Dr. Pepper Snapple: We need to change from the prior ownership that maintained an inefficient and high cost structure.
PAUL SOLMAN: Of course, management's sway over labor is as old as capitalism itself. It took well into the 20th century for workers to wield real power of their own.
WOMAN: The answer is yes!
PAUL SOLMAN: The 1950s Broadway and Hollywood hit musical "The Pajama Game" was a sign of the times.
PAUL SOLMAN: The garment union wanted a pay raise. In an era of low unemployment and no global competition, management was quick to settle.
ACTOR: We will give you 7.5 cents if you give up the claim to retroactive pay.
ACTRESS: We ain't giving up nothing.
ACTRESS: Wait a minute. Don't you see? We have won. We have won.
PAUL SOLMAN: They're not winning in Williamson. And they didn't even ask for a raise. They rejected a contract that included benefit cuts and offered flat wages. Then the company cut their pay by $1.50 an hour, hence the walkout.
Shelly Snyder worked at Mott's for 12 years as a label operator and most recently made $21.38 an hour.
SHELLY SNYDER: You have to have people to make the product, just as much as you have to have people to sell the product. So, our earnings should be based on their earnings.
PAUL SOLMAN: The plant is profitable. The parent company, Dr. Pepper Snapple, maybe more than half-a-billion dollars last year, but says Bob Callan:
ROBERT CALLAN: The Williamson employees have enjoyed wages that exceed 50 percent of the market for a very long time. The best example I can give you is, one of our forklift drivers at the Williamson facility makes $20 an hour. Local market in the Williamson area, a forklift driver will make $9.90 an hour.
PAUL SOLMAN: Doing the math, that's about $20,000 a year. Thomas Culhane is a forklift operator.
THOMAS CULHANE, forklift operator: I don't think that's fair, that a multibillion dollar company can tell us, well, you know what, the economy is tough, you guys have to accept all these cuts, when they were making money hand over fist.
PAUL SOLMAN: The fact is, for all the union's efforts, the company has been able to find replacement workers, for a very simple reason.
ROBERT CALLAN: The unemployment rate is -- is approximately 9.8 percent in the area.
PAUL SOLMAN: Local firms like Xerox and Kodak have been shedding jobs for years, leaving a reserve work force that makes the Mott's strike seem quixotic.
ANDREW SUM, economist, Northeastern University: Workers in the United States represented by unions have been engaged in a lowered number of strikes today than at any time since we have seen since this data has been collected in the last 40 years.
PAUL SOLMAN: Economist Andrew Sum, a former union steelworker himself, runs a labor center at Northeastern University.
ANDREW SUM: There's no need to -- to pay workers more. Workers do not have the collective bargaining power to demand that they get paid more. And, so, as a result, the upper hand at the current time is held by corporations.
MICHAEL LEBERTH, union president: I have been hearing it for two years now from the H.R. manager in here: "Don't your people realize that we're in a recession?"
PAUL SOLMAN: Michael LeBerth is president of the union local, Bruce Beal, recording secretary.
BRUCE BEAL, union recording secretary: They are trying to capitalize off the economy and the rate of unemployment in this area to oppress their employees.
PAUL SOLMAN: So, is labor cowed into accepting low wages by a glut of jobless Americans waiting in the wings?
JULIET SCHOR, Boston College: Absolutely.
PAUL SOLMAN: Social economist Juliet Schor says today's labor glut is key.
JULIET SCHOR: I think it dropped out of people's consciousness as an important variable, in terms of how the economy works. But, once you get back into high rates of unemployment, underemployment, as we have today, it -- it -- it again has a lot of force.
PAUL SOLMAN: Meanwhile, as workers feel they're being squeezed, they see executives getting an ever larger share of the pie.
SHELLY SNYDER: Let's just take the CEO, for example. Would he not be an employee?
PAUL SOLMAN: Total pay for Dr. Pepper Snapple CEO Larry Young was $6.5 million last year.
SHELLY SNYDER: He's making more money than any of us here will ever earn in our entire lives. And he keeps making more. All of them keep making more at the top.
PAUL SOLMAN: A recent study by the pro-labor Institute for Policy Studies supports such claims -- quote -- "CEOs of the 50 firms that have laid off the most workers since the onset of the economic crisis took home 42 percent more than the CEO pay average at S&P 500 firms as a whole."
Vice president Callan's response?
ROBERT CALLAN: This is a red herring by the union. Executive pay is completely irrelevant to the discussion. We're talking about 300 workers in Williamson, New York, and how we can maintain a competitive and flexible work force manufacturing Mott's applesauce to satisfy the needs of the Northeast and the East.
PAUL SOLMAN: The head of the union local's response?
MICHAEL LEBERTH: Well, that's fine. Let's be competitive right from the top down.
PAUL SOLMAN: Indeed, many U.S. firms are now competitive enough to reward executives and profit handsomely. But, says economist Andrew Sum, most of that money is being kept by the firms.
ANDREW SUM: It's not been reinvested in new capital equipment. It's not been used to help purchase new technology. So, this is the first time that we have ever had where basically all the gains in income went simply to -- to corporate profits.
PAUL SOLMAN: Instead of to workers.
ANDREW SUM: Instead of to workers.
PAUL SOLMAN: Workers who feel they're now being treated as a commodity in a land of excess labor.
BRUCE BEAL: Myself, along with the other 300 workers that I work with, are a highly skilled, trained work force of food processing technicians. We are not canning factory workers that are general labor. We are a trained work force.
PAUL SOLMAN: The problem for American workers these days, though, especially those in manufacturing, is that, while their skills are hard-won and factory-specific, companies think the unemployed are ready, willing, and even able to replace them.
Though the strikers dispute it, Mott's claims it's doing just fine with temps making less than half the union wage, with no benefits at all.
ROBERT CALLAN: You know, operating a facility with temporary workers is like opening a brand-new plant. It takes time to train workers to do a good job. It takes time to train workers how to operate machinery effectively. But we're very happy with the success we have enjoyed, and we -- we're ready to continue to operate the facility with our temporary work force.
PAUL SOLMAN: A work force drawn, the union says, from a pool of labor that has nowhere else to go.