The size of the task was monumental. The decline of working conditions for IBU employees was even more severe than many of them understood. This degradation was illustrated by an analysis of labor contracts at the warehouse complexes going back to the 1970s. The analysis shows that the warehouse workers became more productive every year, moving more containers with less labor. But even as they did so, they were growing poorer. In 1975, for example, warehouse workers like Hammond earned $6.90 an hour. By 2005, they were making $19.74 an hour, which sounded like a large increase. But when adjusted for inflation, the warehouse workers were actually earning $25.77 an hour back in 1975. Over three decades, in other words, Hammond and his coworkers had taken a 23 percent pay cut. And while they were earning less, their work became more onerous. The LMS didn’t give them time to talk or blow off steam. They logged the minutes they spent in the bathroom, had to explain the minutes they spent telling a joke.
This economic stagnation wasn’t unique to the Georgia-Pacific warehouse workers. Between 1948 and 1973, American workers’ productivity rose steadily, and their wages rose with it. But in the early 1970s, as the age of volatility shook apart the New Deal policy infrastructure, the rise in productivity broke free from the wages that were paid for it. Productivity rose 74.4 percent from 1973 until 2013. Wages rose only 9.2 percent.
Hammond and Bucknum were elected to somehow reverse the downward slide of the IBU workers. Their work began a few months before the labor contract officially expired in March of 2010. They had a matter of weeks to prepare before the official negotiations began. They didn’t know what to expect from Koch, but they knew that the IBU rank and file was prepared to hold out for a new and better deal.
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Abel Winn closely scrutinized the data he developed at the MBM Center at Wichita State. Some clear patterns emerged early on in the experiment. In some ways, the data was discouraging—it seemed at first as if there was no easy way to overcome the holdout. The master box computer ran its various simulations, and, in case after case, it revealed that holdouts were hard to beat. One stubborn landowner could get a lot of money for their property—if they chose to stand firm.
Over time, however, one promising strategy emerged from the tests. One simulation showed that a pipeline company might beat down the holdouts if it negotiated with all of the property owners at once, rather than buying one plot of land and then moving on to the next. This buying strategy seemed to inject a level of uncertainty into the sellers’ minds—each seller didn’t know if his or her neighbors would sell or not, which increased the pressure on them to do so.
This strategy worked even better if the sellers were walled off from one another and didn’t know what price their neighbors were being offered. If the sellers couldn’t compare notes—in other words, they didn’t know how much the master box was willing to pay—they could be bargained down to a lower price.
Winn realized that it was tough to pull off this kind of bargaining in the real world. Neighbors were always liable to talk. A company couldn’t manage to act in total secrecy. But it was best to keep the sellers in the dark as much as possible.
Or, as Winn and a coauthor would later summarize it in an academic paper based on the experiment: “In the field, truly simultaneously bargaining may be difficult or impossible to implement, but it may be approximated by limiting the flow of information between sellers.”
In this way, bargaining against the holdout was not all that different from trading in commodities markets. The advantage went to the party that had the most knowledge and could best exploit any asymmetries of information.
It was best to keep the holdouts guessing, and on the defensive.
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When Hammond and Bucknum negotiated a labor contract, they usually sat down with the senior managers or owners of small, privately held firms. They typically hammered out a new labor contract in one or two months. Things would be different with Koch Industries.
When it came time to negotiate, Hammond and Bucknum faced a team of trained labor negotiators whose full-time job was to travel around the country forging labor agreements at Georgia-Pacific facilities. Corporate labor negotiators learned their craft at some of the nation’s leading law firms and corporate consultancies. They trained to beat back unions for a living, a skill that was in high demand and well-compensated. The online job networking site LinkedIn, for example, listed “union avoidance” as a job skill that could be added to profiles and endorsed by colleagues. The industry of well-trained people who were paid to undermine union strength was booming, and the IBU leadership knew it.
The IBU negotiating team, in contrast, consisted of rank-and-file warehouse workers. They were elected by their peers to sit on a bargaining committee of six members who would help Hammond and Bucknum. Some of the committee members had never negotiated a contract before. The lead negotiator on the 2010 committee was David Franzen, a longtime coworker of Hammond’s who had a hot temper and a reputation as a brawler.
The IBU team had to learn the art of labor bargaining in a matter of weeks. They didn’t have the money to hire consultants, and it would have been a waste of time to search LinkedIn for people with skills like “labor organizing” or “solidarity.” Still, the IBU team did the best it could. They got help from two college professors at the University of Oregon, who offered training to local unions through a program called the Labor Education & Research Center, or LERC.
When the IBU asked for help, the university dispatched Lynn Feekin, a soft-spoken woman with thick, gray hair who still had the midwestern accent from her many years of living in Wisconsin. Feekin had worked with unions in the Midwest before moving to Oregon to teach. She was joined by a fellow professor named Ron Teninty, a fast-talking expert on labor contracts who seemed to take glee in spending long hours poring over the minutiae of labor agreements.
Feekin and Teninty arrived at the Longshoremen union hall and held a crash-course session for the IBU team in a large meeting room, just down the hallway from the IBU office. The team gathered around a large, collapsible table with rolling office chairs set around it. Behind the head of the table, the wall was adorned with black-and-white photos documenting the Longshoremen’s glory days of the past: portraits of past union presidents staring gloomily down, shots of the shipping yards and union hall meetings. Far down at the other end of the table, a big window looked out onto a wall of pine trees planted outside the union hall. The IBU had rented out the meeting room for the day, and it was going to be a long one.
During the hours-long series of lectures, Feekin walked the IBU team through the formulaic legal process of contract negotiation. There was a set of prescribed steps for the negotiations, and a set of legal pitfalls that the negotiating committee should avoid. But Feekin’s primary goal was to teach the IBU negotiators a larger lesson. She wanted to teach them how to get the best contract possible when they found themselves up against trained negotiators. Her main message to them was not to count on their silver tongues. The back-and-forth in the bargaining room was not, in fact, as important as what happened outside the room. It was the power dynamic—the balance or the imbalance of leverage between employer and employee—that ultimately determined who would win or lose in the contract negotiations.