Thursday, June 4, 2009

Press Releases: Death knell

Published in the Portland Phoenix

Last week was a bittersweet week for the people who work at the Portland Press Herald and its sister publications. It is hard to fault them for the steps they took to try to preserve some semblance of the present, but we cannot avoid the fact that they have sounded the death knell both for the newspapers that employ them and the unions that represent them.

Which is not to say they had much choice. At a press conference announcing a contract agreement between the Portland Newspaper Guild and Richard Connor, the Bangor native who has been trying to buy the papers for the past year, guild president Tom Bell put a positive spin on things, calling the deal "a remarkable story." He is certainly right that without the agreement of his union and the several smaller ones involved with the company, the papers might well have closed altogether. But the price the unions are paying to avoid that fate is a cruel second-best.

Thanks to union concessions including a 10-percent wage cut to a new level that will be frozen for two years, a pension freeze, suspension of company 401(k) contributions, the papers are not closing. But they certainly will be changing significantly.

Even the unions themselves are speculating that more than 100 jobs will disappear (the unions hope they'll come through buyouts rather than outright layoffs, but that remains to be seen). What they are not saying, publicly at least, is that if that lowball number is real, union membership will shrink by 25 percent (the 500-employee company has just more than 400 union workers). And if more people's jobs go, the unions will be even smaller.

Collective power, already almost nil, will weaken further. Sure, those union members who keep their jobs get "sweat equity" in the form of 15 percent of any increase in the company's value. But there are no guarantees that the company will, in fact, gain value. And while the guild also gets three seats on the company's board of directors, that won't be a majority, and (depending on whether the board has seven or nine seats) may be an utterly powerless bloc.

In fact, in an ironic twist, the unions may end up in a position relative to Connor similar to where Knight-Ridder and now McClatchy have found themselves in dealing with the Blethen family: as minority owners who find out the results of important decisions only after they have been made.

It does remain, though, hard to blame the unions for trying. Many of those who voted for the new contract will lose their jobs — as will some who voted against it, presumably. But the people who remain will still be part of a union, and there is a principle they are upholding by attempting to defend the strength of numbers, even as they must realize the entity is a shadow of its former self.

Connor has been clearly in the driver's seat for some time now, and the unions' concessions only make him stronger. They have tacitly accepted his argument that union members have been overpaid and otherwise overcompensated in the past. Earning back any of the things they just gave up will be difficult, if not impossible: As an example, it will take at least eight years for any worker who survives the layoffs to return to his or her previous pay level — and that's true only if, after the two-year wage freeze, raises return to their previous 2-percent-per-year rate.

It will, then, be quite hard for the unions to counter any further claims Connor makes about what his company's financial needs are, and nigh impossible for them to effectively oppose anything he wants to try.