|In Honor of Ronald Reagan
In honor of Ronald Reagan's 90th birthday, I thought I'd do a story on his handling of the air traffic controllers union back in 1981, just months after he took office. While this isn't a standard Wall Street history piece, it certainly was a historic moment in the annals of labor unions and Reagan set the tone for a generation of management / labor issues, the vast majority of which were settled peaceably and for the good of the U.S. economy.
When Ronald Reagan took the oath of office in January 1981, he put forward in his inaugural address that government was not the solution to the nation's difficulties, it was the major cause. But while the nation was clamoring for a change in tone, in light of the depressing Carter years, it was still unclear just what kind of leader Reagan would be.
Then on March 30, just two months into his presidency, Reagan was shot by John Hinckley. The president's brave handling of the near fatal assassination attempt helped enhance his standing among the people. Following a series of congressional victories, his image would soar even further that summer.
The American aviation system employed some 17,000 air traffic controllers, organized under the Professional Air Traffic Controllers Organization (PATCO). The members were upset that the wage increase they had been offered was below what they sought. They also argued that the stress of the job demanded a shorter workweek and earlier retirement options, on top of the extra cash. Some of their grievances were legitimate, such as the plea for a more modernized air traffic control system. And since earlier in the century, the American people had a sympathetic ear when it came to union matters (after all, at one time over 60% of workers in this country were part of organized labor), and it was assumed by PATCO that they would win over the people's support.
And when one thinks of the job of an air traffic controller, certainly the issue of stress is at the top of shared concerns. Just one mistake in judgment could cause the death of hundreds of passengers. In this respect, the work of a controller was unlike any other.
And so it was that on August 3, 1981, 13,000 of the 17,000 controllers went on strike. In the immediate aftermath of the strike announcement, there was bedlam in the entire U.S. transportation network. Management scrambled to fill the slots (controlling air traffic themselves, in most cases) and the airlines were able to operate at only 70% capacity. But if PATCO thought they were going to have their way with President Reagan because he would be too concerned about the financial impact a prolonged strike could have on the American economy, well, they were about to find out otherwise.
PATCO's members were in total defiance of federal law as there was a ban on strikes by government employees. In fact, each PATCO member had taken an oath not to strike when they were first hired. It was Reagan time.
Reagan's hero had always been Calvin Coolidge. And both believed in the virtues of hard work, frugality, and obligation to duty. Once, as governor of Massachusetts, Coolidge had turned the National Guard loose on a strike by Boston's policemen. [This one action had basically earned him the vice presidential slot on the 1920 ticket.] Coolidge and Reagan felt that once you took oaths, you were held to them. So Reagan acted quickly.
Ironically, PATCO had supported the president in the 1980 campaign. But, as Reagan biographer Dinesh D'Souza wrote, "(while) political calculation might dictate that a new president should work out an amicable settlement rather than alienate a powerful union that supported him and risk paralyzing the country's civil aviation system," Reagan didn't buy that argument.
In his meetings with advisers, Reagan quoted Coolidge, "There is no right to strike against the public safety by anybody, anywhere, any time." With the backing of transportation secretary Drew Lewis, Reagan gave the controllers just 48 hours to return to work. 48 hours later most of them were fired. Reagan observed in his memoirs that his action "convinced people who might have thought otherwise that I meant what I said." Just as importantly, on a far bigger stage, Reagan's decision also helped show the Soviets that he was a decisive, no-nonsense leader.
PATCO's leader, Robert Poli, still naively thought that he could shut down the nation's airports and that the administration would have to give in to their demands. But instead, the government scrambled to hire more controllers (many from the military) and the disruption to air traffic proved to be brief. And amazingly, the American people stood with Reagan in large numbers. It wasn't too long before air traffic was back to normal, fears of disaster having been unwarranted.
But on the second thought, just imagine what would have happened had one accident occurred during this time. The blood would have been on many hands, including Ronald Reagan, himself.
As D'Souza notes (he was a Reagan aide at the time), the president adopted this stern course of action without consulting any polls. Yet, much to the surprise of many on his staff (who were often incredulous at some of his actions), the American people supported him because they were convinced that principle mattered, especially in the face of threats and intimidation. By this one incident, which set the tone for the whole presidency, "Reagan proved that the right thing to do can also be politically advantageous."
It took two years to fully train the new controllers, but we all survived, disruptions were few and PATCO was dead. The American labor movement had suffered its worst defeat in decades and the balance of power in labor disputes shifted towards management. Reagan's image as a courageous leader was burnished.
"American Heritage: The Presidents," Michael Beschloss
"The Presidents," edited by Henry Graff
"The American Century," Harold Evans
"Ronald Reagan," Dinesh D'Souza