Labor got on well with monopoly.
But now, if experience is any guide,
expect a stiff fight for benefits, jobs, and wages.
At this very moment, utility chief executive officers (CEOs) are planning for the future. These plans may include buying and selling assets, merging or spinning off business units, outsourcing functions, and pursuing a mix of regulated and unregulated business activities. Some of these plans or their execution will inevitably collide with union interests. John J. Barry, president of the largest utility union, the International Brotherhood of Electrical Workers (IBEW), predicts that utilities that cooperate with labor will prosper in a deregulated environment. For those that do not, he warns, the "prognosis is bleak."1
While much of the U.S. economy is nonunion, many employees in regulated industries are unionized. Indeed, unions have prospered under regulation. It discouraged new entrants and made it easier for unions to organize an industry. And by restricting or eliminating price competition, regulation excused employers from having to cut labor costs to compete (em a factor that reduced the pressure on unions at the bargaining table. As a result, unions have been able to capture a significant share of revenues at regulated companies.
Now comes deregulation. If experience in other, similar industries is any guide, unions in the utility industry will use their leverage to influence mergers, protect jobs, preserve wage levels and benefits and union coverage, and seek large severance packages for jobs that are lost. Perhaps even more significant for CEOs, unions may try to restrict utilities' ability to sell assets or to move into unregulated businesses, unless they let the unions represent the new ventures.