In thousands of U.S. firms, where union & management bargain out the workers' hour and wage scales, the boss each year rewards outstanding employees with independent merit raises above the scale. Last week the U.S. Supreme Court spiked the practice. Henceforth, said the court in effect, a company whose workers are covered by a union contract must, on demand, consult the union before giving merit raises.

The Supreme Court was sitting in judgment on a lawsuit involving Chattanooga's tiny J. H. Allison & Co. (meat packers). Until three years ago, Allison had considered it sound business practice to boost its best...

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