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.

Sources:
"American Heritage: The Presidents," Michael Beschloss
"The Presidents," edited by Henry Graff
"The American Century," Harold Evans
"Ronald Reagan," Dinesh D'Souza
Brian Trumbore




20. The Air Traffic Controllers' Strike

Copyright 2000     Jason Manning     All Rights Reserved



     On August 3, 1981 nearly 13,000 of the 17,500 members of the Professional Air Traffic Controllers Organization (PATCO) walked off the job, hoping to disrupt the nation's transportation system to the extent that the federal government would accede to its demands for higher wages, a shorter work week, and better retirement benefits.  At a press conference in the White House Rose Garden that same day, President Reagan responded with a stern ultimatum: The strikers were to return to work within 48 hours or face termination.  As federal employees the controllers were violating the no-strike clause of their employment contracts.  In 1955 Congress had made such strikes a crime punishable by a fine or one year of incarceration -- a law upheld by the Supreme Court in 1971.  Nevertheless, 22 unauthorized strikes had occurred in recent years -- by postal workers, Government Printing Office and Library of Congress employees, and by air traffic controllers who staged "sick-outs" in 1969 and 1970.

     Negotiations between PATCO and the Federal Aviation Administration (FAA) began in February 1981.  PATCO president Robert Poli demanded an across-the-board wage increase of $10,000/yr for controllers whose pay ranged from $20,462 to $49,229; the reduction of a five-day, 40-hour work week to a four-day, 32-hour work week; and full retirement after 20 years service -- a package with a $770 million price tag.  The controllers argued that they deserved these considerations due to the highly stressful nature of their very important work.  The federal government balked at these budget-busting demands of more money for less work, well aware that other federal employees were likely to take action to improve their lot if PATCO succeeded.  The FAA made a $40 million counteroffer which included a shorter work week and a 10 percent pay hike for night shifts and those controllers who doubled as instructors.  Further negotiations between Poli and Transportation Secretary Drew Lewis sweetened the pot even more.  Nonetheless, 95 percent of PATCO's membership rejected the final settlement.  The FAA began work on a contingency plan that would go into effect if a strike occurred.

     Designed to take place during the busiest time of the year for airlines, the strike threatened major carriers like Braniff, Eastern, American and TWA, who reported losses of $30 million a day during the strike.  These companies had been counting on a summer surge in business to offset losses due to fare and route deregulation which had spurred the growth of new, smaller carriers that effectively competed with the giants.  Concern grew regarding the extent to which the strike would impact business and the economy.  Air transportation was a $30 billion-a-year business; every day 14,000 commercial flights carried 800,000 passengers -- 60 percent of them on business trips -- while 10,000 tons of air cargo was transported daily.  Airlines employed 340,000 people and revenue losses due to the strike forced some to resort to layoffs and management wage cuts.  The fresh fruit, fresh flower and fresh fish markets depended on swift air transport, as did other industry in need of spare parts, health care services for blood supplies, and the financial system for paper fund transfers.  But other businesses prospered thanks to the strike -- among them Trailways and Greyhound, the Amtrak rail service, and car rental agencies, as travelers sought alternate means of transportation.

     To the chagrin of the PATCO strikers, and the surprise of nearly everyone else, the FAA's contingency plan functioned smoothly, minimizing the strike's effects.  Approximately 3,000 supervisors joined 2,000 non-striking controllers and 900 military controllers in manning airport towers.  The FAA ordered airlines at major airports to reduce scheduled flights by 50 percent during peak hours for safety reasons.  Nearly 60 small airport towers were scheduled to be shut down indefinitely.  The FAA's Oklahoma City training school, which normally produced 1,500 graduates per 17-21 week course, considered plans to increase that matriculation number to 5,500.  (More than 45,000 people applied within four weeks of the strike's onset.)  PATCO strikers made dire predictions about reduced air safety as a consequence of the 60-hour work week put in by their replacements, but in fact limited traffic and the extra monitoring efforts of the 33,000 Air Line Pilots Association members diminished the risk of an "aluminum shower," as controllers euphemistically called an air accident.  Before long, about 80 percent of airline flights were operating as scheduled, while air freight remained virtually unaffected.

     There wasn’t much support for the PATCO strikers.  The public sided with the government and exhibited little sympathy for individuals whose earnings were already well above the national average.  AFL-CIO president Lane Kirkland accused Reagan of "brutal overkill" in firing the strikers, and another union leader complained that the president was engaged in "union-busting," but pilots and machinists continued to do their jobs in spite of the PATCO picket lines, while labor strategists criticized Poli for calling an ill-advised strike that damaged Labor's image.  The International Federation of Air Traffic Controllers considered a boycott of U.S. air traffic to show support for PATCO, but it never developed.  (Canadian and Portuguese controllers did engage in a two-day boycott.)

     The federal dreadnought turned all its big guns on the hapless strikers.  PATCO leaders were hauled off to jail for ignoring court injunctions against a strike.  The Justice Department proceeded with indictments against 75 controllers.  Federal judges levied fines amounting to $1 million a day against the union while the strike lasted. Over 11,000 strikers received their pink slips, while 1,200 went back to work within a week's time.  Morale among the strikers was shaky. "I thought Reagan was bluffing," lamented one controller.  In October the Federal Labor Relations Authority decertified PATCO.

     Two months after the strike, a congressional committee report indicated that by January 1983 only two-thirds of the controllers needed for full and safe operation of air traffic would be in place, and recommended rehiring some of the strikers who had been fired.  The administration curtly refused, and Transportation Secretary Drew Lewis declined even to meet with PATCO leader Robert Poli.  By 1984 air traffic had increased by 6 percent while there were still 20 percent fewer controllers than had been on the job prior to the strike.

     According to journalist Haynes Johnson, the decisive manner in which Reagan handled the PATCO strike convinced many Americans that he was "the kind of leader the country longed for and thought it had lost: a strong president" -- in sharp contrast to the widely-held view that Reagan's predecessor, Jimmy Carter, had been too indecisive.  Reagan stressed that he derived no satisfaction from sacking the controllers.  He pointed out that he was the first president to be a lifetime member of the AFL-CIO.  And he was aware that PATCO had been one of the few unions to support his presidential bid.  "I supported unions and the rights of workers to organize and bargain collectively," he wrote in his memoirs, " but no president could tolerate an illegal strike by Federal employees."




A Reagan Letter to Robert Poli, PATCO (Oct. 20, 1980)

Dear Mr. Poli:
     I have been briefed by members of my staff as to the deplorable state of our nation's air traffic control system.  They have told me that too few people working unreasonable hours with obsolete equipment has placed the nation's air travellers in unwarranted danger.  In an area so clearly related to public safety the Carter administration has failed to act responsibly.
     You can rest assured that if I am elected President, I will take whatever steps are necessary to provide our air traffic controllers with the most modern equipment available and to adjust staff levels and work days so that they are commensurate with achieving a maximum degree of public safety....
     I pledge to you that my administration will work very closely with you to bring about a spirit of cooperation between the President and the air traffic controllers.

Sincerely,
Ronald Reagan



REFERENCES

The Economist, 27 June 1981, 15 August 1981

Newsweek, 29 June 1981

Time, 17 August 1981, 24 August 1981, 2 November 1981

U.S. News & World Report, 17 August 1981, 24 August 1981, 31 August 1981

Sleepwalking Through History: America in the Reagan Years
Haynes Johnson (New York: Doubleday, 1991)

An American Life
Ronald Reagan (New York: Simon & Schuster, 1990)

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