EDITORIAL: Windfalls in steel

For years, the United Steelworkers used the political strength of their 30,000 members to make the case for steel tariffs to stem the flow of cheap foreign steel being dumped on U.S. shores. Steelworkers provided the steel industry the boots on the ground, and, in many cases, the votes in the booths for the presidential candidate who promised to impose across-the-board tariffs on foreign imports, even from countries that compete on a level playing field with U.S. companies.

The result has been a huge windfall for the shareholders of companies like U.S. Steel and ArcelorMittal, as a sharp run-up in domestic steel prices have big steelmakers literally wallowing in profits. But, as usual, the trickle-down theory of economics has left steelworkers feeling trickled on, and with good reason.

As has been widely reported, this year’s contract talks between the steelworkers and steel makers have been difficult, with the companies holding fast to a hard line seeking cuts in workers’ health benefits while giving up little in wage increases. Three years ago, of course, steelworkers accepted wage freezes during a period when steel prices had fallen dramatically and the companies were struggling.

You might think that the dynamic of the talks would be different at a time when ArcelorMittal has posted $5 billion in net profits in the first half of 2018 alone, and U.S. Steel is doing nearly as well. But, as usual, the big steelmakers have little, if any, willingness to share the benefits with their workers.

It’s just one more case study in the failure of supply-side economics to lift the boats of the vast majority of Americans. In a sense, the steel tariffs are little different from the supply-side tax cuts that Republicans enacted late last year. The tax cuts slashed the corporate tax rate nearly in half, providing another windfall to U.S. corporations. Combine the tax cuts with the tariffs and it’s practically raining money on the U.S. steel industry right now.

But are those policies benefitting workers?

Supply-side theory suggests that by ladling tax breaks and perks like tariffs on certain industries the corporate titans will use those resources to invest in new plants and hire more workers. The trouble is, it rarely works out that way.

Last December, just as the new tax cuts were signed into law, Bank of America conducted a survey of U.S. corporations to see how they planned to use their windfall. The most common response was to trim their debt load, followed by stock buybacks, which benefit investors. Third on the list? Mergers and acquisitions, which typically result in lost jobs. Capital expenditures was fourth on the list, followed by increasing dividends for shareholders. Pay increases for workers? Sorry, it didn’t make the list.

Sure, most steelworkers are back on the job today, which is better than the situation in 2015, when layoffs were widespread. But that recovery was well underway in 2016, after then-President Obama, enacted stiff tariffs on illegally-dumped foreign steel. President Trump’s across-the-board tariffs have simply allowed domestic producers to reap windfall profits, little or any of which will find its way into the pockets of actual workers. As usual, it’s the One Percent that take home virtually the entire pie.

Steelworkers might want to keep that in mind the next time the steel bosses ask for the union’s political muscle to help the industry in the next downturn. That’s when union workers can remind the bosses that loyalty should cut both ways.