The Rise and Fall of Labor Unions In The U.S.
From the 1830s until 2012
Whatever the NLRA's shortcomings and long-term failures, it changed the American power structure for the next 50 years. In telling this story, the document shows that corporate moderates had more of a role in creating the legislation than is usually understood, even though they fiercely opposed its final form. Then the document goes on to explain how and why the act was all but dead by 1978 due to an all-out and unrelenting battle against it by the entire corporate community from the day it was passed, and then finally killed in the 1980s. The account ends in 2012 through a quick overview of a failed legislative issue initiative in 2009 and information on the declining figures on "union density" (the percentage of wage and salary workers in unions). By then the figure was as low as it was in 1916.
But why do workers want unions in the first place, and why do business owners resist them so mightily? Workers originally want unions primarily for defensive purposes -- to protect against what they see as arbitrary decisions, such as sudden wage cuts, lay-offs, or firings. They also want a way to force management to change what they see as dangerous working conditions or overly long hours. More generally, they want more certainty, which eventually means a contract that lasts for a specified period of time. In the United States, as we will see, the early trade unionists also wanted the same kind of rights at work that they already had as independent citizens. And if unions grow strong, then, well, they try to go on the offensive, by asking for higher wages.
Business owners, on the other hand, don't like unions for a variety of reasons. If they are going to compete successfully in an economy that can go boom or bust, then they need a great deal of flexibility in cutting wages, hiring and firing, and adding extra hours of work or trimming back work hours when need be. In fact, wages and salaries are a very big part of their overall costs, maybe as much as 80% in many industries in the past, and still above 50% in most industries today, although there is variation. And even when business is good, small wage cuts, or holding the line on wages, can lead to higher profits. More generally, business owners are used to being in charge, and they don't want to be hassled by people they have come to think of as mere employees, not as breadwinners for their families or citizens of the same city and country.
Thus, the nature of the economic system means that there is going to be at least some degree of conflict over a wide range of issues between owners/managers and employees/workers. These conflicts are therefore best described as class conflicts because the two sides have many conflicting objectives even though they have to cooperate to keep the company going. The conflicts that these disagreements generate can manifest themselves in many different ways in a step-by-step escalation: workplace protests, strikes, industry wide boycotts, massive demonstrations in cities, pressure on Congress, and voting preferences. All this soon leads to more general disagreements over the rate and progressivity of taxation, the usefulness of labor unions, and the degree to which business should be regulated by government. Employees want businesses to pay higher taxes to government, and they often want government to regulate businesses in ways that help employees. Most businesses reject these policy objectives -- they are for low taxes on businesses, minimum regulation of their businesses, and no government help for unions.
Despite the greater power of employers, sometimes workers are able to form unions and win contracts for two reasons. First, protests and strikes by workers in some occupations succeed because the "replacement costs" for bringing in strikebreakers and replacement workers are very high (Kimeldorf 1999; 2013). Sometimes replacement costs are high due to skill barriers, as in the case of printers in decades gone by or professional sports players today (who have some of the strongest unions in the country, which is why they make big money, not just because they are sterling athletes). Replacement costs also can be high for companies that have fast turn-around times, such as shipping and railroads in the past, or UPS today, which is why UPS drivers have been able to maintain a strong union and keep their wages high. And in the past it was often impossible to recruit strikebreakers and replacement workers due to the geographic isolation of the workplace (e.g., mining, logging, and other extractive industries). For example, you could get killed by strikers for being a replacement worker in a coal mine in unfamiliar hill country far from your urban upbringing.
If replacement costs are high, then sometimes the use of violence can play a role in organizing a union, but mostly as a means of keeping replacement workers from entering job sites, not as a primary strategy. Most of this violence is between strikers and scabs, or police and strikers, with destruction of equipment and other forms of sabotage relatively rare even though it is sometimes threatened. However, some skilled workers, such as construction workers of various kinds, were able to do a lot of damage if they decided to sabotage equipment or destroy what they had partially built.
The second way workers can have success in creating unions through sit-downs, strikes, and other forms of disruption is if the government imposes restrictions on violence by employers, of which there was plenty between 1877 and 1937. In this case, the government may be acting to keep the economy from going into depression, or more likely, to make sure that the government has the war materiel it needs, as during World War I and World War II. But the government usually doesn't side with the workers if the workers don't have some political power through their involvement in a political party.
If workers do succeed in unionizing, as a little over one-third of wage and salary workers did between 1935 and 1945, then there's one kind of contract that corporations really came to despise in the 1960s and 1970s. It's one that runs for several years and has an annual cost-of-living-adjustment ("COLA") built into it. Employers dislike COLA's because they create inflationary spirals if some separate factor, such as increased demand for products, or unexpected increases in the cost of raw materials, triggers inflation. When there's no COLA, inflation is partly tamed by holding wages steady, or even cutting them, but employers can't do that when there are COLA's.
Hopefully, this quick overview of why there's a big battle over unions should make the story that unfolds fairly easy to understand, even though there's always some further details or unexpected events. But before we get to the passage of the National Labor Relations Act in the 1930s, and the aftermath of that unique legislation, it's necessary to have some historical context on the pitched battles of that era, so the story begins in the 1830s. Along the way, it makes a few comparisons with successful unionization efforts in many European countries, which provide the context that is needed to explain why unionization had so little success in the United States, except from the late 1930s to the mid-1970s.
The early forms of labor organization in the United States were largely mutual aid societies or craft guilds that restricted entry into a craft and enforced workplace standards, as was also the case in Western Europe. It didn't raise too many hackles or cause too many hassles because craft workers were relatively few in number and most companies were small. But industrial development in the early nineteenth century slowly widened the gap between employers and skilled workers, so the workers began to think of industrial factories as a threat to both their wages and status. They soon formed fledgling craft unions in an attempt to resist sudden wage cuts, longer working hours, and unsafe working conditions, while also protecting their political, social, and economic rights. Most of these unions were local in scope, but as both labor and product markets became more national due to improvements in transportation, and as employers continued to decrease wages and de-skill jobs, workers came to believe that they would have to organize on a wider basis if they were to be effective. But they faced enormous resistance from employers and had little success until the 1890s.
The first halting steps beyond separate craft guilds at the local level occurred between 1833 and 1837, when workers in a wide range of skilled jobs (including railroading, mining, canal building, and building construction) formed citywide labor organizations in and around Boston, New York, and Philadelphia. Their goal was to resist the longer hours and wage cuts that were being demanded by employers. Union leaders from these cities met yearly under the name General Trades' Union, but in fact there was little coordination beyond the city level. However, the new labor leaders did speak out against increasingly frequent claims by publicists of the day (building on the ideas of Adam Smith) that the new economic conditions were simply due to abstract and neutral economic laws, which of course became a familiar refrain for employers and all those social scientists who think that it's all about free markets and not at all about power (e.g., Lambert 2005, for a fine account of how the early craft unionists viewed the world).
In contrast to the story told by free-market advocates, the union activists asserted that they had been dispossessed, which they cast as a threat to the United States as a Republic because it stripped them of their rights and independence as free white male citizens. The defense of labor was thereby equated with the defense of American republican government (Voss 1993, pp. 29-36). Although there were strikes by carpenters, shoe binders, textile workers, and tailors in defense of what they claimed to be their republican rights, the attempts to organize in any serious way ended abruptly with the onset of the nation's first industrial depression in 1837. After all, workers in a slack economy stand even less of a chance than workers in a strong economy when few people are unemployed. Many local craft organizations were disbanded. The efforts at unionization were not revived until after the Civil War.
Fast-forwarding by 35 years, the rapidly industrializing economy created in the post-Civil War boom gave skilled workers an opening to resuscitate the past craft unions and start some new ones as well, and they seemed to be building a national labor organization that might have some staying power for the first time. This national labor organization, the Noble and Holy Order of the Knights of Labor (usually shortened to the Knights of Labor) was founded in 1869 as a secret society by a handful of Philadelphia garment cutters, who had given up on their own craft union as having any chance to succeed. Their credo emphasized citizenship rights, action in support of general social progress, cooperative forms of organization for the society as a whole, and, significantly, the inclusion of workers of all crafts and races in one union for the first time (Voss 1993, pp. 73-82). They also started reading rooms, held parades, and supported local labor parties. The top leaders were ambivalent about strikes because disruptive actions alienated both employers and the general public, so at first they tended to focus on education, persuasion, and legislative changes. Although they emphasized their openness to unskilled as well as skilled workers, to women as well as men, and to African Americans as well as whites, they were in fact mostly white male craft workers when the union grew to a few thousand members nationwide between 1869 and 1877.
Four months after a big political bargain called the Compromise of 1877 handed the Republicans the disputed 1876 presidential election, and just weeks after the last of the federal troops were removed from the former Confederate states as part of the deal that gave the presidency to the Republicans, labor relations suddenly took a violent turn. This violence turned out to be the start of a new era that lasted for decades and reshaped the nature of the American union movement. It began when the Baltimore and Ohio Railroad announced in mid-July that it would impose an immediate 10% pay cut, the third for that year. In the face of an ongoing depression that had lingered since 1873, other railroads had already made draconian wage cuts without major protest, but in Martinsburg, West Virginia, the announcement by the Baltimore and Ohio led to a spontaneous strike in the company's rail yards that did not end quickly.
|Pittsburgh's Union Station burns, July 1877|
City officials called out the local militia, but its members were reluctant to use force against workers who were part of their own community. The governor asked for federal troops, leading to a clash in which workers stopped trains and destroyed railroad property. The strike rapidly spread to other nearby cities. The violence was especially extensive in Pittsburgh, already a growing industrial center based in the iron and steel industry. When militia brought in from Philadelphia fired at the demonstrators, killing several people, the angry mob burned down 39 buildings and destroyed 104 locomotives and 1,245 freight and passenger cars. The strike became national in scope, drawing in nearly 100,000 workers and at one point stopping half the nation's rail freight from moving (Bruce 1959; Foner 1977). In all, governors in seven different states had to call out their militia.
Traveling from city to city via trains, government troops finally quelled the uprising after two weeks of effort. In the process, over 100 people had been killed and many more were imprisoned (Stowell 1999, for the most recent account). Based on the traditional, more tolerant responses to strikes, the extent of the violence came as a shock to both workers and employers. Up until that time, as just noted, strikes usually had been called in an effort to reduce the long working hours that increasingly had been imposed upon workers, and somewhat less often to protest sudden wage cuts. Americans generally had viewed strikes as a legitimate form of action because employees had an independent stature that reflected both their valued work skills and their belief in republican values (Lambert 2005). Courts had sometimes condemned strikes as conspiracies or restraints of trade, but fines were usually small and there were no imprisonments, and in any case the Massachusetts Supreme Court had rejected the conspiracy and restraint of trade charges in 1854 (Dubofsky and Dulles 2004, pp. 59-61). The only previous known deaths from strike activity -- two in number -- had occurred in New York City in 1850 when police shot into the crowd to break up a strike by tailors who were protesting wage cuts (Lambert 2005, p. 22).
But after 1877 American labor relations were the most violent in the Western world with the exception of Russia (Mann 1993). It is one of those superficial paradoxes of history that the most democratic and the most despotic countries in the Western world would have the most violent labor clashes. The strongly held American belief in the right of business owners to have complete control over their property, along with business dominance of both political parties and a history of violence in dealing with Native Americans and slaves, not to mention the horrendous casualty rate in the Civil War, made the pitched labor battles seem as normal and expectable to most Americans as they were to Russians with their totally different history. Between 1877 and 1900, American presidents sent the U.S. Army into 11 strikes, governors mobilized the National Guard in somewhere between 118 and 160 labor disputes, and mayors called out the police on numerous occasions to maintain "public order" (Archer 2007, p. 120; Cooper 1980, pp. 13-16; Lambert 2005, p. 44).
In the aftermath of the summer of violence in 1877, a few railroad corporations began to consider the use of employee benefits, such as accident insurance and old-age pensions, to mollify workers. Generally speaking, though, very little changed in terms of employer/employee relations. Instead, corporate leaders put their efforts into creating stronger military forces to control workers when necessary, starting with reorganized militias and fortified local armories. In addition, militia units were often directly funded and supplied by corporate leaders: Cyrus McCormick, Sr., the founder of International Harvester (now called Navistar), equipped an Illinois National Guard regiment, and a group of Chicago businessmen funded five cavalry companies (Smith 2003). The regular army also developed close ties to the industrial companies in urban areas. Three business leaders in Chicago, for example, provided the money for a military base just twenty miles north of their city (Archer 2007, pp. 121-122; Cooper 1980, pp. 85-86). The use of private security forces in labor disputes also grew. Business leaders paid for and directed the activities of deputy sheriffs and deputy marshals, regularly employed Pinkerton Detective Agency strikebreakers (the company had 30,000 regular and reserve agents in 1890), and attempted to establish and control their own police forces (Norwood 2002; Smith 2003).
The violence of 1877 also led to a change of strategy by many local affiliates of the Knights of Labor, which decided that the strikes had failed because they lacked the proper leadership and organization. Reflecting the changing circumstances as businesses grew in size and power, the Knights decided to drop their semi-secret ways and take a more active role in creating the kind of organizations that could counter employers and even challenge the new industrial companies. They also emphasized again that their doors were open to membership by both skilled and unskilled workers as well as women and people of all racial and ethnic backgrounds. With the economy improving at the same time, the Knights claimed to have 50,000 members in 1883.
|Railroad magnate Jay Gould, as depicted in a cartoon in Puck magazine|
It was at this point that the Knights seemed to be on the verge of major success due to highly publicized strikes by railroad shop men in 1883 and 1884 against one of the most notorious Robber Barons of the day, railroad magnate Jay Gould. The successes only involved the restoration of wage cuts, but local activists saw them as evidence for the potential power of unions and their strike weapon, and more workers began to join: "In its wake, thousands of workers -- particularly semiskilled and unskilled workers -- joined the Order. By the summer of 1885, membership had doubled and a local assembly [the Knights' term for a local chapter] had been established in nearly every city and mid-sized town in the country" (Voss 1993, pp. 75-76).
Buoyed by their new hopes, many assemblies decided to join a general strike to force employers to grant the eight-hour day, an action first advocated by the Federation of Organized Trades and Labor Unions, which was another loose-knit national labor organization to which some of the Knights also belonged,. The strike was set for May 1, 1886. The top leader of the Knights opposed the idea, fearful that such a strike could not be won, but sociologist Kim Voss (1993, p. 77) concludes that large numbers of workers were taken with the idea that they could establish the eight-hour day on their own initiative, a step toward imposing their own work rules (cf. Lambert 2005, p. 56). As workers across the country prepared for the upcoming general strike, another Knights-affiliated union went on strike against another Gould railroad, this time in the Southwest, demanding a daily wage of $1.50 for unskilled workers and the reinstatement of a worker who had been fired for attending a union meeting. Workers across the country became members of the Knights out of sympathy for this strike, but Gould held firm this time.
As the railroad strike in the Southwest dragged on, the May 1 strike for the eight-hour day began with over 1,500 work stoppages throughout the country, involving several hundred thousand people. But the tide turned against them just two days later when police in Chicago fired into a crowd of 30,000 pro-strike demonstrators and killed two people, with several more wounded. At that point anarchists came into the picture by calling for a massive protest rally the next day, which attracted 50,000 people to Haymarket Square. After two hours of speeches and many reminders that the event was to be non-violent, and with the demonstrators starting to disperse, a major disaster suddenly erupted. A bomb was thrown at the police when they suddenly started to break up the gathering, killing one policeman and wounding 70 others. The police then began shooting, which killed one worker and wounded many more (Lambert 2005; Voss 1993).
The big industrialists and their allies in city governments across the country used what was quickly labeled as the Haymarket Riot as a pretext for a major counterattack by federal troops and private business armies. They now defined all union leaders as Communists, socialists, and especially, anarchists. The result of the corporate and government repression was a complete defeat for the Knights of Labor on both the eight-hour day and the railroad strike. Moreover, the organization gradually collapsed over the next few years, losing 90% of its membership in four years (e.g., Lambert 2005, p. 57). Four of the anarchists involved in organizing the Haymarket demonstration were hanged from the gallows in Chicago six months after the riot, even though there was no evidence that any of them were involved in planting the bomb. A fifth committed suicide in his jail cell before he could be hanged.
Although various factors seem to have contributed to the decline of the Knights, including tensions between craft and unskilled workers, Voss (1993, pp. 186-204) uses cross-national comparisons with Great Britain and France, and a close look at the rise and decline of Knight assemblies in New Jersey, to argue that the most important factor was the unusual strength and cohesion of American employer associations. These associations displayed brutal determination in combating the growth of labor unions, because they dominated local governments and political parties. Voss then draws an important contrast when she shows that the British and French governments in effect forced employers to compromise with workers (Voss 1993, pp. 238-239). For a combination of reasons, including the continuing power of land-based aristocrats and the greater strength of their national governments, the business owners did not dominate Britain or France (cf. Guttsman 1969; Hamilton 1991; Mann 1993).
The repression of 1886 led to a rapid decline for the Knights of Labor, but the events of that year also gave rise to a very different kind of union movement, the American Federation of Labor (AFL), which took several lessons away from the failures of the Knights. These lessons eventually made it possible for the AFL to force business moderates to consider the possibility of collective bargaining as an acceptable compromise in the face of ongoing labor strife, which ranged from slowdowns to strikes to sabotage and the destruction of equipment. But a possible compromise was still more than a decade in the future.
The new federation was founded in early December 1886, a few months after the strikes of the spring and summer had ended in defeat. Convinced that previous forms of unionization were too diffuse and fragmented to withstand the violence that companies could bring to bear against workers, its leaders organized as a federation of narrow, self-interested craft unions that included iron molders, miners, typographers, tailors, bakers, furniture workers, metal workers, carpenters, and cigar-makers. It was the separate unions, not the AFL itself, that conducted the main activities of organized labor (such as recruitment, bargaining, and calling strikes) and the federation itself was always dependent upon its constituent organizations for finances. By 1892, the AFL included 40 unions, most of them with a few thousand members. The carpenters (57,000), typographers (28,000), cigar makers (27,000), iron and steel workers (24,000), and iron molders (23,000) were the five largest (Foner 1955, p. 171).
Craft unions, with exclusive membership jurisdictions and high membership dues, were able to grow stronger than the Knights' assemblies because they used new organizational measures to survive the combined onslaught of employers and government authorities when they called strikes and could fend off replacement workers. In order to secure the long-term loyalty of their members, they first provided sickness, unemployment, and strike benefits in addition to the burial insurance that had been a staple of craft guilds since the colonial era. Second, craft unions became more centralized, such that authority for strike action had to come from the national-level leadership. This organizational form reduced the potentially fatal consequences for a nationwide organization if there were independent strike initiatives by local affiliates. At the same time, as later events showed, a centralized form of organization provided a potential base for dictatorial union leaders, who ran the unions the way they pleased (Shefter 1994, p. 153). Organization, as always, was a double-edged sword.
|AFL founder Samuel Gompers |
Despite their considerable autonomy and independence, however, the national-level craft leaders ceded some authority to speak for them on general policy issues to the leader of the federation, who was voted into office for two-year terms by delegates from each union at national meetings. Samuel Gompers, the federation's founding president, originally a leader of the cigar makers' union, served as president for all but two years from 1886 until his death in 1924.
With their organizational strategy in place, the craft unions then girded for the focused strike actions and boycotts they selectively employed in carrying out what the preamble to their original constitution described as a "struggle" that was going on "between the oppressors and the oppressed of all countries, a struggle between the capitalist and the laborer, which grows in intensity from year to year, and will work disastrous results to the toiling millions if they are not combined for mutual protection and benefit" (e.g., AFL 1901). This ringing general analysis was used against the AFL ever after by editorial writers and conservatives, but at the same time the federation also adopted a more pragmatic and less politically threatening strategy toward employers and the government. It emphasized higher wages, shorter working hours, and better working conditions, not class struggle. This narrow agenda (known as "pure and simple unionism") was supposed to be accomplished through direct actions against employers, so it is not like the AFL members were afraid of confrontation or unaware of how most employers would react. They knew what they were up against.
As part of this confrontational but narrowly focused approach, the AFL tried to avoid involvement in broad-based political organizations, especially at the national level. They feared that political activity might divide their unions in a context in which the nation's electoral rules and the history of the two dominant political parties made it highly unlikely that workers could form their own political party. Believing that the political activism of the Knights of Labor, and especially the frequent disagreements between craft unions and various groups of socialists within the organization, had contributed to its downfall, the AFL kept anarchists and Marxists at a distance, and treated any claims they made with suspicion (Shefter 1994, p. 156). But as the union leaders expected, the employers nonetheless continued to resist the union pay scales, elaborate work rules, and apprenticeship limits that skilled craft workers wanted to retain in the workplace. This is important to underline for those new to thinking about rough and tumble power struggles, because it shows that employers' primary concern was full control of the workplace and the greatest possible profits, not fear of socialist ideas. In addition, the employers increasingly sought to speed up the labor process with new forms of work organization (e.g., Zieger and Gall 2002, pp. 27-28). They also employed growing numbers of unskilled immigrant laborers at lower wages in order to take advantage of the new machines and other technologies that were becoming available.
To counter these business initiatives, the craft unions within the AFL opposed the continuing influx of non-skilled industrial workers into the country because they saw the introduction of more workers and mass-production technologies as detrimental for their wages and social status. Instead of trying to fight industrialists by joining with the growing number of unskilled workers, as many assemblies of the Knights of Labor had attempted to do, they decided that their best hope was in limiting the number of available workers in order to keep their wages as high as possible. That is, they knew that the control of labor markets is the key power issue.
The fact that the newly arriving immigrants were mainly from Eastern and Southern Europe, and from Catholic and Jewish backgrounds, only heightened the resolve of these white male craftsmen, who were overwhelmingly Protestants of Western and Northern European heritage. Over time, as political scientist Gwendolyn Mink (1986, p. 17) has argued, "ethnic differences and skill differences converged within an expanding labor market to precipitate organizational and nativist anxieties among skilled unionizing workers of older immigrant stock." As the craft unions' objections to immigrant industrial workers mounted, "ethnic exclusion solidified craft-based exclusion, stripping union economic action of its class-based potential" (Mink 1986, p. 72). The result was a political division in the working class, with immigrant industrial workers tending to support the pro-immigrant Republicans from 1896 to the late 1920s, while members of the AFL were more likely to vote Democratic because urban political machines were more tolerant of unions (Mink 1986, p. 155).
For all the AFL's hopes, pure and simple trade unionism for skilled workers organized into craft unions did not enjoy much success against big industrial companies in its first decade. The problems are seen in the sudden collapse of the Amalgamated Association of Iron, Steel and Tin Workers, which provided the AFL with 10% of its members and had a contract with Andrew Carnegie's steel companies. When the union refused to accept the introduction of highly profitable new technology and changes in wage rates in 1892, Carnegie and his executives in effect forced a strike by cutting wages by nearly 18% at the Carnegie Steel Works in Homestead, Pennsylvania.
|The 1892 Homestead riots, as depicted on the cover of Harper's Weekly|
The ensuing confrontation led to the deaths of ten workers and three of the 300 armed Pinkerton Detective Agency guards that had been brought in to attack the strikers (Bernstein 1969, pp. 432-434; Scheinberg 1986, pp. 7-9). Eight thousand members of the Pennsylvania National Guard then occupied Homestead; the nationwide union was but a shell thereafter (e.g., Dubofsky and Dulles 2004, pp. 153-170). In 1893-1894, when an estimated 150,000 workers in the railroad industry went on strike to protest wage cuts in the midst of a severe depression, roughly 32,000 state troopers were called out in 20 of the 27 states affected, along with nearly 16,000 federal soldiers out of an available regular force of 20,000 (e.g., Cooper 1980, pp. 144-164; Lambert 2005, pp. 58-63).
In the aftermath of these dramatic defeats, however, the AFL did make some headway outside the manufacturing sector, where disruptive efforts could succeed because the "replacement costs" for bringing in strikebreakers (discussed in the introduction to this document) for some kinds of jobs were prohibitive. For example, the newspaper industry had to accede to the unionization demands of printers, typographers and pressmen's unions because of the unique skills these workers had, and then came to appreciate the union's businesslike attitude toward contract negotiations. Similarly, the building trade unions (e.g., carpenters, bricklayers, plasterers, and painters) grew from 67,000 in 1897 to 391,600 in 1904 because these skilled construction workers could capitalize on their disruptive capacities due to the decentralized nature of the construction industry and also their connections to the urban political machines (Brody 1980, p. 24; Zieger and Gall 2002, p. 22). It was in this context that an Era of Good Feelings began in the late 1890s, encouraging some AFL leaders to accept overtures from a new group of corporate moderates that are discussed in the next section.
The appearance of a reasonably cohesive group of corporate moderates just as the twentieth century began was due to two loosely related developments in the last three decades of the nineteenth century, a 30-year span that included major technological and transportation advances as well as the rise of a factory system that transformed the economic landscape. First, there were the several intensely violent conflicts between workers and employees that were discussed in the previous section. Second, there was a gradual adoption of the corporate form of ownership by business owners, which was originally intended to raise more capital, limit liability for owners, and allow businesses to continue after the death of their founding owners (Roy 1997).
This corporatization process began with textile companies and railroads in the early nineteenth century, then spread to coal and telegraphs companies after mid-century (Roy 1983). At the same time, commercial and investment banks on Wall Street took an integrative role in these developments through their ability to raise capital in Great Britain, France, and Germany. Bankers also contributed to the general leadership of the corporate community and provided large campaign donations to candidates in both political parties (e.g., Alexander 1992; Carosso 1970; Overacker 1932).
Until the late 1880s and early 1890s, however, industrial companies were not part of this gradual corporatization. Instead, they were organized as partnerships among a few men or families. They tended to stand apart from the financial institutions and the stock market. Detailed historical and sociological studies of their shift to the corporate form reveal no economic efficiencies that might explain the relatively sudden incorporation of industrial companies. Instead, it is more likely that industrial companies adopted the corporate form of organization for a combination of economic, legal, and sociological reasons. The most important of these reasons were a need to (1) regulate the competition among industrial companies that was driving down profits, and (2) gain better legal protection against the middle-class reformers, populist farmers, and socialists who had mounted an unrelenting critique of "the trusts," meaning agreements among industrialists to fix prices, divide up markets, and/or share profits (Roy 1997). There were further pressures on industrialists due to a new depression in the early 1890s, which led to another round of wage cuts and then strikes by angry workers. Furthermore, the Sherman Anti-Trust Act of 1890 had outlawed their resort to trust arrangements to manage the vicious price competition among them that was bringing them to potential collective ruin. This combination of events set the stage for industrialists to take advantage of the increasing number of rights and privileges that legislatures and courts were gradually granting to the legal entity called a "corporation."
It was at this point that a more integrated set of financial, rail, coal, and industrial companies began to develop. Between 1897 and 1904 alone, $6 billion worth of corporations were organized, six times the worth of all incorporations in the previous 18 years, leading to a situation in which the top 4% of companies produced 57% of the industrial output: "By any standard of measurement," concludes historian James Weinstein (1968, p. 63), "large corporations had come to dominate the American economy by 1904" (cf. Roy 1997). The result was the emergence of a corporate community that is defined by overlapping ownership patterns, interlocking boards of directors, a shared concern to limit the power of employees, and a common desire to keep the role of government at a necessary minimum (see Bunting 1983; Bunting 1987; Roy 1983. for network analyses of the emerging corporate community).
Due to the combination of a more integrated corporate community, continuing labor strife, and the return of prosperity after three years of depression, an "Era of Good Feelings" between employers and workers began to emerge. As a result, moderate conservatives in some of the new corporations began to differentiate themselves from their ultraconservative colleagues. They did so by indicating to union leaders that they might be willing to make bargains with them as a possible way to reduce industrial conflict. Then, too, some smaller businesses, especially in bituminous coal mining, thought that unions that could insist on a minimum wage might be one way to limit the vicious wage competition that plagued their industries (Gordon 1994; Ramirez 1978). Moreover, companies were urged by some of the expert advisers of the day to organize themselves into employer associations. These associations would make it possible for companies to enter into the multi-employer collective bargaining agreements that were thought to be essential if unions were going to be useful in helping to stabilize a highly competitive industry (Swenson 2002).
On the other side of this class warfare, several AFL leaders decided that unions could not defeat the burgeoning industrial corporations through strikes and spontaneous work stoppages. In addition, they long ago had abandoned any hope that elected officials or judges might aid them. They saw political entanglements as divisive and were convinced that the new corporate titans dominated government at all levels. They therefore decided it might make sense to react positively to the overtures from corporate moderates. In addition, a few trade union leaders were among the voices encouraging employers to form their own organizations, on the grounds that such organizations would make cooperation and multi-employer bargaining between corporations and labor all the easier (Brody 1980, pp. 23-24).
The most visible organization to develop in this changed atmosphere was the National Civic Federation (hereafter usually called the NCF). Formed in 1900 and composed of leaders from both big corporations and major trade unions, it also included well-known leaders from the worlds of finance, academia, and government. Building on this cross-section of leaders, it was the first national level policy-discussion group formed by the newly emerging corporate community. It therefore has been studied extensively from several different angles (e.g, Cyphers 2002; Green 1956; Jensen 1956; Weinstein 1968). The explicit goal of the NCF was to develop means to harmonize capital-labor relations, and its chosen instrument for this task was the trade union agreement (now called collective bargaining). The hope for the NCF rested on the fact that some of its corporate leaders stated publicly that the right kind of trade unions could play a constructive part in reducing labor strife and in helping American business sell its products overseas.
|Senator Mark Hanna|
In particular, the first president of the NCF, Senator Mark Hanna of Ohio, a mining magnate and Republican kingmaker, who had a major role in the election of Republican President William McKinley in 1896 and 1900, was respected by labor leaders for the fair-minded way he had dealt with striking miners on some of his properties. Hanna also worked to convince his colleagues that the improved productivity and efficiency that would follow from good labor relations would make it possible for American products to compete more effectively in overseas markets, because the finished goods would be of both a higher quality and a lower price. In exchange, labor would be able to benefit through employment security and the higher wages that would come with increased productivity and sales (Weinstein 1968, Chapter 1). In terms of present-day theorizing, Hanna and the NCF were trying to create a cross-class coalition or alliance that would be beneficial for both parties (Swenson 2002, pp. 143-144).
Nor did the NCF hesitate to seek the advice of experts, including some who were considered reformers or even liberals, which is another reason for thinking that the corporate moderates were somewhat different than the ultraconservatives. The most famous of these reform-oriented experts was an atypical economist, John R. Commons, who had been part of many reform efforts in the previous decade. Commons became a researcher and strike mediator for the NCF while managing its New York office from 1902 to 1904. He adopted the NCF emphasis on collective bargaining and championed the concept ever afterwards. When he left for a position at the University of Wisconsin, where he trained several of the economists who later worked for the New Deal in the 1930s, half of his salary was paid by moderate conservatives in the NCF that admired his efforts. Commons later claimed that his years with the NCF were among the "five big years" of his life (Commons 1934, p. 133).
At first glance, the NCF focus on collective bargaining may seem to reflect the corporate moderates' acceptance of an equal relation between capital and labor in a pluralistic American context, which would not fit with the theory of corporate dominance reflected in this document, and on this site more generally. But from a class-dominance perspective, collective bargaining is not about pluralism or values or decency, none of which had been in evidence in the periodic violence and use of repression by employers in the years following 1877. Instead, the concept of collective bargaining is the outcome of a power struggle that reflects the underlying balance of power in favor of the corporations. From the corporate point of view, a focus on collective bargaining involved a narrowing of demands by AFL unions to a manageable level. It held out the potential for satisfying most craft-union members at the expense of the unskilled workers and socialists in the workforce, meaning that it decreased the possibility of a challenge to the economic system itself. However farfetched in hindsight, the possibility of such a challenge seemed to have some validity in the early twentieth century due to the volatility of capitalism, the seeming plausibility of at least some aspects of Marx's theory of inevitable collapse, and the strong socialist sentiments of a growing minority of intellectuals and workers. From the corporate moderates' point of view, which did not have the benefit of twentieth-century history as a guide, it is understandable that they preferred unions for skilled workers to periodic disruption by frustrated workers or constant political challenges from socialists, who incidentally won a growing number of city and state elections in the first 10 to 15 years after they founded a new political party in 1901 (e.g., Weinstein 1967).
From the labor standpoint, collective bargaining over wages, hours, and working conditions seemed to be the best that it could do at that juncture. Despite the growing agitation by socialists, most skilled workers apparently did not think it was worth the costs to organize a political challenge to capitalism, or even to continue to attempt to organize unions that included both skilled and unskilled workers, as the Knights of Labor tried to do between 1869 and 1886. They therefore decided to fight for what their power to disrupt forced the corporate leaders to concede in principle. This strategic decision to work toward unions based on bargaining for better wages, hours, and working conditions was embraced even by the committed socialists who predominated in a handful of unions, including the Brewery Workers Union and the International Association of Machinists (Laslett 1970). More generally, sociologist Howard Kimeldorf (1999, p. 149) has shown that both the leftist and apolitical unions that often fought each other very vigorously "relied on labor solidarity, mass mobilization, and unrestricted direct action to find their way across what was still a largely uncharted organizational landscape."
Thus, the process and content of collective bargaining is actually a complicated power relationship that embodies the strengths and weaknesses of both sides. Its existence reveals the power of labor, but the narrowness of the unions and the substance of what is bargained about reflect the power of capital. Collective bargaining is "both a result of labor's power as well as a vehicle to control workers' struggles and channel them in a path compatible with capitalist development" (Ramirez 1978, p. 215). Drawing on Kimeldorf's (2013) new formulation concerning the importance of replacement costs in union success in that era, Ramirez's point can be generalized to say that unionization is possible when workers can exercise a disruptive potential that threatens profits. That is, the unions that were organized in the late ninetieth and early twentieth centuries had a high disruptive capacity that was rooted in the difficulty (and thus high costs) of finding replacement workers in the face of strikes. Sometimes these replacement costs were due to skill barriers, as in the case of the typographers and construction workers mentioned earlier, but replacement costs could also be high for companies that had fast turn-around times or had geographically isolated work sites that scared away potential replacement workers.
However, it is important to add that the unionization and collective bargaining that sometimes developed in industries in which workers had disruptive potential is not quite a standoff in which both sides have the same amount of power. They are close to equal when it comes to collective bargaining once the ability of workers to disrupt and organize has been demonstrated, but it is also the case that it is very difficult to sustain most unions if governments use their legal or coercive powers to support employers in their refusal to recognize unions. Thus, political power has to be added to the collective bargaining equation and it can serve as the tipping point if and when collective bargaining fails and one or both sides of an open class struggle resorts to organized violence. In this context, the matter of who controls key government offices, starting with the presidency, becomes critical.
Once again, it needs to be stressed that the unionism the NCF leaders were willing to support was a narrow one, focused almost exclusively on skilled or craft workers, to the exclusion of the unskilled industrial workers in mass-production industries. Furthermore, the corporation leaders in the NCF objected to any "coercion" of nonunion workers by union members and to any laws that might "force" employers to negotiate. Everything was to be strictly voluntary, although government could be called in to mediate when both sides agreed to arbitration. Indeed, there was precedent for such voluntary arbitration in federal legislation passed in 1898, which allowed for mediation between interstate railroads and those unionized employees that worked on the trains themselves (e.g., engineers, brakemen, conductors).
Within this limited perspective, the NCF and other corporate moderates seemed to be having at least some success in their first two years. Leaders in the new employers' associations not only signed agreements with their workers, but spoke favorably of the NCF and its work. None was in a major mass-production industry, however, and the new era did not last very long. As the unions' membership grew and they began making more demands, the employers' dislike of unions resurfaced accordingly. In other words, class conflict once again emerged, which soon led to organized opposition to unions within the very same employer associations that had been created to encourage trade agreements. This sequence of events reveals the difficulties of maintaining cross-class coalitions, which were to break down more often than not in future decades as well. Either the workers try to impose conditions that employers find unreasonable, or else some employers, known as "chiselers" in that era, try to gain market share or earn higher profits by undercutting the terms of the agreement.
The usual pattern was most dramatically demonstrated when the National Metal Trades Association, which included a wide range of manufacturers that made use of metal in their production processes, broke its agreement with the International Association of Machinists only 13 months after signing it in May, 1900. The turnabout occurred when the machinists tried to place limits on the number of apprentices in a shop and resisted piece rates and doubling up on machines (Swenson 2002, pp. 49-52). The angry employers announced in a Declaration of Principles "we will not admit of any interference with the management of our business" (Brody 1980, p. 25). The failure of the attempt to employ collective bargaining to resolves disputes is also demonstrated by the refusal of steel unions even to consider the terms offered in 1901 by J P. Morgan, the most powerful financier of the day, for his acceptance of already established unions in subsidiaries of his newly organized behemoth, U.S. Steel. Instead, the union actually "called a general strike against the corporation to force immediate agreements on its entire tin plate, sheet steel, and steel hoop operations, thus breaking current agreements in some of them" (Swenson 2002, p. 51). The corporation then crushed the strike and the union. More generally, at least 198 people were killed and 1,966 were injured between 1902 and 1904 in the other labor disputes that soon followed in a variety of industries (Archer 2007, p. 121). Nevertheless, union membership grew an average of 2% a year from 1904 to 1915 despite the renewed warfare (Nelson 1997, pp. 92-93; Zieger and Gall 2002, pp. 18-19).
The individual employer associations were reinforced in their anti-union efforts when the industry-wide National Association of Manufacturers (NAM) moved into their ranks. Founded in 1896 to encourage the marketing of American products overseas, its first president was also an early member of the NCF and tried to avoid any discussion of management-labor issues within NAM. However, when anti-union employers took over the association in late 1902 in a three-way race for the presidency, it quickly turned into the largest and most visible opponent of trade unions in the United States. It thereby became the core organization for the ultraconservatives in the corporate community, a role it has played ever since, but always buttressed by the organizations established by specific industries, such as the Iron and Steel Institute and the American Automobile Manufacturers Association.
The rise of the anti-union movement caused the NCF to draw back from its collective bargaining emphasis, but it continued to endorse collective bargaining as a principle even though it no longer pushed for it. At the same time, though, the organization began to put greater emphasis on urging employers to pay good wages and install welfare programs of the kind that had been tried by a few companies in earlier decades in an attempt to placate workers. "After 1905," says Weinstein (1968, p. 18), "welfare work increasingly was seen as a substitute for the recognition of unions." These widespread efforts were successful in many large corporations and were an important forerunner of the welfare-capitalism strategy to combat unions emphasized during the 1920s. In fact, the Welfare Department within the NCF played a large role in disseminating this perspective (Cyphers 2002). In present-day theorizing, these large-scale employers, many of them using advanced production technologies, were paying "efficiency wages" in an effort to increase profits through enhanced productivity and at the same time protect themselves against disruption, sabotage, and the destruction of equipment:
|Aftermath of the Los Angeles Times bombing, October 1910|
In spite of the efforts by the NCF and other corporate moderates to deal with labor conflict after 1904 through welfare and education programs instead of collective bargaining, there was another wave of industrial violence in 1910 and 1911. Dynamite attacks at many construction sites across the country, and on the Los Angeles Times' entire building, by what turned out to be apolitical but militant members of the bridge and structural ironworkers' union, were of particular surprise and concern. In reaction, President William Howard Taft sponsored legislation to create a Commission on Industrial Relations to examine the causes of industrial unrest and labor sabotage, which resulted in further legitimation for the collective bargaining agreements sought by the AFL.
Although the National Civic Federation had abandoned its organizational emphasis on collective bargaining, several of its individual members nonetheless played the major role in the commission's deliberations. The nine member commission, which was appointed by President Woodrow Wilson in 1913, consisted of three corporate leaders, all members of the NCF; three labor leaders, also members of the NCF; and three public members, two of whom, Commons and a well-known socialite and reformer of the era, Mrs. Borden Harriman, were members of the NCF. The only non-NCF member was the chairman, Frank P. Walsh, an attorney, reformer, and advocate for the poor. Walsh was more than a match for the other eight members, leading the commission into investigations, arguments, and pronouncements that angered the non-labor members (Adams 1966; Weinstein 1968, Chapter 7).
The commissioners could not come to general agreement after hearing hundreds of hours of testimony and debating numerous legislative proposals. However, it is important to note, in the light of the eventual passage of the National Labor Relations Act in the mid-1930s, that the weight of the members' several separate reports in 1915 favored greater use of the collective bargaining mechanism. As Commons noted in a report that also was signed by Mrs. Harriman and the business members, but not the labor members, the important issue was "whether the labor movement should be directed towards politics or toward collective bargaining" (Weinstein 1968, p. 202). Commons went so far as to recommend new legislation empowering government advisory boards to mediate capital-labor relations and channel protest into collective bargaining, clearly foreshadowing the kinds of solutions that eventually were tried during the early New Deal.
The outbreak of World War I changed the power balance between business and organized labor. Supplies of new labor from Europe virtually dried up, the war fueled an economic boom, and the federal government expanded its role in the economy. Many AFL unions took advantage of the situation by calling strikes to gain union recognition, leading President Wilson to support the right of unions to exist and bargain collectively in exchange for a no-strike pledge. To insure a smooth flow of production and secure the loyalty of workers in the face of the many socialist critics of the war, government officials, with the acquiescence of major corporate leaders, instituted a National War Labor Board in 1918 to mediate corporate/union conflicts. Composed of corporate and trade union leaders, it was co-chaired by former President Taft and Frank P. Walsh, the intrepid investigator who had served as chair of the recently disbanded Commission on Industrial Relations. AFL membership increased from two million in 1916 to 3.2 million in 1919, mostly in unions that had existed since 1897, with the ten largest national unions accounting for nearly half the increase (Dubofsky and Dulles 2004, p. 191). While all this was going on, anti-war dissenters from radical unions and the Socialist Party were put in jail.
|The Seattle Union Record announces the beginning of the general strike, February 1919|
Leaders within the AFL were hopeful that this renewed harmony and success would continue after the war, but such was not to be the case. In 1919 nearly four million workers (21% of the workforce) took disruptive action in the face of employer reluctance to recognize or bargain with unions. There were major strikes in the nation's coalfields and among longshoremen in New York City and police officers in Boston, as well as a general strike in Seattle. The largest strike took place in the steel industry, in which nearly 350,000 workers went on strike in an attempt to gain the right to bargain. Led by U.S. Steel, the biggest and most powerful manufacturing company in the country, the employers launched a strong counterattack, branding the strike leaders as foreign radical agitators, this time linking them to Bolshevism, not anarchism. They also employed 30,000 African Americans as replacement workers, attacked picket lines, and broke up union meetings. With President Wilson appearing to favor steel executives, the defeat of the steel strike in December 1919 sealed the fate of collective bargaining in the ensuing decade (Zieger and Gall 2002, pp. 39-41).
|Boston Police Strike, September 1919|
During the 1920s, unions lost strike after strike as employer opposition to unions reversed many of the wartime advances by organized labor. Due in good part to a union-breaking campaign led by the NAM, union strength dropped from about 20% of the nonagricultural labor force in 1920 to less than 10% at the beginning of the New Deal. Over the course of these lean years for organized labor, union membership declined from five million in 1919 to just under three million in 1933 (Bernstein 1960, p. 84). Still, total union membership never fell below 1917 levels, no major union organizations disappeared, and there were some gains for the building trades, railroad brotherhoods, and the Teamsters (Nelson 1997,pp. 98-99). But the United Mine Workers, which later took the lead in organizing during the 1930s, fell from 500,000 in 1919 to under 80,000 in the early 1930s. The garment unions were also devastated -- the Amalgamated Clothing Workers, another spearhead union in the 1930s, fell from 180,000 in 1920 to 60,000 in 1933 (with only 7,000 of those members paying dues) and the International Ladies' Garment Workers Union fell from 120,000 in 1920 to around 40,000 in 1933. The biggest unions were now in construction, transportation, entertainment, and printing, all of which had high replacement costs in the face of union demands (Zieger and Gall 2002, pp. 69-70). There were virtually no union members in mass production industries.
Nevertheless, there were a few corporate moderates who wanted to control labor by giving workers some representation and thereby avoid the kind of violent confrontations that the leaders of the NAM and other ultraconservatives were willing to undertake if necessary. These efforts were led by the richest man of that era, John D. Rockefeller, Jr., and they were to have a large impact on New Deal labor policy, although things did not turn out as Rockefeller intended them
With the NAM openly attacking unions, and Rockefeller trying to woo workers away from them through employee representation plans, there were only two bright spots for organized labor in the 12 years of Republican rule from 1920 to 1932. The Railway Labor Act of 1926, which proved to be an important precedent for the National Labor Relations Act nine years later, showed the leverage skilled workers could generate in the most critical means of freight and passenger transportation between the 1850s and 1950s. Setting the stage for this legislative triumph, railroad workers had gained strength during the war because the railroad owners were forced to accept collective bargaining and government regulation, as well as an eight-hour day at the same wages that workers had received previously for a ten-hour day. Furthermore, the federal government had to take over the railroads in 1917 because their owners could not make deliveries in a timely and efficient way, thereby hampering the war effort. As a result of this series of events, skilled railroad workers took the opportunity to organize and gained a greater role in railroad operations.
Railroads were returned to private ownership after the war, but both owners and workers were forced to accept a Railway Labor Board in 1920, which had the power to issue non-binding proposals to resolve labor disputes (Nelson 1997, pp. 99-100). The result was several years of renewed conflict that led to a stalemate due to a combination of the skills of many rail workers, the need for timely delivery of industrial goods and passengers, and the vulnerability of expensive engines and train cars to sabotage and destruction. Faced with a standoff due to the government's involvement, the corporate executives in the Association of Railway Executives finally agreed in 1926 to accept legislation creating a government mediation board. The new board proved able to deal successfully with labor disputes in the industry. The representatives of the four railroad craft unions were not crazy about the idea of a mediation board either, but most of them realized it was the best they could do at the time. The new legislation passed against the wishes of the NAM, which opposed it on principle because it contained "the first explicit congressional endorsement of the right of collective bargaining" (Zieger 1986, p. 34). At the same time, the law in effect permitted the continuation of attacks by the railroad corporations on organizing efforts by the unskilled labor force in the railroad yards and on track repair crews, reinforcing the cleavage between skilled and unskilled workers.
The second bright spot for organized labor prior to the New Deal, the Norris-LaGuardia Act of 1932, had a number of important provisions agreed to by a temporary coalition of liberals and organized labor. Sponsored by progressive Republicans George Norris, a senator from Nebraska, and Fiorello LaGuardia, a Congressman from New York City, the act endorsed collective bargaining, prohibited employers from forcing new employees to forego union membership as a condition of employment, placed limits on the use of labor injunctions, and made it illegal to sue unions for the unlawful acts of individual members, except when there was clear proof that unions had taken part in or authorized the actions (O'Brien 1998, pp. 154-158). In essence, the act established unions as entities with rights and responsibilities, then provided them with a modicum of freedom to pursue those rights. But on the most important issue, collective bargaining, it did not provide any way to bring corporations to the bargaining table (O'Brien 1998, pp. 148-172).
Even with the Railway Labor Act and the Norris-LaGuardia Act on the law books, it did not seem likely that the weakened union movement would have any power to influence the New Deal. However, the AFL did have institutional legitimacy and a heritage of over 45 years of labor organizing. Most of all, workers had the right to vote and the potential to disrupt production and destroy plants and equipment. The dynamiting of the Los Angeles Times Building in 1911, the Ludlow Massacre in 1914, the deadly strikes at Standard Oil of New Jersey in 1915 and 1916, the disruptive efforts of railroad workers during World War I, and the massive U.S. Steel strike in 1919 were only the most recent reminders of these disruptive capabilities.
There also was one new factor. The ongoing depression led to changes in several AFL policy positions at its convention three months before the 1932 presidential election, which proved to be pivotal. The craft unions abandoned their opposition to national-level labor standards, unemployment insurance, and old-age pensions, although they continued to be hostile to minimum wage legislation. In all, though, the changes meant that organized labor could become part of a new liberal-labor alliance after Franklin D. Roosevelt, the Democratic challenger to the incumbent Republican, won the presidential election and included liberals in his governing coalition. The AFL was positioned to try to influence the federal government to pass labor and social welfare laws favorable to workers. With the new possibilities in mind, we can turn to the detailed and boring slog that finally led to the National Labor Relations Act, but there are unexpected twists and many strike actions that pep the story up a bit.
After the passage of several pieces of emergency legislation in the spring of 1933 to save the banks, plantation owners in the South, and corn-hog farmers in the Midwest, Roosevelt was inclined to end the special session of Congress he had called to deal with the dire emergencies the country was facing. He thought that the new legislation, which concerned the problems of agriculture and finance, for the most part, dealt with the most pressing problems facing the nation, and did not want to press his luck. However, he had been alerted through memos from members of his Brain Trust that corporate leaders were working on plans for industrial reorganization that would free them from the constraints of the anti-trust laws, thereby making more cooperation (i.e., price setting) among them possible. In addition, he also had received memos and personal White House visits from representatives of the NAM and the U.S. Chamber of Commerce, which urged the corporate plans upon him. But Roosevelt was not convinced that any of these plans had jelled sufficiently or were politically feasible (Himmelberg 1976/1993, Chapter 10).
Then the political equation suddenly changed on April 6, 1933 when the Senate unexpectedly approved a liberal bill concerning wages and hours that would cut the workweek to 30 hours for the same daily wage. It meant a significant pay raise despite a likely decrease in productive output. Sponsored by one of the few Southern liberals in the Senate, Hugo Black, later to be appointed to the Supreme Court by Roosevelt, the bill was based on the argument, heartily supported by organized labor, that the measure would spread work and increase purchasing power at the same time. Neither Roosevelt nor any business group liked the idea for a variety of reasons. Leaders of the NAM, along with several corporate moderates, including Teagle of Standard Oil, testified against it, which reminds us that Teagle was not a minor figure on policy issues of major concern to the entire corporate community. Secretary of Labor Frances Perkins found the legislation unacceptable for her own reasons: it did not include a minimum wage provision.
Faced with so much disagreement, but deciding that the time might be right, Roosevelt then insisted on an industrial reorganization plan that was acceptable to both organized business and organized labor, which is nothing to be sneezed at because it at least put the unions' desires on the agenda. The search for an alternative began on April 11 when Roosevelt told the head of his three-person Brain Trust to ask Senator Robert F. Wagner of New York, an urban liberal with good relations with the AFL, to bring together a drafting group. The resulting legislation, the National Industrial Recovery Act, passed in June 1933. It had some surprising outcomes, but serious labor legislation turned out to be two years away, so be prepared for some more slogging.
Based on a two-year suspension of the antitrust laws, the proposed National Recovery Administration authorized by the act would bring together business owners in each sector of the economy, usually through their trade associations, to create codes of fair competition. The codes would set minimum prices, minimum wages, maximum hours, and levels of productive output. The business owners were supposed to be joined in this effort by representatives of workers and consumers, although in practice labor was only represented by even one person in fewer than 10% of the cases, usually in various garment trades (Hawley 1966, pp. 56-57; McQuaid 1979). In theory, these separate and self-policed "code authorities" would eliminate cutthroat competition, reemploy workers, and increase purchasing power, thereby restarting the economy.
Although the National Industrial Recovery Act was a hasty response to Black's 30-hour bill, corporate leaders had been discussing its basic ideas for over a decade. According to every historian who has studied the matter, the fingerprints of various corporate leaders and policy experts can be found on every part of it (e.g., Hawley 1966; Himmelberg 1976/1993; Schlesinger 1958; Vittoz 1987). The basic ideas developed in the aftermath of the seeming success of the business-government partnership during the limited industrial mobilization for World War I and through the War Industries Board. The idea of instituting peacetime equivalents of the National War Labor Board was widely discussed by businessmen through their trade associations over the next 12 years. Roosevelt, as president of the American Construction Council from 1922 to 1928, was one of those "encouraging industrial self-government as an alternative to government regulation," so the idea was not foreign to the new president (Schlesinger 1957, pp. 374-375).
Roosevelt not only was familiar with the basic plan and the corporate support for it. He knew he was trying to bring about recovery within the constraints that were likely to be set by the Supreme Court if the executive branch tried to regulate the economy. Roosevelt and his advisers feared that the extremely conservative court, consisting primarily of former corporate lawyers, would find legislation regulating wages to be unconstitutional. It was likely to do so on the grounds that regulating wages was an infringement on the right of individuals to freely negotiate contracts, as it had done just ten years earlier. So they figured that the only way to obtain the minimum wage and maximum hour laws they wanted was through agreements hammered out by business and labor leaders in each industry. Unfortunately for the liberals and labor, the White House had to find ways to induce those agreements by giving business something it wanted even more, the ability to set minimum prices and restrict output without fear of antitrust prosecution (Schlesinger 1958, p. 101).
Given the unanimous scholarly opinion that the corporate community had the major impact on the shaping of the National Industrial Recovery Act, the most interesting question in terms of an eventual understanding of the origins and passage of the National Labor Relations Act in 1935 is how the 1933 legislation came to include the idea that labor should have the right to bargain collectively through representatives of its own choosing. The clause that eventually gave support to this right began as a one-sentence declaration that came to be known simply as "section 7(a)." It said that "employees shall have the right to organize and bargain collectively through representatives of their own choosing." However, it's important to emphasize that the NCF first articulated these principles 33 years earlier and that organized labor had insisted upon them in exchange for its participation in the National War Labor Board 16 years earlier (Conner 1983, Chapter 11). The idea did not come out of nowhere.
There are slightly conflicting claims on the origins of section 7(a). The specific language seems to have been suggested by W. Jett Lauck, the only labor-oriented member of the Wagner group that had primarily responsibility for drafting the administration's legislative proposal. An economist who was an advisor to John L. Lewis of the United Mine Workers, Lauck had served as the secretary for the National War Labor Board during World War I, so he was familiar with the tradition of accepting government involvement in collective bargaining in times of social upheaval (Vittoz 1987, p. 87). There is also some evidence that at least a handful of business executives and economists from the policy-planning network supported the idea, apparently because they believed unions could play a positive role in stabilizing such highly competitive and wage-cutting industries as coal mining and garment making (e.g., Gordon 1994 Chapter 3; Vittoz 1987, Chapters 2 and 3). However, as subsequent resistance to union involvement in the code authorities demonstrates, most of the corporate leaders who at first seemed willing to accept some degree of union involvement became highly opposed to unions. It is also clear that the most important labor leaders of the 1930s, Sidney Hillman of the Amalgamated Clothing Workers, John L. Lewis of the United Mine Workers, and William Green, president of the American Federation of Labor, spoke directly with several of the people involved in drafting the bill.
Ultimately, the act included section 7(a) because labor leaders and liberals demanded it (e.g., Bernstein 1950, Chapters 2 and 3; Schlesinger 1958, p. 99). The two most important liberals inWashington, Senator Wagner and Secretary of Labor Perkins, were adamant in their insistence that it be included, which reveals their sympathy for unions. Wagner, as the most respected and visible spokesman for urban liberals in Congress, told Roosevelt that there would be no law without the clause. Perkins, who had supported unions for decades, even though she found them narrow and shortsighted, made an appointment for her and Green of the AFL to see Roosevelt. He decided the conflict by agreeing that the clause would remain in the legislation (Cohen 2009, p. 240). The nascent liberal-labor alliance had the power to put its clause in the bill for two reasons; first, the disruptive potential of organized labor through strikes, boycotts, and property destruction at a vulnerable moment for the economy, and second, the inclusion of liberals as one part of the New Deal coalition.
However, there was concern on the part of Southern Democrats about the possible inclusion of agriculture as an "industry," because they did not want to provide any encouragement toward unionization on the part of what was at the time a completely subjugated, and overwhelmingly African American, workforce. In response, Wagner insisted that agriculture was excluded from the purview of the legislation (Farhang and Katznelson 2005, p. 12). There was also implicit agreement that any issues having to do with agriculture and its labor force came under the jurisdiction of the Agricultural Adjustment Administration, which was known to be safely in the hands of conservative Democrats. Thus, this potentially divisive issue did not cause any further problems within the Democratic Party during the legislative process. And note well that from his point forward in the story, the concerns of Southern Democrats become paramount. The accommodation of those concerns made the eventual passage of the National Labor Relations Act possible two years later.
The AFL successfully proposed an important, and controversial, amendment to the National Industrial Recovery Act of 1933 once it reached Congress. It insisted that language from the pro-labor Norris-LaGuardia Act of 1932 be added to the simple declaration of the right to collective bargaining in section 7(a). The additional clause stated that employees "shall be free from the interference, restraint, or coercion of employers of labor or their agents..." (Bernstein 1969, p. 31). Moreover, the AFL wanted a seemingly small change in a clause in the Norris-LaGuardia Act stating that "no employee and no one seeking employment shall be required as a condition of employment to join any organization or to refrain from joining a labor organization of his own choosing." In a phrase aimed directly at the Rockefeller industrial relations network, the AFL demanded that the word "organization" be replaced by "company union," which raised the corporate moderates' hackles immediately (Bernstein 1969, p. 31). But the AFL's amendments made it into the bill passed by the House despite the NAM's desire to eliminate section 7(a) entirely. However, at this moment NAM did not have the support of its temporarily more moderate ally, the Chamber of Commerce. The Chamber remained neutral because it had made a private agreement with the AFL that it would accept the collective bargaining provision in exchange for labor's support for the price-setting provisions (Bernstein 1950, p. 35).
The ultraconservatives represented by NAM carried their fight against section 7(a), and especially the amendments to it, to the floor of the Senate. By this time they had the support of the Chamber of Commerce, which felt that the AFL amendments went too far. And yet, their united effort to soften section 7(a) was soundly defeated, 46 to 31, by the overwhelming Democratic majority. This vote clearly showed the potential power of the liberal-labor alliance within Congress when the Southern Democrats did not oppose it, long before the labor upheavals that are often given most of the credit for passage of the NLRA two years later.
|NRA "Blue Eagle" poster|
Once the National Industrial Recovery Act passed, the moderate conservatives and ultraconservatives reacted very differently to the success of the liberal-labor alliance in carving out a small space for union initiatives within the framework of the National Recovery Administration (NRA). The corporate moderates believed they could live with collective bargaining if they had to, an attitude reinforced by the way in which the Railway Labor Act of 1926 had led to a moderate railroad unionism focused on a few skilled jobs. They also had confidence that employee representation plans, as honed by the efforts of the IRC, could keep out independent unions. Most of all, corporate moderates believed they had won the day against unionism. Thus, historian Robert Himmelberg (1976/1993, p. 107) concludes that "few" corporate reformers felt modification of the new language in section 7(a) was an "absolute condition" for their support of the whole bill.
On the other hand, the National Association of Manufacturers and other ultraconservatives opposed section 7(a) to the bitter end. Moreover, NAM's general counsel believed Senator Wagner had betrayed business on the issue when he agreed to the AFL amendments in the course of his own testimony before the House committee. Thus began an increasingly acrimonious relationship between NAM and Wagner. But for the time being, the ultraconservatives, recognizing that there were no penalties for violating section 7(a), decided to stonewall the pro-union provisions by claiming that the law did not outlaw company unions or designate trade unions as the sole bargaining agents within a plant. Everything now depended on who administered the NRA and how the vague guidelines were interpreted.
Based on the direct and overwhelming corporate involvement in the creation of this legislation, and the fact that the inclusion of section 7(a) had some semblance of a business rationale and no enforcement mechanism, most social scientists and historians seem to accept Himmelberg's (1976/1993, Chapter 10) conclusion to his highly detailed analysis of the origins of the National Industrial Recovery Act: the legislation marked "the triumph of business revisionists," the group of business leaders called corporate moderates in this document. So far, then, this document hews closely to the mainstream views on labor legislation, except for the comments and additions concerning the Rockefeller industrial relations network.
Any qualms about the administration of the act seemed to disappear for the ultraconservatives when someone they trusted, whose name and story need not sidetrack us here, was appointed as the NRA director. To the great satisfaction of ultraconservatives, he immediately made an interpretation of the collective bargaining section that discouraged unionization. He also accepted many other suggestions made to him by businessmen, including various mechanisms for setting industry wide prices. Further, he ended any lingering concerns on the part of Southern Democrats by ruling that the Agricultural Adjustment Administration would deal with any issues concerning agricultural labor, a ruling that was backed up with a series of executive orders by Roosevelt (Farhang and Katznelson 2005, p. 12).
To provide him and the many business leaders in the NRA with advice, the NRA director set up an Industrial Advisory Board. He drew its members from a unique governmental advisory agency formed in the early spring of 1933 by Roosevelt's Southern-born Secretary of Commerce, Daniel Roper, a former lobbyist for corporations with extensive contacts throughout the corporate world. The new advisory committee, originally called the Business Advisory and Planning Council of the Department of Commerce, soon shortened its name to the Business Advisory Council (hereafter usually BAC).
Although the BAC was a government advisory group, the corporate community itself selected its members. Through consultation with the leading policy groups and trade associations, the corporate leaders that set it up made a deliberate attempt to enlist highly visible and respected members of the corporate community (McQuaid 1976; McQuaid 1982). At the outset, it had 41 members, representing a cross-section of business and financial executives. Several members of the Special Conference Committee were in this group, as well as officers of other large banks, retail firms, policy groups, and trade associations. Eighteen of the 60 largest banks, railroads, utilities, and manufacturing corporations of the day were linked to the BAC through the multiple corporate directorships held by some BAC members. There were also numerous regional and local businessmen from across the country.
|Gerard Swope (G.E.)|
Gerard Swope, the president of General Electric, and a friend of the New Deal, was named chairman of the BAC. Teagle was selected as chairman of its Industrial Relations Committee, which demonstrates the central role of the Rockefeller network in the corporate community once again. One of Teagle's first decisions was to appoint all the vice-presidents that were members of the Special Conference Committee to the Industrial Relations Committee, thereby making that private group into a governmental body. Rockefeller's personal employee, Edward Cowdrick, the aforementioned secretary of the Special Conference Committee, was made secretary of the new BAC committee. Reflecting the seamless overlap of the corporate community and government in the early New Deal, Cowdrick wrote as follows to an AT&T executive. The memo deserves to be quoted because it reveals one of the ways the corporate leaders explained their involvement in government advisory groups, as well as a decision to avoid any mention of the Special Conference Committee, even though the government advisory meetings were part of Special Conference Committee meetings. The members were told they would be there as individuals, not as representatives of their companies or as members of the Special Conference Committee:
"Each member is invited as an individual, not as a representative of his company, and the name of the Special Conference Committee will not be used. The work of the new committee will supplement and broaden -- not supplant -- that of the Special Conference Committee. Probably special meetings will not be needed since the necessary guidelines for the Industrial Relations Committee's work can be given at our regular sessions" (Senate 1939, p. 16800).
Not surprisingly, perhaps, the first task of the new Industrial Relations Committee was to prepare a report on employee representation and collective bargaining, which favored employee representation plans and criticized unions (Scheinberg 1986, p. 163). However, it did not really take a report from the new BAC to prod the corporate community into defensive action by quickly installing employee representation plans (Jacoby 1997, pp. 157-159). As if to signal that it meant to continue the central role it had always taken in resisting unions, U.S. Steel hired the longtime director of the IRC, Arthur H. Young, as its vice president in charge of industrial relations.
Young, who had worked for both International Harvester and Colorado Fuel and Iron before joining the IRC, received a personal letter of congratulations from John D. Rockefeller that thanked him for his years of service and told him that "I shall follow with interest your course in this new position" (Rockefeller 1934). At the least, this letter shows that Rockefeller was paying attention, or having someone pay attention for him. Young soon announced a new employee representation plan and assured everyone that the plan would generate "sound and harmonious relationships between men and management," which he likened to the "sound and harmonious relationship between a man and his wife" (Bernstein 1969, p. 455). Within a year, at least 93 steel companies had employee representation plans that covered over 90% of the workers in the industry. Things were looking good for the Rockefeller network.
|Walter Teagle |
At the BAC's first general meeting in Washington on June 26, 1933, ten days after the NRA itself was created, the NRA director asked Teagle to chair the NRA's Industrial Advisory Board, which drew the majority of its members from the BAC as well (McQuaid 1979, p. 685-686). Teagle brought Hicks, his recently retired industrial relations vice-president at Standard Oil of New Jersey, to join him in Washington as his personal assistant. (At this point Hicks was paid about $98,500 a year as a personal consultant to Rockefeller, in addition to his $163,500 a year pension from Standard Oil of New Jersey -- both those figures are in terms of 2012 dollars). Teagle, along with Swope and other business executives, then spent the summer of 1933 overseeing the development of the NRA. In short, the overlap between the corporate community, the Rockefeller industrial relations network, and the NRA was very extensive. This seems to be even more the case when it is added that other top businesspeople came to Washington to serve the NRA as "presidential industrial advisers" on temporary loan from their corporations. In other words, and this conclusion will rankle those who see the American government as independent of "big business," the corporate community was subsidizing, staffing, and building a new state agency. Moreover, it was happening at the very time that the corporate community supposedly had lost power and legitimacy, according to the modern-day experts that rule the academic roost when it comes to the understanding of the alleged ups and downs of corporate power (Finegold and Skocpol 1995; Hacker and Pierson 2002; Hacker and Pierson 2004; Hacker and Pierson 2010)}
The many efforts to prevent worker unrest and labor organizing did not work out as expected. The inclusion of section 7(a) in the enabling legislation for the NRA turned out not to be benign after all, so at this point the story picks up a little steam again. Instead, it inspired a huge organizing drive. "Those provisions," conclude power analysts Frances Fox Piven and Richard Cloward (1977, p. 110), "were to have an unprecedented impact on the unorganized working people of the country, not so much for what they gave, as for what they promised." Or as sociologist Rhonda F. Levine explains (1988, p. 82): "Ironically, contrary to its design, the National Industrial Recovery Act and the NRA's implementation of the act actually worked to disorganize the capitalist class and to organize the working class." The idea of collective bargaining seemed to have arrived due to its legitimation and support by the state. Organizers for the United Mine Workers told workers "the president wants you to join a union," leaving it somewhat unclear as to whether they were referring to the president of the United States or the president of the union that employed them.
Labor's organizing efforts met with success in some industries, especially those in which the companies were small or the workers were organized into one industry wide union that included many different types of craft workers as well as unskilled workers. This success was greatest for the United Mine Workers, who were able to thwart attempts by mine operators to bring in replacement labor. Similarly, the Amalgamated Clothing Workers grew rapidly by organizing the men who worked for the many small clothing companies in New York and other Eastern cities; the International Ladies Garment Workers did the same for women. (For an excellent analysis of the relatively unique situation in the coal and clothing industries, see Swenson (2002, pp. 146-160).)
At the same time that craft and industrial workers were demanding unions and causing disruption, agricultural workers were also going on strike. Their strikes had no long-term impact in terms of creating unions, but they did add to the tension of the times and heighten the class-consciousness of farm owners as employers, so they are important to talk about for a few paragraphs to give readers a full sense of what was going on in the country in the context of the NRA and the industrial strife it engendered.
The turmoil began in the South because plantation owners regarded their subsidy payments from the Agricultural Adjustment Administration, which were made in exchange for planting less cotton and tobacco, as an incentive to fire farm hands and terminate leases with tenants and sharecroppers. Not every tenant farmer was cut loose, of course, but historian Pete Daniel (1985) likens New Deal agricultural policy in the South to a modern-day enclosure movement. This enclosure movement triggered disruption in the South and an African American exodus to the North. Although as many as 15% to 20% of Southern tenants and sharecroppers were evicted between 1933 and 1935, the plantation owners nonetheless wanted them available as low-wage labor when needed (Grubb 1971, pp. 25-26). Despite what most outside observers and government officials saw as a surplus of labor, the landowners were afraid that they were going to run short of inexpensive employees at peak seasons (Mertz 1978, pp. 45-50).
But it was not only evictions that were causing problems for the tenants and sharecroppers. Even those who were allowed to stay on the land were receiving less income from the subsidy payments that they previously received for growing crops. Through a variety of contractual devices and southern customs, the landlords found ways to keep a very large share of the subsidy payments for themselves. For example, on one typical plantation "the landlord's gross income increased under the AAA from $51,554 in 1932 to $102,202 in 1934, while the average gross income of his tenants fell from $379 to $355" (Grubb 1971, p. 20).
Still, the power of southern landowners was not so great that they could keep the rural poor in total destitution. There were two countervailing influences: the disruptive potential of the people that were being displaced or underpaid, which was aided and augmented by leftist organizers, and the leverage that liberals gained within the federal government because they were part of the Roosevelt coalition. The exploited tenants and evicted farm hands were a source of tension and disruption in many ways. They wrote letters of protest about their situation to officials in Washington, generating conflict within the White House, Congress, and the Department of Agriculture. Their poverty was highly visible to journalists, writers, and photographers, who publicized their plight and thereby caused embarrassment for officials in Washington. Most of all, their resistance and despair held out the potential for radical action of the kind that leftists, and especially Communists, were trying to organize (Conrad 1965; Grubb 1971).
Liberals within the Roosevelt coalition, both southerners and northerners, responded to the exclusion and exploitation of tenants and sharecroppers by demanding relief and reform for all southerners, black or white, that had lost their livelihood. In effect, they assumed the leadership of the farm workers' battle with plantation owners through their access to the media, their presence in some federal agencies, and a few pipelines to the White House. In reaction, there was an attempt by the White House to create agencies and programs aimed at relieving some of the devastating poverty in the South without alienating the wealthy whites that controlled the regional Democratic Party. Put another way, the Democratic Party and plantation owners faced the classic dilemma about relief payments analyzed by Piven and Cloward (1971/1993): such spending is necessary to forestall disruption, but it must be accompanied by rituals of degradation and eliminated as soon as possible so that work norms and the willingness to work for low wages are not undermined.
The protest movements did not go very far in the South because they were met by racial epithets, violence, and jailing (e.g., Grubb 1971, pp. 70-71). Nor did the meager emergency relief payments disrupt the labor market. Despite protests by liberals, local relief administrators cut off payments when more workers were needed for planting or harvesting (Mertz 1978, p. 49; Schulman 1994, pp. 31-32). Nonetheless, the southern landlords were extremely disturbed by the farm workers' protests, and by the involvement of "outside agitators" (i.e., liberals and leftists). The Department of Agriculture therefore had to deal with strong pressures from the landlords and liberals outside government, who were the most visible combatants in a class struggle that pitted the better-off farmers and plantation owners against the massive number of displaced farm hands and their liberal allies, with small family farmers somewhere in between.
The scope of what began as a one-sided class struggle in Southern agriculture was widened by clashes in California, where there was a long history of large agribusinesses and migratory wage labor (e.g., Majka and Majka 1982; McWilliams 1939; Weiner 1978). Strikes and organizing efforts were frequent in the first summer after the passage of the Agricultural Adjustment Act, often led by Communists and sometimes taking place in labor camps set up by the federal government (Dyson 1982; Klehr 1984, Chapter 8).
Moreover, conflict between the farmer-business alliance and the liberal-farm labor coalition was not limited to the South and California. There was also an increasing use of wageworkers in the Southwest, Midwest, and even to some extent in the Northeast because farms had expanded in size throughout the 1920s and 1930s. In 1935, when 3% of the farms were hiring 40% of the roughly 2.5 to 3 million farm laborers, the largest 184,000 farms employed 1.1 million workers for some part of the year (Majka and Majka 1982, p. 104; McWilliams 1942, p. 353). The strikes by farm workers outside of California, usually to protest wage cuts, but sometimes to demand union recognition when led by Communists, were usually not large or frequent, and they only rarely succeeded in restoring wages. Nonetheless, there were many work stoppages in several different states between 1933 and 1935 after virtually no strikes in the preceding three years. They occurred in such varied crops and places as beet fields in Michigan, hops fields in Oregon, onion fields in Ohio, cranberry bogs in New Jersey, citrus groves in Florida, and tobacco fields in Connecticut and Massachusetts. As for unions, they rarely lasted for more than one summer (e.g., Jamieson 1945, p. 39).
Still, as mentioned at the outset of this interlude, this labor turbulence was very important politically because it helped to generate greater class-consciousness and solidarity among farm interests in all parts of the country, not just the South and California. Since their harvests were at risk if there were strikes or work stoppages, especially with highly perishable crops, the farmers often reacted even more harshly than industrialists to challenges from their workers. The fact that some of the strikes in the Midwest and Northeast were led by organizers from the Communist Party, although not as frequently as in California, made it all the easier for the farm owners to become highly agitated about them and to be successful in enlisting local and state governments against the strikers (Jamieson 1945, pp. 39-42; Klehr 1984, Chapter 8).
Although the upheavals in the South and West proved to be sporadic and manageable for the big agricultural interests, the unexpected labor upheaval in Northern industrial cities six weeks after passage of the NRA was so great that major business figures felt it necessary to contemplate a compromise with organized labor. The BAC members on the Industrial Advisory Board of the NRA therefore hosted a private meeting with the Labor Advisory Board of the NRA on August 3 1933, which included Lewis of the mine workers, Hillman of the garment workers, and Green of the AFL as its key members. BAC minutes reveal that Teagle opened the meeting by suggesting a "truce" (this war-derived metaphor suggests that Teagle believed that there was a class struggle going on) until the NRA could establish the numerous codes that would set price, hours, and wages in a wide variety of industries. According to notes from the meeting, he emphasized that he had no complaint with labor's efforts. "It was only natural," he said, "for labor to try to use this opportunity to organize and for employers to resist" (McQuaid 1979, p. 688). But some degree of harmony was needed, he continued, so that the recovery process could begin. Teagle therefore proposed that the two boards create an agency to arbitrate the problems that were being caused by differing interpretations of section 7(a).
|Sidney Hillman (ACWA & CIO)|
The labor leaders were skeptical about Teagle's proposed truce because he also was asking that organizing drives and strikes be halted. Hillman countered that he might agree to forego strikes if the right to continue organizing was stated clearly by the Industrial Advisory Board, but Teagle did not like this suggestion. Swope of GE, searching for compromise, then suggested that a small subcommittee of four people, including himself, meet for a short time to see if it could work out a common declaration on labor policy.
The subcommittee came back to the full meeting a few minutes later with a proposal for "a bipartisan arbitration board composed equally of Industrial Advisory Board and Labor Advisory Board members, which would be headed by an impartial 'public' chairman" (McQuaid 1979, p. 680). The similarity of the proposed board to the earlier National War Labor Board was not lost on any of the participants; several of them had been involved in management-labor cooperation during World War I. The problem of union organizing was left unmentioned, but to reassure the labor leaders, Swope suggested Senator Wagner as the public member and chairman. While there was general acceptance of Wagner, Hillman remained doubtful about the overall plan. He repeated his opinion that the "right to organize on the part of labor" should be announced as an overall board policy. In response, Green, who was far more cautious than Hillman or Lewis, responded that Hillman's view was as "extreme" as Teagle's proposal to halt all organizing drives for the duration. Green, like Swope, wanted to maintain a "cooperative spirit" by leaving the issue of organizing rights for the future (McQuaid 1979, pp. 689-690).
After further discussion, the two groups reached general agreement on the subcommittee proposal and they formally approved it the following day. President Roosevelt accepted the agreement immediately and the next day announced the formation of a National Labor Board to arbitrate strikes and seek voluntary consent to section 7(a). Corporate moderates had forged a compromise with labor leaders in the way that their general approach to most problems and the earlier efforts of the National Civic Federation on labor issues would lead us expect. In the process they developed a new government structure (another example of state building) and thereby gave renewed legitimacy to collective bargaining and government mediation of labor disputes. In all, the written record provides practically a minute-by-minute account of how the corporate community and organized labor created a new government agency with little or no involvement of the White House, but most of the social scientists that write about the New Deal ignore the work by historian Kim McQuaid (1976; 1979) almost as much as they do that by Gitelman (1988). In any case, the passage of the act is a classic example of how a new law, in this case the National Industrial Recovery Act, can lead to outcomes that no group anticipated or desired, but it is also a demonstration of the importance of government in shaping -- and even supporting -- class conflict.
For the most part, the National Labor Board consisted of men that had been present for the meeting during which it was proposed. The labor representatives on the new board were Lewis, Green, and Leo Wolman, who was an adviser to Hillman and a professor of economics at Columbia University. The three business members were Teagle, Swope, and Louis Kirstein, a vice-president of William Filene & Sons, the Boston department store. Like Teagle and Swope, Kirstein was a member of the NRA's Industrial Advisory Board and had been present at the August 3 meeting with the labor leaders. The Filene family for whom he worked, one of whose members was on the BAC, had been proponents of liberal business policies for several decades. They also had a role in the formation of the U.S. Chamber of Commerce in 1912 (Eakins 1966, p. 226).
From the tenor of the August 3 meeting of corporate and labor leaders, and a look at the composition of the new labor board, it appeared that corporate moderates within the corporate community were prepared to adopt a more cooperative stance toward organized labor. It seemed that they might be willing to accept the collective-bargaining solution that had been urged by the National Civic Federation and the Commission on Industrial Relations in the Progressive Era, then implemented for the duration of World War I, then reluctantly accepted by railroad executives in 1926, then supported by the Norris-LaGuardia Act, and then legislated by Congress as part of the NRA deal. The presence of Swope and Teagle seemed to signal that two of most respected and powerful corporate leaders in the country were now in favor of a more cooperative approach to labor strife. So what happened?
The new board registered considerable success in its first few weeks by establishing regular procedures and settling several strikes. On August 11, just six days after the board was created, it announced a five-step procedure that was successful in ending a strike at 45 hosiery mills in Reading, Pennsylvania. Drafted by Swope, and soon to be known as the "Reading Formula," the procedure was as follows, with the provision for secret elections conducted by the National Labor Board as the most crucial aspect:
|Striking mill workers in Reading, Pennsylvania, 1933|
Most of the successes under the Reading Formula were with small businesses in minor and fragmented industries that were neither big enough nor organized enough to resist worker pressure and a government board, especially coal mining, clothing, and building construction, which accounted for half of all union members in 1934. It also seemed possible that the employers in those industries had reason to hope that bargains with unions might help put an end to destructive competition through cuts in wages and prices (Swenson 2002, p. 144). Despite its auspicious start, however, the National Labor Board's authority and prestige were diminished in late 1933 by the lack of a legal underpinning and enforcement powers to overcome opposition by the large industrial employers organized into the Special Conference Committee, NAM, and strong trade associations, all of which refused to accept the board's decisions.
In October, for example, several companies declined to appear at its hearings, and on November 1 the NAM launched a vigorous public attack on the legitimacy of the board itself. NAM claimed that the procedures of the board were unfair and objected in particular to Swope's idea of representation elections, 75% of which were won by trade unions from August through December of 1933. NAM even objected to the business members of the board, claiming "the representatives of the manufacturers are usually chosen from among those who are known from their expression of views to have a strong leaning towards labor" (Gross 1974, p. 44). In two major cases in December 1933, Weirton Steel and Budd Manufacturing openly defied the National Labor Board and brought the agency to its knees (Bernstein 1969, p. 177).
Workers in large-scale industries were therefore defeated in the first surge of unionizing efforts, but it was not simply because the companies they were up against were large, well organized, and treated gingerly by Roosevelt and his advisors. Union organizers also were handicapped by the fact that they were under the jurisdiction of numerous craft unions that, in keeping with the principles that had led to the original success of the AFL, had little interest in organizing the growing number of industrial workers.
By December 1933, Wagner had decided that the basic principles established by section 7(a) and the Reading Formula, along with various board rulings concerning procedures for implementing them, had to be written into law outside the structure of the NRA (Bernstein 1950, p. 62). To that end he held a meeting in early January with labor leaders and a lawyer from the Department of Labor to decide what topics would be covered. This meeting began a process that led to an eventual defeat for the corporate moderates, so it's important to note that the following account of it makes use of my new archival findings that were not known to most scholars until 2011, and have yet to be taken seriously by the social scientists and historians who laugh about the idea of Rockefeller influence on labor legislation.
Although no employer representatives were present at that first meeting to plan for new labor legislation, it did not take long for Hicks to write Wagner on January 16 saying that he liked section 7(a) as written because in many cases workers did need unions. However, he did not like the possibility that section 7(a) would be modified at labor's request so that employee representation plans would be forbidden because they were allegedly company dominated:
"I have noticed, however, that the A.F. of L is recommending a change in this Section which would forbid employers to cultivate friendly relations with their own employees. Such a change would in my opinion, work a great injustice to both employers and employees" (Hicks 1934a).
Hicks went on to explain that it would not be fair to allow union leaders to "have a free hand to secure members on a voluntary basis" while at the same time saying that "such men as Mr. Teagle, Mr. Swope, and Mr. Kirstein should be forbidden to encourage and cultivate cooperative relations with their own employees..." Wagner replied with a cordial thank-you letter two weeks later, but a prohibition against employee representation plans sponsored by a company nonetheless appeared in the first draft of the legislation in early February. At that point the corporate representatives on the National Labor Board began planning a dinner meeting with Wagner for February 13, during which they hoped to convince him to adopt their plan for organizing the board for its current work, with Hicks playing an administrative role. But no changes were made on the basis of the dinner meeting.
As these maneuverings signal, the strong opposition from steel, autos, and the NAM soon led to differences of opinion within the board itself, which had been enlarged from seven to eleven members so there would always be three business people able to come to Washington at relatively short notice to deal with new cases that needed immediate attention. One of those new members was BAC member Pierre S. du Pont, chairman of DuPont Corporation, and a member of the then closely knit du Pont family of Wilmington, Delaware, the third-richest family of the era (Lundberg 1937, pp. 26-27). Since Pierre du Pont was the family's leader at the time and a key figure in a split in the National Labor Board that was about to emerge, a few details on him and his family are in order.
The family's main corporate base was in the DuPont Corporation, which had grown very large during World War I through munitions orders from the government. It was the tenth-largest American corporation in 1933, when it earned $26 million despite the depression; by 1936, its profits were over $90 million (Zilg 1974, p. 345). Although no big fan of employee representation plans, it was a member of the Special Conference Committee. In addition, the family owned about 25% of the stock in General Motors, the third-largest corporation in 1933, and about 20% of the stock in United States Rubber, both of which were also in the Special Conference Committee. It also owned the National Bank of Detroit and the Wilmington Trust Company and had at least partial ownership in Continental American Life Insurance, North American Aviation, and Remington Arms Company.
Although highly conservative and anti-government, the du Ponts became Democrats in the 1920s to push for repeal of prohibition, which they favored for reasons that are still disputed -- maybe to make federal income taxes less necessary through the collection of taxes on alcoholic beverages, or to keep the role of the federal government in American life to a minimum, or to make sure that respect for government was not lost through the flagrant disregard for the law (Okrent 2010; Webber 2000, Chapter 2). They also were drawn to the Democrats because one of their top employees, John J. Raskob, who served as vice-president for finance for both General Motors and the DuPont Corporation, backed fellow Catholic Al Smith for president in 1928 and then took over as the head of the Democratic National Committee.
Raskob and the du Ponts were anti-Roosevelt at the Democratic National Convention in 1932, but they were pleased with the repeal of prohibition and other early New Deal measures. Then tensions gradually developed over tax and labor policies, with a special focus on the majority rule decision by the National Labor Board. The du Ponts and their allies soon led a successful effort by ultraconservatives to install new leadership and take over the NAM in 1934 at a point when its financial situation was at a low ebb due to the loss of small-business members hit hard by the depression (Burch 1973). They then increased its advertising and public relations budget from $36,500 in 1933 to $467,759 by 1936 (Lichtman 2008, pp. 62-63).
In May 1934, Pierre du Pont stopped making regular donations to the Democratic National Committee to help pay off its campaign debts, and then joined with Raskob in August of that year to form the American Liberty League, an ultraconservative political action group funded by a handful of multi-millionaire ultraconservatives. The league immediately began media attacks on the New Deal based on traditional conservative principles. In 1935, it published and disseminated more than 135 different pamphlets to members, newspapers, and universities. It also supported numerous radio broadcasts and recruited college students and conservative professors in an effort to publicize its cause. In addition, it supported legal challenges to the constitutionality of most New Deal legislation through a lawyer's committee headed by the general counsel of U.S. Steel (Lichtman 2008, pp. 70-71). Needless to say perhaps, it hoped to defeat Roosevelt in the 1936 elections by publicizing criticisms of him, starting with those by highly visible Democratic leaders from the past who had become disenchanted with the New Deal (Webber 2000; Wolfskill 1962).
|Pierre S. du Pont|
Pierre du Pont made his first public dissent as a member of the National Labor Board on March 1, 1934, when the majority on the board ruled that the union or employee representation plan chosen by a majority of the employees voting in a representation election had to be recognized as the sole bargaining agent for all the employees in the plant, factory, or office. This decision, if enforced, would have cut the ground from under one of the major tactics of anti-union employers, who insisted, based on a doctrine called "proportional representation," that they had the right and duty to bargain with their company unions and individual employees as well as trade unions. Although the industrialists' claim was based on lofty arguments about the rights of numerical minorities and individuals, it was believed by most observers at the time to be a divide-and-conquer strategy that would allow them to avoid serious negotiations with unions. Corporate lawyer Lloyd K. Garrison, who chaired the reconstituted labor board for several months in the summer and fall of 1934, subsequently said that "I have never yet seen a case in which these arguments were advanced by a bona fide minority group generally concerned with negotiating a collective agreement applying to all" (Bernstein 1950, p. 103n, italics in the original).
For many years thereafter, Pierre du Pont was portrayed as the villain in contrast to Teagle and Swope. For example, the former general counsel employed by the National Labor Board, Columbia Law School professor Milton Handler, remembered du Pont as a person who tended to vote automatically for the business side in a dispute. This was in contrast to Teagle and Swope, whom he recalled as "very, very fair-minded men and they called the shots as they saw them" (Gross 1974, p. 44). Another member of the board's staff said:
"My experience with Pierre du Pont [was] that when he spent a little time in Washington subject to discussions with us, he would be well educated to the purpose of the act and interested in carrying out its functions... and then he'd go back to Wilmington for two weeks... (listening... to the people in his own organization who must have told him what a horrible thing the whole 7(a) idea was)... and by the time he came back again, we'd have to go through the whole process all over again" (Gross 1974, pp. 44-45).
However, my new findings in the General Electric Archives suggest that du Pont was not the only major business leader on the National Labor Board who opposed the March 1 decision establishing majority rule. Surprisingly, Swope also opposed it. As he wrote in a letter to du Pont on February 26, he was on the panel that heard the Denver Tramways case in December and "the officers of the Amalgamated had at no time asked for Tramways to deal exclusively with them as representing all employees, and the contract recites that they were dealing on behalf of the members of the union who were employees of the Tramways" (Swope 1934b). Swope therefore was "heartily in agreement" with du Pont's view that the decision should say that "the Amalgamated shall represent the 353 employees who voted for them, and the representatives for whom 325 employees voted shall represent them, and the Tramways is to deal individually with the 36 employees who cast no ballot, until such time as part or all of them choose some method of collective bargaining" (Swope 1934b). He added that he had told Wagner that this was his conclusion.
March 1 was also the day that Wagner introduced his labor disputes bill into the Senate. Swope did not like it any better than the ultraconservatives did, revealing that the differences between the liberal-labor alliance and the corporate moderates were beginning to emerge more clearly. A clear-cut class division was developing. Swope immediately wrote to one of his vice presidents at the company's plant in Schenectady on March 2 asking him what he thought:
"I suppose you saw in the paper this morning about the bill of Senator Wagner for the strengthening of the National Labor Board and also combat the company union. Senator Wagner's statement to me was that it would not affect our so-called company unions, but the way I read this bill, I am not so sure of this. What do you think?" (Swope 1934a).
The vice president quickly wrote back on March 5 saying he read the bill in the same way: "The provisions are far reaching and my feeling is like yours that they do touch the General Electric Company's various Employees Representation Plans as they operate today" (Peck 1934). By March 12 Swope had sent a rush telegram to Teagle in Washington outlining his objections to the bill and suggesting ways to change it. He first of all wanted to make sure that employee representation plans could survive by adding language that would specify that employees could be paid for the time they spent meeting with managers and that a manager would have the right to discuss "matters relating to his business" (Swope 1934c). He also thought that the act in general was unfair because it "imposes no obligations whatever on employees." Further, he did not think the board should be permitted to make decisions "without legal evidence and to proceed in disregard of ordinary rules of evidence." In short, the corporate moderate Swope had as many reservations about the direction Wagner was heading as the ultraconservative du Pont.
While the du Ponts and NAM made plans to block any labor legislation that would strengthen section 7(a), Teagle, Kirstein, Swope, and Hicks lobbied Wagner for modifications in the draft legislation that would make it more palatable to them in case it did pass. They did so through a memorandum of suggested changes, many of them similar to Swope's comments via telegram. Teagle and Kirstein handed the memorandum to Wagner when the three of them had dinner in Washington on March 14 (Teagle 1934b). As Teagle summarized the results of the meeting in a letter to Swope the next day, "Generally speaking, the Senator expressed himself as feeling that most of the points we had made were sound and that the draft of the Bill should be modified accordingly" (Teagle 1934a).
One of the suggestions eventually accepted by Wagner, small though it may be, concerned a change in the title for his "Labor Disputes Bill. " Teagle felt that the word "disputes" contained what today would be called a self-fulfilling prophecy. As the memorandum dryly noted, "some of the provisions of the law, unintentionally of course, seem to have been framed expressly to invite such industrial disagreement." Teagle's memorandum then went on to suggest that henceforth the term "labor relations" be used: "I am sure that you, as the sponsor of this measure, had quite the opposite field in mind and I, therefore, take the liberty of suggesting that the title be made "Labor Relations Act" (Teagle 1934b). (When a new board was constituted by a presidential executive order three months later, it was called the National Labor Relations Board, and the law that Roosevelt eventually signed in July 1935, was called the National Labor Relations Act.)
The memorandum made several other suggestions that were standard items in the employers' argument by then. For example, coercion by labor organizers as well as coercion by employers should be banned and efforts should be made to solve problems through cooperative means. But the sticking point in the memorandum at the dinner discussion concerned a section of the draft legislation that banned employee representation plans that had been founded and financed by companies. Teagle and Kirstein argued that the issue was domination, not origins, but Wagner held firm, at least for the time being:
"The principal point, on which the Senator seemed to be still in doubt, was as to our suggestion that on Page 5 "Section 5 (3)" [which in effect outlawed all employee representation plans] should be struck out. We had quite a debate about this, and I am sorry to say that I am doubtful whether the arguments we advanced were in themselves sufficient to convince the Senator as to the desirability of the elimination of this paragraph" (Teagle 1934a).
As the tensions increased over labor issues, Fosdick wrote an extremely revealing letter to Rockefeller on March 22 1934, warning him that he and IRC had to keep a very low profile because there were likely to be strong clashes with labor. Fosdick began by stressing the importance of the IRC, but then said he had "to introduce a caveat which is not in any sense inconsistent with the enthusiasm which I have just expressed"(Fosdick 1934). He then noted, "One of my responsibilities in the 21years I have been associated with you has been to point out possible dangers ahead in connection with your multifarious interests." By this he meant that Rockefeller and IRC might be drawn into the class conflict between corporations and unions, which he deftly reframed and softened as "a head-on collision between the labor union and the company union." Due to these conflicts, he was "not entirely convinced that the detached attitude which we have thus far held can be maintained."
Fosdick then brought Hicks's opinion into the picture by saying that "Mr. Hicks with entire frankness has pointed out to me that the very nature of the work of Industrial Relations Counselors implies a sympathy toward the company union which as an organization we do not have toward the labor union." He then delivered the clear warning: "If this is true -- and I fear it may be -- it is possible that the charge might be made that you were financing an organization to fight union labor, and you might thereby be maneuvered into an uncomfortable public position." He then qualified this warning by reminding Rockefeller that "I am not saying you would be dragged in" (emphasis in the original). Indeed, he thought it likely that "Industrial Relations Counselors might -- and indeed probably can -- steer clear of this fighting issue in the future as we have in the past." Fosdick then closed by saying "I feel I have a duty, however, just to mention the possibility of unpleasantness -- and with this mention I again subscribe to my belief in the value of the organization" (Fosdick 1934).Although Hicks and Fosdick in effect suggested that the IRC lie low on union issues, Hicks and Teagle continued their individual efforts to influence the legislation. On March 26, four days after Fosdick's letter to Rockefeller, Hicks wrote another long letter to Wagner on the issue of employee representation plans, agreeing that employers initiated "practically all" of them, but denying that the employers "have in any sense dominated employees." He pointed to the higher wages paid by Standard Oil of New Jersey as evidence for this point, along with the company's willingness to accept outside arbitration when workers and management disagreed. Then he reminded Wagner that Teagle, Swope, and Kirstein felt strongly about this matter:
"Mr. Teagle tells me that he and Mr. Swope and Mr. Kirstein are agreed in feeling that these provisions would be disastrous to the plans now in operation in the companies which they represent. I know that you believe in the sincerity of these men and I hope that you will see to it that these particular provisions, which they and many others deplore, are stricken from the bill" (Hicks 1934b).
Based on this lobbying, the provisions banning all employee representation plans were removed from the draft legislation in late March. Let's count this as a small victory for the Rockefeller industrial relations network. Thus, this series of events suggests that Teagle and Swope still had some leverage with Wagner, especially when it is added that amendments to the Railway Labor Act in 1934 banned company unions. But Teagle and Swope obviously did not have the clout to bring about all the changes they wanted. In any case their partial success proved to be unnecessary. At the moment when Wagner was making the requested changes, Roosevelt intervened in a conflict between the National Labor Board and the automobile industry over unionization that put an end to their concerns for the time being. As part of his decision to move jurisdiction over automobile companies to a separate labor board, he rejected the principle of majority rule. It seemed to be a clear concession to the du Ponts and General Motors, and it was a great disappointment to liberals and union leaders. Roosevelt's decision meant that company unions could flourish alongside trade unions, thereby undercutting serious negotiations by employers with independent unionists (Gross 1974, pp. 61-62). If there had been any hope of restraining anti-union employers, this decision by Roosevelt seemed to kill it, at least for the time being.
However, there may have been more than meets the eye to Roosevelt's decision than pressure from the du Ponts and the automobile industry. First, he needed the automobile industry to lead the way to recovery; the industry had accounted for one-fourth of the increase in national payroll between January and February, 1934 and was in general, along with large steel and rubber corporations, leading the economic rebound (e.g., Levine 1988, pp. 104-106). Second, he was well aware that the AFL union could not win a strike against the powerful and well-organized automobile executives, who were widely known for their willingness to use strong-arm methods. It may even be that some union leaders conveyed their desire to avoid a showdown to the president (Fine 1969, pp. 220-222).
Whatever Roosevelt's reasons for his decision, the moderate conservatives Teagle and Kirstein were privately pleased with it. They believed the National Labor Board now would fall by the wayside. They were in effect abandoning a government agency they had played a major role in creating. Yes, history, like life, does have its little ironies, and in this case the irony allows me to distinguish my views from those theorists who make "the Rockefellers" sound all-knowing and all-powerful. They do make mistakes, they do screw up, and they do sometimes lose. But it didn't look that way at the time to at least some members of the Rockefeller industrial relations network. As Teagle wrote to Kirstein in a private note in April 1934:
"Just between you and me and the lamp-post it strikes me that the President's decision in the automobile controversy has put the Labor Board out of the running. I am sure that neither you nor I will shed any tears if such is the case" (McQuaid 1982, p. 46).
Any hope for Wagner's revised legislation also collapsed at this point. The new draft was handed to another Democratic senator, David I. Walsh of Massachusetts, whose Committee on Education and Labor proceeded to suggest legislation that was even more sympathetic to employer concerns. However, the committee's revised legislation act did not include any mention of excluding agricultural and domestic labor, a glaring omission in the eyes of the wary Southern Democrats. That problem was remedied by five of the Democrats on the committee (Farhang and Katznelson 2005, p. 13). Once the exclusion of agricultural and domestic labor was in the bill, there was no further mention of the issue by either supporters or opponents of the bill. Industrial workers were the focus of the floor debate and the amendments that were offered. Despite the many amendments that were added, the NAM, Chamber of Commerce, Special Conference Committee, and industrial trade associations worked to make sure that even this tepid legislation did not pass. As part of their effort, they brought in large numbers of employees from several different companies with employee representation plans to testify to their satisfaction with the plans, which Cowdrick thought to be the most influential statements heard by the Senate (Senate 1939, p. 16807). Corporate executives who supported employee representation plans were especially vigorous in their criticism. Arthur H. Young, identified as the former director of the IRC as well as the vice president for industrial relations at U.S. Steel, criticized the bill as "in its entirety both vicious and undesirable because of its fundamental philosophy as to the certain and complete clash of interest as between employer and employee" (Stark 1934, p. 1).
The refusal by the corporate moderates to accept majority rule in March 1934, when they still had control of the overall legislative and administrative situation, encapsulates the complex change in class forces that had occurred over the previous four to six years. At the surface level, the corporate moderates had an obvious concern to protect the employee representation plans they had established in their various companies. At a deeper level, they were committed to proportional representation because it allowed them to deal with craft workers separately from industrial workers, thus helping to maintain the segmentation of the working class. Proportional representation had been the basis for the agreement between big business and organized labor during World War I, because it allowed the craft-oriented AFL to look out for its workers while leaving industrial workers to the tender mercies of their anti-union employers. In suggesting a similar board in 1933, the business leaders were assuming that AFL leaders once again would accept the same sort of cross-class bargain (McQuaid 1979; McQuaid 1982).
However, the leaders of at least some AFL unions were no longer willing to accept this bargain because of changes in their own circumstances. First, Lewis and Hillman wanted to organize industrial unions, so they refused to go along with proportional representation. In particular, Lewis was determined to organize the steel workers because the steel companies would not allow him to organize the coal miners in the many mines owned by steel companies. These "captive mines" left the United Mine Workers completely vulnerable to the employers, who almost destroyed the union in the 1920s, so Lewis was determined that such a near-catastrophe would not happen again (Dubofsky and Van Tine 1977). Hillman also had strategic reasons to support industrial unions. He needed to organize textile workers to protect his clothing workers union (Fraser 1991).
If it were only a matter of Lewis and Hillman in coal and garments, perhaps the corporate moderates might have conceded the point on majority rule, although the du Ponts and other ultraconservatives would have objected mightily. However, there was an even more serious issue: the growing unity and militancy among both craft and industrial workers, especially in steel, rubber, autos, and other heavy industries. The moderate conservatives did not want to see most workers organized into industrial unions, especially unions supported by national laws. The idea of collective bargaining was acceptable if it was voluntary and involved craft workers, but not if it was mandatory and contained the potential for uniting all workers. There is also a little bit of evidence that some business leaders, usually in highly competitive sectors with many small companies, could see the benefits of unions in helping to limit competition among businesses by means of making wage reductions. However, even the historian who presses this point the furthest concludes that in the final analysis almost all business owners rejected unions as a threat to the right to manage their enterprises exactly as they pleased (Gordon 1994, p. 238). At the most general level, then, as one historical institutionalist concluded in a rare nod to the importance of class conflict, a large part of the problem boiled down to the fact that virtually no corporate leaders wanted the government to have the power to help create a fully organized working class (Skocpol 1980, p. 181).
The rejection of majority rule by the corporate moderates meant that labor policy would be decided by the president and Congress, not corporate executives. They would do so in the context of labor unrest on the one side and a corporate willingness to use physical attacks to resist unionization on the other, as exposed in great detail by Senate hearings in late 1936 and early 1937 (Auerbach 1966). Roosevelt, as a member of the labor board for naval shipyards in World War I and a participant in discussions at the National Civic Federation in the 1920s, was most closely identified with those corporate leaders who favored a conciliatory approach toward workers and an acceptance of limited trade unionism. But as his decision to give the automobile industry its own labor board clearly showed, he was willing to make temporizing decisions that reflected the complex balance of issues and political alliances at any given moment. Francis Biddle (1962, p. 220), a corporate lawyer who served as chair of the temporary National Labor Relations Board in 1934-1935, reflecting many years later on Roosevelt's approach to labor conflict, admiringly concluded that he had "a strong sense of the incidence of power..."
Although they surely understood the shifting power equation, Roosevelt, most corporate leaders, and top AFL leaders probably did not fully grasp the growing militancy of industrial workers or the increasing acceptance of trade unionism by Congressional liberals, which of course fed on each other. The corporate policy-planning network had helped to legitimate an idea (collective bargaining) and create a mechanism (the National Labor Board) that were fast taking on lives of their own, although it is more accurate to say that these ideas had gained new supporters in the changing circumstances of the New Deal. The moderate conservatives had lost control of the concept of collective bargaining to liberals and industrial unionists. Senator Wagner, Lewis, Hillman, and the lawyers for the National Labor Board, most of them corporate lawyers or law school professors, would come to center stage to fight for an improved version of the labor board that corporate moderates in the Rockefeller industrial relations network had created and then abandoned.
|Longshoremen march in San Francisco, 1934|
Roosevelt's decision to establish an automobile labor board, in conjunction with the watering down and forthcoming defeat of the 1934 version of Wagner's bill, was deeply disheartening to militant unionists and gave activists inspired by Marxism their opening. The result was a series of violent strikes that broke out in April and May in San Francisco (where Communists joined with syndicalists and independent radicals to lead the way), Toledo (where small Marxist groups sparked the confrontation), and Minneapolis (where Marxist-Leninists who followed Leon Trotsky had the lead role). At the same time, the Senate, under enormous lobbying pressure from the corporate community, rejected Wagner's attempt to codify the practices and case law developed by the National Labor Board (see Brecher 1997, for a detailed discussion of these strikes that gives a full accounting of leftist leadership and police violence). The fact that the corporate community and the Senate rejected the first version of Wagner's bill at a time of high militancy does not fit with the frequent claim that the corporate leaders were quaking in their boots by this point.
For all the tensions and calls for repressive forces by the ultraconservatives, Roosevelt was able to deal with all three of these serious upheavals when they reached the boiling point that summer by sending special mediators to bring the two sides to the bargaining table, where temporary arrangements acceptable to them were hammered out after several deaths, scores of injuries, and hundreds of arrests (Bernstein 1969, Chapter 6). Despite all this violence and the militancy of the striking workers, Roosevelt might have put aside labor legislation entirely except for a problem that could not be easily handled, the threat of an industry-wide steel strike in mid-June, which might slow economic recovery as well as lead to more violence. The strike was first proposed by a small group of leftist labor leaders who had taken over several moribund locals of the Amalgamated Association of Iron, Steel, and Tin Workers. It was then agreed to by the union as a whole in mid-April as a last resort if the steel companies would not bargain with it. As the steel companies prepared for physical conflict by stocking munitions, putting up barbed wire fences, and hiring extra employees, the top AFL leadership was able to head off the strike, which the union almost surely would have lost, by convincing Roosevelt to set up an impartial committee to mediate the dispute (Bernstein 1950, pp. 76-77). Once again, leftist activists, including Communists, had forced an issue that top labor leaders and Roosevelt did not want to face.
The near collision in steel was enough to convince Roosevelt that he needed a new labor board to handle unexpected disputes while at the same time buying him time to see if the National Recovery Administration would be able to bring back economic prosperity. The result was a Public Resolution, written by Roosevelt on the basis of suggestions from lawyers in the Department of Labor, which Congress immediately adopted in late June. It gave the president the power to appoint a temporary National Labor Relations Board that would have what corporate leaders felt confident were very limited powers. Young of U.S. Steel, who had made the spirited attack on Wagner's proposed legislation two months before, wrote a private memo expressing his pleasure with the outcome, suggesting that victory could be declared:
"I view the passage of the joint resolution with equanimity. It means that temporary measures that cannot last more than a year will be substituted for the permanent legislation proposed....I do not believe there will ever be given as good a chance for the passage of the Wagner Act as exists now, and the trade is a mighty good compromise. I have read carefully the joint resolution, and my personal opinion is that it is not going to bother us very much" (Bernstein 1950, p. 81, ellipses in the original).
However, Young may have misunderstood Roosevelt's perspective on labor issues. As Roosevelt wrote to one of his most trusted advisors, Harvard Law School Professor Felix Frankfurter, in August 1934, his long-term goal was to salvage the National Industrial Recovery Act's provisions for "(1) minimum wage, (2) maximum hours, (3) collective bargaining and (4) child labor," which would require legislation that could pass muster with a Supreme Court dominated by eight former corporate lawyers (four ultraconservatives, two moderate conservatives who provided the swing votes, and two liberals); Frankfurter then passed this information along to Justice Louis Brandeis, one of the two liberals, in a handwritten note (Davis 1986, p. 517).
|Lloyd K. Garrison|
Moreover, the new board proved to be more formidable than Young expected, in part because its new chair, Garrison, the corporate lawyer quoted earlier, who was at the time the dean of the University of Wisconsin Law School, took the board in a more legalistic direction. In the process he prepared it to become a mini-Supreme Court for labor law. With the aid of two equally competent board members and a staff of excellent young lawyers, some of whom were former law school professors, others fresh out of law school, he began to create the "common law" on labor issues that would provide the basis for a stronger version of the National Labor Relations Act in early 1935. When Garrison resigned after several months to return to the University of Wisconsin, he was replaced by Biddle, even more experienced and liberal, whose firm boasted the Pennsylvania Railroad as its most prominent client among several blue-chip corporations (Bernstein 1969, pp. 318-319; Biddle 1962).
It was at this point that Industrial Relations Counselors began printing a brief Memorandum to Clients, which updated a wide range of industrial relations executives, primarily in the Special Conference Committee and the many companies related to Rockefeller interests, but also a few others as well, such as Sun Oil and Union Carbide, on unfolding events in Washington relating to labor relations, unemployment insurance, and old-age pensions. This memorandum, which appeared on an as-necessary basis, provides us with a new window into the perspectives of corporate moderates during these years. So here's another source of new evidence that might make it possible for scholars to rethink their past conclusions on business involvement in labor legislation (Kaufman 2003, was the first to make use of these memorandums and kindly provided copies of them). Generally speaking, the memorandums are very circumspect in discussing labor issues, but they prove that IRC employees kept a close eye on the personnel, inner workings, and decisions of the new labor board. (As shown in the document on "How Corporate Moderates Created the Social Security Act," the memorandums are much more revealing of insider information on the Social Security Act, which the IRC openly supported and on which it could provide considerable detail because its employees were involved in writing it.)
The first memorandum, dated July 10, provided a two-page overview of the powers of the new labor board and the backgrounds of its three appointees. It noted that the president's executive order "gave it more authority than was contemplated" in the resolution passed by Congress, then went on to characterize the three board members for its clients. An accurate account of Garrison's impressive career is provided, followed by the reassuring information that "Apparently he has a pleasant personality and has favorably impressed the business men with whom he has been in contact." It is further stated "He is said to have 'advanced ideas on economics,' but not to be radical on labor questions." Similar positive comments are provided on the other two board members, who were judged to be open to established employee representation plans (Memorandum to Clients, No. 1, pp. 3-4).
Meanwhile, the leaders of most craft unions continued to reject the idea of organizing workers into industrial unions despite the ongoing failure for craft forms of organizing and the presence of an activist ferment that might be capitalized upon. In particular, the head of the machinists union was adamantly opposed to industrial unions even though virtually no machinists in the automobile industry belonged to a union. If machinists in heavy industry were somehow organized into a temporary industrial union, he insisted, they would have to be reassigned to his craft union at some point (Bernstein 1969, pp. 353-354). The same balkanization obtained in the rubber industry. Sixteen internationals claimed jurisdiction over one or another subset of rubber workers, thereby disregarding the fact that most of the men in the plants thought of themselves simply as rubber workers and wanted to belong to industrial unions. Lewis and Hillman remained in near isolation at the top of the AFL when it came to sympathy for this approach. But labor organizing went nowhere from 1934, following a devastating defeat for textile workers in the autumn of that year, until after the passage of the National Labor Relations Act in the summer of 1935, which suggests that the corporate community and the New Dealers were not as afraid of labor militancy as some theorists have claimed.
|Senator Robert F. Wagner|
Disruption or no disruption, Wagner was determined to continue his work towards legislation that would give workers the right to unions and collective bargaining. His revised version of the National Labor Relations Act, introduced in February of 1935, benefitted greatly from the experience of the temporary board appointed by Roosevelt in the summer of 1934. The new version also may have had more legitimacy with political leaders through Biddle's numerous speeches to business groups and middle-class voluntary associations across the country about the proposed legislation's sensible approach based in long experience and many legal precedents (Biddle 1962). With Biddle and other board members overseeing their efforts, the key provisions in the act came from the board's legal staff, led by former Harvard Law School professor Calvert Magruder (Gross 1974). Wagner's only staff member at the time, Leon Keyserling, a 24-year-old Columbia law school graduate, then put these ideas into traditional legislative language (Casebeer 1987). Keyserling is often given too much credit for the substance of the act, which he gladly accepted, but that's a separate story. However, from my point of view, the credit he is given is further evidence about how little some authors really know about the origins of the act; it shows they have not bothered to read the definitive work on the matter by James A. Gross (1974) decades ago.
The new version of Wagner's National Labor Relations Act, which is rightly called the "Wagner Act" for his solidness, tenacity, and courage, established the National Labor Relations Board as a "Supreme Court" that would focus on the enforcement of rights, not on mediation. It would have the right to enforce its decisions concerning the appropriate bargaining unit for each case, the use of unfair labor practices by employers, and the appropriate remedies for workers who had been fired for union activities. The proposed legislation also drew upon precedents set by earlier quasi-judicial government regulatory agencies, such as the Federal Trade Commission, which had been upheld by federal courts (e.g., Bernstein 1969, pp. 323-324). However, there was one aspect of the 1934 version that remained unchanged. Agricultural and domestic labor was excluded with the same language that the Committee on Education and Labor introduced in 1934. And once again, there were no questions raised about this exclusion in the floor debates (Farhang and Katznelson 2005, p. 13). And companies did have the right to appeal the board's decisions in courts of law, which proved to be one key factor in its eventual undoing.
Significantly, Teagle and Swope made very little effort to influence the legislation this time around, probably because they knew that they could not have any general impact. (Yes, the Rockefeller industrial relations network basically met defeat on this issue, but let's at least have their earlier efforts as part of the record, not just a bunch of superficial stuff about the power of liberals and labor.) In February 1935, Teagle sent Wagner a copy of a new booklet that Standard Oil of New Jersey had created to sing the praises of its employee representation plan and employee benefits. Wagner replied that the booklet was "quite helpful," adding "the need for social legislation would be much less pressing than it is" if "conditions everywhere were such as described in your booklet" (Wagner 1935b). On a more important note, Swope made a successful effort to amend a section of the bill pertaining to employee representation plans by sending Wagner a letter containing language suggested by Teagle. Creating an employee representation plan would not be prohibited, but dominating or interfering in one would be illegal. In addition, language was once again added to make it possible to pay workers for the time they spent in meetings with management as officers of an employee representation plan (Swope 1935). While this language did not stop the subsequent union onslaught, it did help Rockefeller oil companies and a few others companies, as noted later in this account.
The IRC Memorandum to Clients No. 8, dated March 1, reported on the new version of the legislation in a descriptive and neutral tone. It included a comparison of the 1934 and 1935 drafts provided by an unnamed "client company." It also contained a list of questions and answers, mostly pertaining to the status of employee representation plans, which once again was provided by a client company. The first question asked whether an employee representation plan can still "continue to function if the bill were passed," and the answer was "yes," but only as long as "it is not dominated by the management and involves no practices ruled illegal by the bill" (Memorandum to Clients, No. 8, attachment, p. 1). The illegal practices were then listed, including financial support beyond paying workers their wages while meeting with management. The memorandum's assured tone in claiming employee representation plans remained legal fits with the language that Wagner added to the bill at Teagle and Swope's request.The IRC Memorandum to Clients for March 27, No. 9, reported that "spokesmen for employee representation plans in a number of steel plants testified before the committee March 26, asserting that many thousands of employees were satisfied with employee representation plans as a method of collective bargaining." But it also said on the basis of "advice received from Washington this morning" that the new bill was likely to pass. Again documenting IRC's concern for the preservation of employee representation plans as their only remaining hope, the memorandum added that "it is hoped that certain amendments which have already been considered by the Senate Committee on Education and Labor will be adopted; these amendments are designed principally to ensure recognition of employee representation" (Memorandum to Clients, No. 9, p. 8).
Although the hoped-for amendments were adopted, Cowdrick and the Special Conference Committee nonetheless coordinated an all-out battle against the act, a fact revealed in documents subpoenaed by a Senate investigating committee (Auerbach 1966; Senate 1939, pp. 16806-16809). Contrary to those researchers who claim that some corporate leaders were willing to accept the new labor legislation (e.g., Ferguson 1995), which is then bought hook, line, and sinker by several leftist scholars with "economic determinist" tendencies, no business sector or visible corporate leaders supported it. Most of the favorable testimony came from Garrison, Biddle, and others who had worked for earlier incarnations of the labor board. The act also had the support of a number of labor relations experts who had in effect parted company with the IRC-oriented industrial relations network on this issue, including several who had worked with Commons, as discovered in work by sociologist Jeff Manza (1995, Chapter 3).
By late April, Cowdrick reported to members of the Special Conference Committee that Roosevelt might have struck a deal with Hillman and Lewis to support the act in exchange for labor support for the renewal of the National Industrial Recovery Act:
"There is much speculation over the question of whether or not Roosevelt has made a deal with Wagner and the American Federation of Labor, as a result of which the Administration will support the Wagner bill and receive labor's aid for some of its own projects in exchange. People who suspect a deal of this kind had been made point out that Wagner switched his vote on the prevailing wage amendment on the public works bill, and that a few days later Green and Lewis agreed to the appointment of Donald R. Richberg as head of NRA. For this concession the labor leaders ostensibly received no other consideration except the appointment of an additional representative on the NRA Board. Some people suspect, however, that there was an understanding about the Wagner bill" (Senate 1939, p. 17017).
Cowdrick added that he was not certain the deal had taken place: "One point against this story is the fact that the Wagner bill was not included in the list of 'must' legislation which Roosevelt gave to Senator Robinson just before the President left for his Florida vacation this week" (Senate 1939, p. 17017). But an economist close to Hillman, George Soule (1935), was confident that a bargain was in the making. He reported to liberals and leftists in The Nation on April 3 that informal talks between Hillman and Roosevelt were going on about industrial unions to work with the government. For all the speculation about Roosevelt's backroom dealings, there is no certain evidence as to what he had promised and not promised to key labor leaders. The most likely inference is that he was playing for time to see what the Supreme Court would rule on the constitutionality of the NRA. On May 14, he refused Wagner's request to make the act "must" legislation, but the Senate nonetheless passed the bill two days later by a strong 63-12 vote, just as Cowdrick feared. The Senate's approval, which included virtually all of the Southern Democrats, made the final outcome a foregone conclusion because the Democrats also had an overwhelming majority in the House.
On May 20, the lawyers at the National Labor Relations Board wrote to Wagner that they thought it was imperative that the bill go to the White House "this week" because of "the imminence of a decision in the Schechter case, which will in all probability be adverse to the government" (Levy 1935). In other words, the lawyers at the National Labor Relations Board expected the NRA to be declared unconstitutional, which would eliminate the foundation for labor relations in section 7(a). With further urging from Wagner, Roosevelt finally made a public statement in favor of the act on May 24, three days before the Supreme Court issued its unanimous negative verdict. Many people -- including most business leaders, labor leaders, liberals, and consumer advocates -- rejoiced for their own separate reasons when the NRA was declared unconstitutional, just 23 months after it was launched. However, it did acclimate business and organized labor to the idea of minimum wages, maximum hours, and the abolition of child labor, all of which were included in the Fair Labor Standards Act of 1938. Moreover, the industries that most needed government regulation to deal with their problems were able to restore it very quickly. For example, the Bituminous Coal Conservation Act of 1935 and the Bituminous Coal Act of 1937 authorized a National Bituminous Coal Commission to set minimum coal prices and provide a safeguard for labor standards. The Connally Hot Oil Act of 1935 saved the oil industry from itself by prohibiting the shipment of oil in excess of quotas set by individual states (states in which the industry dominated quota setting).
The certain passage of the National Labor Relations Act once Roosevelt expressed his support for it was the final straw for most corporate leaders, who had become increasingly uncomfortable with the direction the New Deal was taking. They had expressed their dissatisfaction in early May by replacing a corporate moderate as the president of the Chamber of Commerce with an ultraconservative, who made fiery speeches about the perfidy of the New Dealers. From that point forward most corporate leaders were in all-out revolt against New Deal policies, with the important exception of the Social Security Act. Young of IRC and U.S. Steel was so incensed by the act that he got carried away with himself before the august audience at a banquet on May 24, at which he received a gold medal from the American Management Association for "his outstanding and creative work in the field of industrial relations." Young told those assembled that he would "prefer to go to jail or receive a conviction as a felon and yet be true to the principles of peaceful cooperation in industry," than to accept any provision of the National Labor Relations Act. He claimed the act was being "imposed on us by demagogues," a claim that was strongly contested at the same banquet by a centrist labor economist from Harvard (NYT 1935).
Shortly before the House was due to vote, the opponents of the act were momentarily heartened by the unanimous Supreme Court decision on May 27th declaring the National Industrial Recovery Act unconstitutional. They took hope from the fact that the justices said that the act was both an impermissible delegation of congressional power to the president and an overreach on the power that Congress had to regulate commerce, unless there was a direct impact on interstate commerce. Concerned by the substance of the court's ruling in relation to interstate commerce, Wagner asked that the House delay its vote so he could change the preamble to the act in light of the court's argument. It now omitted any appeal to the general welfare clause of the constitution and focused on the fact that the failure of employers to recognize and bargain with unions was a major cause of strikes, which did stop production of goods intended for interstate commerce, and therefore had a very direct effect on the flow of goods beyond single states (Bernstein 1950, pp. 120-122; Cortner 1964, pp. 82-83). The revised bill passed the House by a voice vote and then was supported once again in the Senate.
Two days before Roosevelt signed the new legislation on July 5, IRC's Memorandum No. 13 provided a summary of the bill, along with a criticism of it for efforts to upend employee representation plans:
"Many provisions of this act are clearly intended to prevent not only coercion but also any active interest on the part of the employer in the matter of collective bargaining so far as it concerns employees. It may fairly be stated that the act encourages the organization of outside unions and discourages employee representation plans" (Memorandum to Clients, No. 13, p. 1).
The memorandum further claimed that union organizers were using the act to argue that employee representation plans had been "outlawed," but the memorandum then reminded readers that "The bill states otherwise, and employers and employees should bear in mind that employee representation plans are specifically named in the act as a recognized form of 'labor organization for dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work,' and employers and employees should be prepared to maintain before the Labor Board and in the courts their right to continue friendly relations" (Memorandum to Clients, No. 13, pp. 1-2).
The memorandum then urged employers to "study carefully the list of five specified unfair labor practices and under advice of counsel instruct all connected with management to refrain from any statements or actions which could be construed as coming within that list" (Memorandum to Clients, No. 13, p. 2). It next presented six steps that needed to be taken to assure that an employee representation plan could not be banned because it was deemed to be employer-controlled. They included employee-controlled elections, separate meetings of employee representatives in addition to their meetings with management, statements by employee representatives to fellow employees assuring them that the organizations were independent of management, and the withdrawal of any company subsidies to the organizations.
Clearly, the IRC was not prepared to give up on its employee representation plans. In fact, the memorandum argued, "genuine employee representation plans should be strengthened rather than weakened by this legislation" (Memorandum to Clients, No. 13, p. 2). But in spite of all the hope and effort on the part of Industrial Relations Counselors and the members of the Special Conference Committee, the union movement overwhelmed most employee representation plans in 1937, quickly winning the support of most of the two million members enrolled in these plans. As late as 1962, however, when the Industrial Relations Section at Princeton last supported a study, there were still 1,400 "single-company" unions, as employee representation plans were called at that point, most of them descendants of earlier employee representation plans, representing 400,000 workers. (By comparison, there were about 17 million members in independent unions at that time.) Interestingly, single-company unions were "the dominant form of labor organization in the chemical industry and close to being so in the telephone and petroleum industries," which means that the employee representation plans at the DuPont Corporation, AT&T, and various Standard Oil companies were able to hold on by offering higher salaries and better employee benefits than in most industries (Shostak 1962/1973, p. 1). (For an excellent and detailed account of company unions after the New Deal through the lens of a major manufacturing company heavily involved in the leadership of NAM, see historian Sanford Jacoby's Modern Manors (1997, Chapter 5).)
Meeting shortly after Roosevelt signed the act, members of the Special Conference Committee reaffirmed their decision taken two months earlier to challenge its constitutionality, asserting that "It is generally agreed among industrialists and their legal advisers that the Wagner Act is unconstitutional as applied to manufacturing industry" (Senate 1939, p. 16809). They also stressed that the behavior of corporations should look good in the eyes of the general public. Executives should make themselves more accessible to newspaper reporters. "Industrial relations" and "public relations" were declared to be interdependent (Senate 1939, p. 16850).
The major question that must be answered by any theory attempting to understand the American power structure is how a law so vehemently opposed by organized business groups could pass so easily despite their very large lobbying effort. For historical institutionalists, the passage of the Wagner Act shows that corporate leaders had lost whatever power they once had in Washington (e.g., Finegold and Skocpol 1995; Hacker and Pierson 2010). For many Marxists, the increased unity and militancy of the working class forced a worried corporate community and a timid New Deal to accede to labor demands (e.g., Goldfield 1989). For other Marxists, it was a clever cooptation move made by corporate moderates and AFL "labor bosses" to limit the rise of Communist leadership in the labor movement (Aronowitz 1973; Aronowitz 2003; Davis 1986).
An emphasis on a general loss of power by the corporate community is contradicted by the way in which the same Senate and House that passed the National Labor Relations Act treated other liberal legislation, namely, public utility regulation and changes in the Federal Reserve System. First, business was successful in removing the most stringent forms of utilities regulation (e.g., Parrish 1970). One historian concludes that the House was rebuking Roosevelt in this vote because a majority of its members were "annoyed at what they considered Roosevelt's undue hostility to free enterprise" (Patterson 1967, p. 56). Second, the proposed reforms in the Federal Reserve Act were changed so that New York bankers retained some of their traditional power through the Open Market Committee and the act ended up acceptable to the American Banking Association (Schlesinger 1960, pp. 300-301). It therefore seems that the National Labor Relations Act was a unique piece of legislation even for a liberal Congress, which means it is not possible to explain its passage with generalities such as "loss of business power."
Nor does it seem likely that the labor militancy of the spring and summer of 1933 and 1934 can provide an explanation because the 1934 version of the National Labor Relations Act was defeated in the midst of that militancy. Moreover, there was relatively little militancy in the following year, when the new -- and stronger -- version did pass. Finally, the labor movement was clearly divided over the issue of organizing industrial unions, making it unlikely that the unity and zeal necessary to defeat major corporations could be mustered without the backing of the federal government.
It's therefore much more likely that liberals and labor leaders were able to pass this legislation for very different reasons than what historical institutionalists or Marxists claim. First and foremost, the liberal-labor alliance was able to convince most moderate and conservative Democrats in Congress to vote for the act willingly by excluding agricultural and domestic labor from its purview. This purposeful exclusion meant that the great bulk of the southern workforce would not be covered, making it easier for Southern Democrats to support the legislation (cf., Farhang and Katznelson 2005). The exclusion of farm labor also made it easier for the Progressive Republicans of the Midwest to vote for the act. Translated into class terms, the exclusion of agricultural and domestic workers meant that the Southern segment of the ownership class did not have any direct stake in opposing the act, so Southern Democrats in Congress were free to support their Northern counterparts instead of voting with Northern Republicans, as they usually did on labor legislation. Contrary to historical institutionalists, then, the corporate leaders did not lose power in general despite the calamity of the depression. Instead, they lost on this issue because their key allies, the plantation owners, did not stick with them.
Wagner understood the necessity of this exclusion. As far back as the debate over the National Industrial Recovery Act, he had insisted that the act did not cover agricultural labor, and he had seen the 1934 version of his anti-lynching bill die without even making it out of committee. That is, he fully realized that Southern Democrats still controlled the Democratic Party and Congress despite the large majority of Democrats from the North and West. He knew that they would not be reluctant to use the filibuster in the Senate if all else failed, as they did against later versions of the anti-lynching bill. When the leader of the Socialist Party, Norman Thomas, wrote to Wagner to complain about the exclusion of farm labor, Wagner replied as follows on April 2, 1935, a month before the bill was voted on in the Senate:
"I am very regretful of this, because I should like to see agricultural workers given the protection of my bill, and would welcome any activity that might include them. They have been excluded only because I thought it would be better to pass the bill for the benefit of industrial workers than not to pass it at all, and that inclusion of agricultural workers would lessen the likelihood of passage so much as not to be desirable" (Wagner 1935a).
The importance of satisfying Southern Democrats is also seen in an interview many years later with Keyserling, the Wagner employee who drafted the National Labor Relations Act based on the concepts and arguments given to him by labor board lawyers. As he told the interviewer, Secretary of Agriculture Henry Wallace did not want to include farm labor because "He was entirely beholden to the chairmen of the agricultural committees in the Senate and House, who were all big Southern landowners like Senator Smith and Congressman Bankhead" (Casebeer 1987, p. 334). Moreover, Keyserling knew whereof he spoke from his lived experienced. His father was one of the major cotton growers in South Carolina, the state in which he grew up.
The National Labor Relations Act also passed handily because it was acceptable to the centrists and liberals who controlled the executive branch on this issue, meaning Roosevelt, Perkins, and the corporate lawyers and law professors who worked for the National Labor Relations Board. These were people who believed through long experience that unions were a safe and sensible method for dealing with workers. And from the point of view of moderate and liberal corporate lawyers, the act had a very respectable regulatory pedigree that had worked well for the corporate community in the past, including the Interstate Commerce Commission, the Federal Trade Commission, the Securities and Exchange Commission, and the Railroad Labor Board. From an historical perspective, the New Deal's collective bargaining legislation "gathered up the historical threads and wove them into law" (Bernstein 1950, p. 18).
Third, the legislation passed because of the newly developed electoral cohesion between the native-born craft workers and predominantly immigrant and African American industrial workers in the northern working class, who began to vote together for Democrats in the late 1920s, helping to overcome the divisions that had existed since at least the 1880s (e.g., Mink 1986; Voss 1993). Many of them also worked together in an effort to create industrial unions in heavy industry and almost all of them supported union leaders and liberal elected officials in their efforts on behalf of the National Labor Relations Act. The AFL leaders had some reservations about the act because they knew it would put them at the mercy of labor board decisions on voting procedures and on the determination of the size of bargaining units, but they backed the act even though none of their suggested amendments to the proposed legislation was incorporated (Tomlins 1985, pp. 139-140).
Finally, the Wagner Act passed because Roosevelt had entered into a political alliance on this issue with leaders of the industrial segment of the working class, which had gained his attention through the disruptions its activists and leaders had been able to generate, a point that gives a role to the Marxist claims. That is, the key labor leaders on this issue were Hillman and Lewis, precisely the people that would create the new movement for industrial unions after the passage of the act. Roosevelt was faced with a choice between trade unions regulated by the government and the continuing use of force to repress militant labor activists. As far and away the most important leader of the new liberal-labor alliance, as well as the most cautious and enigmatic, he chose unions over periodic violence and property destruction of the kind that had first broken out in 1877, but only after the liberal-labor alliance proved that it could produce a voting majority in Congress that included the Southern Democrats.
In summary, then, the National Labor Relations Act passed for a confluence of reasons, starting with the fact that the Great Depression led to both social upheaval and a united working class, which in turn led corporate moderates to suggest a new government institution that soon took on a life of its own -- in the sense that liberals, a handful of corporate lawyers serving in government, and labor leaders refashioned it to their own liking. The union leaders who spoke for the working class found allies in the liberal Democrats they had helped to elect to Congress and in the pragmatic patrician liberal they helped elect to the presidency. It was possible for the liberals and Roosevelt to work with labor on this issue because the plantation owners and large-scale farmers outside the South had been satisfied by the removal of their workforce from the purview of the legislation. Although the election of moderate-to-liberal Northern Democrats to Congress and the militancy of a united working class were necessary conditions, Southern Democrats had the final say on this critical piece of legislation.
As shown in the next section, this analysis is supported by the decline in the importance of the National Labor Relations Act after 1938. The Southerners turned against the act in 1937 when the new CIO unexpectedly tried to organize integrated industrial unions in the South, raising the possibility that they would make use of a tactic, the sit-down strike, that was proving to be very effect in the North. This sudden and very adamant change of heart on the part of Southern Democrats meant that the entire ownership class became united against the National Labor Relations Act. At the same time, the American Federation of Labor and the Congress of Industrial Organizations entered into an intraclass war, which meant that the working class was divided at a time when the ownership class was united. When the Republicans gained enough seats in the House and Senate in 1938 to forge an effective conservative voting coalition with the Southern Democrats, which could stop any legislation that employers North and South did not want, the handwriting was on the wall for the development of a strong union movement in the United States. In fact, it was only World War II that saved the union movement and hampered the corporate community for the three decades after the war ended.
Although the corporate community suffered a major defeat when the National Labor Relations Act passed, its leaders and trade associations nonetheless continued to resist unionization through a multi-pronged attack. With Industrial Relations Counselors, Inc. frequently reminding its clients that employee representation plans were legal if the employer did not control them, industrial relations executives restructured their plans with the hope they would find favor with their employees. Top corporate chieftains made preparations to challenge the constitutionality of the act in the Supreme Court, with the long list of corporate lawyers employed by the American Liberty League taking the lead by means of a lengthy brief they already had prepared (Shamir 1995, pp.85-92, for the most complete list of corporate lawyers and Wall Street law firms that filed cases against the National Labor Relations Act or supported the American Liberty League). Further, they obtained injunctions to prohibit the National Labor Relations Board from carrying out the duties assigned to it by the legislation until the Supreme Court ruled on the constitutionality of the act. Finally, many corporations prepared for violent confrontations with labor organizers by stockpiling guns and dynamite, hiring labor spies and infiltrating union groups, organizing squads of men to attack pro-union activists, and in a few cases making contact with right-wing vigilante groups. These efforts were uncovered in Senate hearings in early 1937 that embarrassed the corporate community and put many corporations on the defensive (Auerbach 1966; Huberman 1937). Among the corporations preparing to use violence against their employees were General Motors and Goodyear Tire and Rubber, both members of the Special Conference Committee (Scheinberg 1986. Chapter 7).
Labor leaders were of course elated by the passage of the National Labor Relations Act, and many workers at the plant level were inspired to make new demands, with the number of strikes increasing significantly in 1936. Although spontaneous sit-downs by workers in the rubber industry in the face of wage cuts in early 1936 led to an increase in the membership of the United Rubber Workers, top-level AFL leaders made no immediate attempt to take advantage of the new labor act with massive organizing drives. Three important issues delayed organizing efforts until early 1937, giving the corporate community ample time to put all its defenses in place.
First, there was the ongoing disagreement over the form the new unions would take, craft or industrial, which heated up within weeks after the National Labor Relations act passed. It was not resolved until November 1936, when several unions, including one or two craft unions, left the AFL to form a new Committee of Industrial Organizations (CIO) to create industrial unions. (It later changed its name to the Congress of Industrial Organizations when it broke with the AFL.) For the powerful leaders of traditional craft unions, ranging from carpenters to railroad engineers to photoengravers, the battle involved both longstanding principle and the desire to continue to dominate the AFL. Harking back to the early days of the AFL in the 1880s, they still insisted that only craft unions were strong enough in the long run to resist employer pressures. (While this usual explanation for their behavior makes sense in terms of theories that emphasize past experience and tradition, I admit I am not fully satisfied with it. Why were they so adamant? Why couldn't they change? Were the craft union leaders trying to hold on to their top-dog status? Was their still too much racial, religious, and ethnic scorn toward the large numbers of Catholic and Jewish immigrants from eastern and southern Europe, and towards the African Americans, in industrial unions? Or all of the above? Or something we all have overlooked? The recalcitrance of the traditional craft union leaders is an issue that needs a fresh and more insightful look.)
Whatever the reasons for the resistance to industrial unions by most craft unions, Lewis and Hillman, as the main leaders in favor of a new CIO, argued that large corporations could only be organized if workers with varying levels and types of skills were part of one industrial union, pointing to the failure of most union drives in heavy industry in 1933 and 1934 and the success of their own unionization efforts. They also claimed that workers in industries such as steel, rubber, and automobiles wanted to be in one industrial union (Bernstein 1969, Chapters 8 and 9).
Even if there had been agreement within the AFL, which would have made it possible to issue charters for both craft and industrial unions, there was another difficulty: the need for experienced organizers, who were woefully few within the AFL. Lewis decided to solve this problem in good part by reaching out to his perennial enemies in the Communist and Socialist parties, which had opposed him on many occasions in the 1920s, leading him on one occasion to have the Communist members beaten up and expelled. These overtures to his former opponents, which were formally denied at the time, began with an interview Lewis gave to the Communist Party's Daily Worker in December 1935. They were made possible by the fact that the American Communists had quietly signaled a change in strategy by closing down their rival unions and allowing their organizers to work with the most militant local trade unionists. This change of line was formally announced in February 1936, after Moscow gave its reluctant approval. Months of negotiations then ensued, finally ending with an agreement in mid-1936 that led to the hiring of many dozens of Communist labor organizers, who were highly experienced due to their past organizing efforts. Because the Communists had to gain approval for this new alliance from Moscow, the detailed reports in the Soviet archives opened in the early 1990s make it possible to see the arrangement in detail from the Communist perspective (Haynes, Klehr, and Anderson 1998, pp. 53-70). It makes for a great read.
Third, Lewis and Hillman knew that they could not successfully organize large corporations run by ultraconservatives unless Roosevelt won reelection in 1936 and non-Southern Democrats retained enough seats in Congress to fend off a potential pro-employer alliance between Southern Democrats and Northern Republicans. Labor leaders also wanted to elect sympathetic governors and local officials in key industrial states such as Pennsylvania, the home of the steel industry, and Michigan, the center of the automobile industry.
The unions were particularly concerned about a possible Republican victory because of the highly visible but ultimately futile efforts of the American Liberty League. The du Pont family and their close allies, the Pew family, which owned Sun Oil, gave nearly one million dollars to the Republicans (that's $16.1 million in 2010 dollars) and one-third of the Republican National Finance Committee was identified with the Liberty League (Wolfskill 1962, pp. 205-206). The du Ponts also gave another $350,000 and the Pews an additional $20,000 to the Liberty League and other extremely right-wing groups, with names like the Crusaders, the Sentinels of the Republic, and the Southern Committee to Uphold the Constitution (e.g., Webber 2000, p. 27). This money was used to supplement the Republican campaign in a variety of ways.
To help win Democratic victories against the combined Republican and Liberty League efforts, labor played a major role in a political campaign for the first time in American history as foot soldiers for candidates and as financial contributors to campaigns. Between 1906 and 1935, the AFL had given a meager $95,000 to national political campaigns, but in 1936 organized labor contributed $803,800 to the party and political organizations aligned closely with it, which represented 16% of the $5.1 million spent by the Democrats (Overacker 1937, p. 46; Webber 2000, page 116, Table 7.2). A little over three-fourths of that money came from just three unions -- the United Mine Workers ($470, 349), the International Ladies Garment Workers Union ($90,409), and the Amalgamated Clothing Workers of America ($62,938). What makes these donations all the more unexpected is that Lewis had voted for President Hoover in 1932 and the leaders of the other two unions, David Dubinksy and Sidney Hillman, had voted the Socialist Party ticket.
Contrary to claims that Roosevelt had major backing in the corporate community, he did not have significant support in any business sector except one, the alcoholic beverages industry, which paid "its debt of gratitude to the Democratic Party" for Roosevelt's successful efforts to end prohibition by providing 5.7% of the party's donations of $1,000 or more (Overacker 1937, p. 487). There was no support from an alleged "capital-intensive international segment of the capitalist class," as one political fantasist insists without bothering to go beyond gossip or take a look at the systematic donation records (Ferguson 1995). Nor did Roosevelt receive disproportionate support from purported "proto-Keynesians" in mass-consumption industries (e.g., department stores, chain stores, manufacturers of household electrical equipment), as one historian partial to economic reductionism believes to be the case (Fraser 1989; Fraser 1991).
Instead, two different studies, using campaign contributions as an indicator of political preferences in an election in which virtually no business executives gave to both parties, found that Roosevelt had support from only 17-20% of the 35% of corporate executives who gave $100 or more to either party. The first study used the directors of the 270 largest corporations of that era (Allen 1991). The second used a large random sample of 960 executives and directors listed in Poor's Register of Corporations Executives, and Directors (Webber 2000, p. 13). Four factors, all of which are consistent with findings by those scholars that study voting patterns, were the best predictors of business support for Roosevelt: region (Southerners in most business sectors gave more to Democrats than Republicans); religion (Catholics and Jews in the capital-intensive and mass-consumption sectors were much more likely to give to Democrats than Protestants were); the size of the business (smaller businesses tended to support Roosevelt); and, as already mentioned, involvement in the manufacture or sale of alcoholic beverages. Nor did Roosevelt lose any of his 1932 business backers, except the du Pont family and their key employees and close associates, contrary to many past claims (Webber 2000, for detailed evidence for all these points).
Due to the strong corporate support for the Republican challenger, Roosevelt was outspent $8.8 million to $5.1 million, and most major newspapers endorsed his opponent. But he won 62.5% of the two-party vote, documenting once again that those with the biggest war chest don't always win and that the influence of the mass media can be overstated. The ultraconservatives' appeal to traditional values, their claims that the constitution was being shredded, and their insistence that the New Deal was socialism in liberal clothing (sound familiar?) fell on deaf ears. Organized labor's efforts seemed to make the difference in Ohio, Illinois, Indiana, and Pennsylvania, including "crucial local elections in the steel and coal towns of Pennsylvania and Ohio" (Dubofsky 2000, p. 157). The Democrats increased their already overwhelming margins in both the Senate and House, and also elected New Deal Democrats to the governorships in Pennsylvania and Michigan.
|Sit-down strikers occupying a GM-owned factory in Flint, Michigan, 1937|
With New Deal Democrats in key positions of power, the newly hired organizers employed by the CIO targeted an automobile assembly plant in Flint, Michigan, in early January 1937, for a sit-down strike that would serve as an ideal starting point and a signal of what was to come. The automobile factory was chosen because it belonged to General Motors and was a critical link in the company's network of factories. Success would bring much of General Motors' production to a halt. Moreover, a victory over the third-largest corporation in the country was likely to bring hope to industrial workers everywhere because its profits had rebounded in 1935 and 1936, leading to $10 million in salaries and bonuses for 350 officers and directors in 1936, while its workers averaged $900 a year, well below the $1,600 that was considered to be the minimum necessary for a family of four (Zilg 1974, p. 330). Led in good part by Communist and Socialist factions in the fledgling United Auto Workers, the sit-downers held the factory for six weeks despite attacks by police, legal threats from local authorities, and demands by the owners that the liberal governor put an end to this illegal takeover of private property (Fine 1969, for a detailed account). However, neither the governor nor Roosevelt would accede to the corporation's demands, forcing its leaders to negotiate with the union and thereby providing a major triumph for the CIO.
While the Flint drama was unfolding, the chairman of U.S. Steel decided for several reasons that it was time to make a deal with the unions, starting with the fact that New Deal Democrats controlled Pennsylvania, where the company had many of its mills (Bernstein 1969, pp. 466-473; Gordon 1994, p 229). Furthermore, the CIO's Steel Workers Organizing Committee was in any case winning over many members of the company's employee representation plan. In effect, union organizers were building an industrial union at U.S. Steel, and elsewhere, through the employee representation plans (Jacoby 1997, pp. 158-159; Zieger 1995, pp. 54-59). As a result, the steel company's chairman began secret meetings with Lewis that led to a signed agreement shortly after the United Auto Workers' victory over General Motors. The agreement saved Lewis from expending resources on what could have been a very long and tough battle, kept the many Communist organizers from rising to important positions in what was basically a top-down union, and provided a visible symbolic victory because U.S. Steel was still the largest industrial company in the United States. Change came easily and more completely at General Electric, where Gerard Swope and Owen Young, a director of Industrial Relations Counselors since the 1920s, were still in charge. When the workers voted to unionize, Young and Swope recognized the union immediately and began bargaining. The fact that the union was the largest of the Communist-dominated unions in the CIO made the bargaining all the more notable, but the fact that the leaders were Communists made no difference in terms of the company's willingness to deal with the union. As a result of these and other victories, the percentage of the nonagricultural workforce in unions rose from 6.9% in 1933 to 19.2% in 1939 (e.g., Cohen 2009, p. 304).
By 1937 the IRC was keeping its distance from labor conflicts. As Rockefeller said in a letter to King, the creator of his employee representation plan, in late April, 1937, just a few days after the Supreme Court ruled that the National Labor Relations Act was constitutional, he thought that employee representation plans "were generally doomed." Rockefeller went on to note that "the Harvester Company, the Goodyear Company, and now the subway company in New York City, have given up their industrial relations plans, which have worked successfully for many years, and are carrying on collective bargaining with the union, while the Steel Company has recognized the unions, which I assume is tantamount to the same thing." Although he did not look forward to unions "in our own companies," he did not think it "either wise or possible to withstand the pressures from outside for union recognition even though the employees themselves may prefer the present plan" (Rockefeller 1937). As it turned out, and as mentioned earlier in this account, Standard Oil of New Jersey and several other Standard Oil companies were among the relative handful of companies that were able to maintain their employee representation plans at least into the 1960s.
Moreover, several problems soon arose that slowed the CIO's progress. With the help of the state police in Ohio, Indiana, and Illinois, along with sudden lay-offs for thousands of workers due to the economic downturn triggered by Roosevelt's decision to balance the budget, the ultraconservatives in Little Steel were able to defeat unionization efforts in the second half of 1937. A similar drive in the heterogeneous textile industry was stalled later in the year for a similar combination of reasons. At the same time, Southern Democrats were deeply upset by the sit-downs in the North and by attempts by the CIO to organize in the South, starting in early 1937 with the textile industry, which was by then the largest industry in the South due to the rapid movement of northern mills into the region. The fact that the CIO organizing drives were interracial in both the North and South only added fuel to the fire. Led by Senator James Byrnes of South Carolina, one of Roosevelt's closest allies in previous years, the Southern Democrats began a series of actions within Congress that created problems for the CIO and the National Labor Relations Board, ranging from passage of a "sense of the Senate" resolution that sit-downs were illegal to attacks on the labor board's budget (Gross 1981; Patterson 1967, pp. 135-137). The Southerners were capitalizing on the growing animosity in Congress over Roosevelt's unexpected court-packing scheme, introduced as a complete surprise on February 5, 1937, which stirred their fears of an attack on the Jim Crow system. More generally, the effort to hamstring the National Labor Relations Board helped to revive the conservative voting coalition that had dominated Congress since the Compromise of 1877 (Patterson 1967). (In 1939, the Supreme Court ruled that sit-down strikes were illegal, thereby officially depriving union organizers of a potent tactic that makes it impossible to bring in replacement workers. The National Labor Relations Board, it should be noted, had disapproved of sit-downs, too, but had not been able to do anything about them.)
To make matters worse for pro-union forces, the AFL became extremely bitter toward the National Labor Relations Board because of its belief that the board's decisions favored the CIO. As the AFL had feared might happen before passage of the act, the board was using its power to create large bargaining units that included workers in a wide range of occupations. AFL leaders felt from early 1937 on that the NLRB was aiding the CIO, but the decision that "could not be forgiven" occurred in June 1938, when the board ruled that the entire West Coast would be the bargaining unit for longshoremen and warehousemen, thereby eliminating the AFL in the four ports where it had small locals (Gross 1981, p. 56). Then the board voided an AFL contract because it was allegedly a sweetheart deal between the company and the AFL that was meant to keep out the CIO. AFL officials also were upset by the ruling in the Mobile Dry Dock Company case in Alabama that allowed for plant-wide elections in which the 500 "white, highly skilled mechanics" would be outnumbered by the 1,000 African American laborers (Gross 1981, pp. 59, 85).
The AFL retaliated by claiming that Communists dominated both the labor board and the CIO. It charged that a Communist Party member, with allegedly great power as the board's executive secretary, had manipulated information in the West Coast longshoremen's case in favor of a seemingly pro-Communist CIO union. It also charged that one member of the board, a former industrial relations manager at the liberal William Filene & Sons, had become pro-Communist. It is highly likely that at least some of these AFL charges were at least in part true, but the important point is that the craft segment of the working class had chosen to enter into a public political battle with the industrial segment. In my view, the Communists in the CIO and at the National Labor Relations Board were primarily a useful rallying cry and an ideal scapegoat.
The result of southern and AFL disenchantment with the National Labor Relations Board was a new alignment of class forces. The southerners were once again in an alliance with a united northern business community that had planned for amendments to the National Labor Relations Act from the day of its passage. The working class, on the other hand, was now split. Moreover, and far more surprising, the most conservative segments of the ownership and working classes entered into an alliance after decades of unrelenting hostility. Yep, beginning in July 1938, leaders of the NAM began meeting in private with AFL lawyers to decide upon those amendments to the National Labor Relations Act that would best serve their common interest in thwarting the CIO (Gross 1981, pp 67ff.).
At this point the Roosevelt Recession of 1937-1938 entered into the equation once again because it contributed to the large gains for the Republicans in both the Senate and the House in the 1938 elections, thereby changing the balance of power in Congress. The result was a nearly unbeatable conservative voting coalition that could weaken the National Labor Relations Board and slow any further union gains. (Roosevelt joined with the Communist Party in blaming the new recession he had started on a "capital strike" by his corporate enemies, a laughable concept because eager regional and small business owners would have taken advantage of the new opportunities that large corporations were in effect giving them if there had been any such opportunities. But there are no such opportunities when there's no consumer demand.)
Buoyed by the 1938 election results, the political leadership that was needed to stop the drive for industrial unions was provided by a Southern Democrat in the House, Howard Smith, who also was chairman of a local bank in his hometown of Alexandria, Virginia. The new Southern Democrat/NAM/AFL coalition greatly weakened the NLRB in late 1939 and early 1940 through damaging revelations in House committee hearings, undermining the board's credibility and causing Roosevelt to make changes in its personnel (Gross 1981, p. 2). Moreover, it was the bill fashioned by this coalition that was the basis for the Taft-Hartley Act, a fact the AFL later tried to deny or ignore. As Gross (1981, p. 3) summarizes his discoveries:
"The Hartley Bill was written in Smith's office using Smith's 1940 bill as a model, and the Taft-Hartley Act of 1947 contained most of the more severe provisions of the Hartley Bill. The AFL-business-conservative southern Democrat alliance during the first half of the twelve years between the Wagner and Taft-Hartley Acts has had a lasting effect on labor history and on labor law."
Despite its complaints about the labor board, the AFL nonetheless was growing in the late 1930s in regulated industries, such as railroads and trucking, where both owners and workers could benefit from the higher prices made possible by government oversight (Nelson 2001). Construction unions also grew in late 1939 and 1940 when the economy revived, due to good part to the rise in defense spending. In addition, the AFL made gains in service industries. By 1941 the AFL had almost twice as many members as the CIO, a fact that was masked at the time by the CIO's inflated membership claims (Bernstein 1969, p. 774). Furthermore, its 106 affiliates were in a far wider range of business sectors than the 41 CIO unions, which were concentrated in mining and manufacturing, with its mining, automobile, steel, electrical, clothing, and textile unions accounting for 71% of its membership.
But a bigger fact should not be overlooked. The union movement had gone from about 3 million members in 1934 to 9 million members in 1939, a remarkable surge in growth.
Based on the setbacks the CIO suffered in Little Steel and textiles in the latter half of 1937, and in Congress from 1938 to 1940, and despite the gains made by the AFL, the union movement was stalled at best and most likely on the defensive by 1940. However, the weaknesses of the union movement at that point were overcome by the rapid defense build-up, an industrial conversion of unprecedented speed and proportions that put everyone back to work, including previously excluded women and African Americans. Thus, the tight labor markets made it possible for the unions to renew their upsurge, a turn of events that soon led Roosevelt to create a temporary National War Labor Board, similar to the one that had been created during World War I. It consisted of four employers, four union leaders, and four government representatives. Although the corporate executives on the war labor board resisted rulings that would aid unions, the public and labor representatives gradually came to agreed to accept a "maintenance of membership" provision through which newly employed workers would automatically be part of already existing unions in exchange for a no-strike pledge by union leaders. This agreement provided a huge boost to union membership -- from 9 million in 1941 to 15 million in 1945 -- that never would have happened outside the war context (Gross 1981, Chapter 13). By 1945, the percentage of wage and salary workers in unions ("union density") was at 35.4%, the highest point it ever reached, because corporations could not employ their usual instruments of intimidation and repression. At this point, unions provided a large and solid base for the liberal-labor electorate.
However, the conservative coalition in Congress continued to search for ways to hamper union organizing throughout the war. It found the opening it was looking for when Lewis, who had refused to sign the no-strike pledge, ordered the mineworkers to strike for a $2-a-day age increase in early June 1943. In response, Congress passed the War Labor Disputes Act, which gave the president the power to take over industries essential to prosecuting the war that were threatened by strikes. It also prohibited unions from using membership dues for campaign donations to political candidates. Roosevelt vetoed the bill, but the conservative coalition and its moderate allies on this issue easily overturned the veto. Despite his veto, Roosevelt used the act a year later when 10,000 transit workers went on strike to protest a ruling by the Fair Employment Practices Commission that the city's transit authority had to employ African Americans as trolley and rapid transit operators. This action by white workers was one of many indications during the war years that racial divisions would remain a major problem for unions in the post-war era. In fact, let's get it out there right now: the centuries-old problem of racism was a key factor, if not the key factor, in the rapid decline of unions in the face of the resistance to the civil rights movement and neighborhood and school integration by at least a significant minority of white workers.
The growth in membership during the war caused the union leaders to develop the same illusions about their strength that their predecessors harbored during World War I. At the same time, the AFL muted its antagonism toward the CIO in the post-war years because it had gained in strength and members. Moreover, the AFL and CIO started to work together in the months after the end of the war as workers lost ground due to a strong one-two punch. First, there was an abrupt end to overtime pay due to the end of defense production. Second, there was a rise in inflation because the ultraconservatives inside and outside Congress insisted upon the immediate end of price controls, even though the economy was not producing enough consumer good to be ready for that step. But the ensuing strike actions by several major unions failed in the face of united opposition by the reinvigorated corporate leaders and instead created a backlash that gave Congress the opportunity in early 1946 to legislate many of the restrictions that the Southern Democrats and the NAM had decided upon in 1939. Only a veto by Truman, upheld by liberals and moderates in the House, kept those restrictions from becoming law at that early post-war juncture.
Then, in the election a few months later, at a time when 65% of those polled in a nationwide survey thought "well" of the Chamber of Commerce, but only 50% and 26% thought the same about the AFL and CIO, respectively, the Republicans won big (Collins 1981, pp. 92-93). They gained control of Congress for the first time in eighteen years, with 246 seats in the House and 51 in the Senate; only 75 of 318 candidates endorsed by organized labor's political action arm were elected. These results were a clear sign that a majority of the electorate, which consisted of only 38% of those eligible to vote in that election, was not sympathetic to organized labor, including some liberals who thought the labor leaders had acted in an irresponsible fashion (e.g., Griffith 1988, p. 145). The result was the passage of the Taft-Hartley Act in 1947 despite Truman's veto, which crippled unions in numerous ways (Gable 1953).
|President Truman did, in fact, veto the bill, but he was overridden by Congress|
The Labor-Management Act of 1947, best known as the Taft-Hartley Act because of its primary sponsors, Robert Taft (R, OH) in the Senate and Fred Hartley (R, NJ) in the House, severely hampered organized labor's ability to establish new unions in non-unionized economic sectors, perhaps especially in the least unionized parts of the country. Building on the anti-union amendments fashioned by the Southern Democrats, NAM, and the AFL in 1939, the Taft-Hartley Act put its greatest emphasis on adding new rights for corporate executives in relation to labor, which in effect gave management more latitude to pressure workers. For one thing, the Taft-Hartley amendments included new language that downgraded the importance of collective bargaining in the name of free speech for both employers and workers. In practice, this meant employers could refuse to bargain and more readily propagandize workers through pamphlets, flyers, and speeches at meetings workers had to attend. Veiled threats to move the plants elsewhere were often made and companies did increase their efforts to move factories to the South whenever possible. In addition, the softening of provisions against unfair management practices aided in the defense and extension of company unions (Jacoby 1997, pp. 183-191, 200-203).
The act also added a list of unfair labor practices that hampered union organizing by outlawing tactics that were used in the 1930s to win union recognition, such as mass picketing and secondary boycotts. Unauthorized ("wildcat") strikes by the rank-and-file on the shop floor were prohibited, which took power from those on the bottom of the union and at the same time forced the labor leaders to police their dissident members or else be in violation of the law (e.g., Gross 1995, Chapter 1). Drawing on the precedent in the War Labor Disputes Act, another statute gave the president the power to represent the general public's interest through the declaration of an emergency, which would delay a strike with a 60-day cooling-off period. Still another statute limited the power of labor-board appointees by giving their top staff member, the general counsel, more discretion as to what cases to investigate and bring before the board. The law included a direct attack on the several CIO unions that were led by members of the Communist Party by making it necessary for union leaders to sign an affidavit stating they were not Communists (Gross 1981 Chapter 13; Gross 1995, Chapter 1). Not least, and a mistake by the ultraconservatives in retrospect, it also decreed that employer contributions to a union health fund were illegal, which effectively abolished a union-controlled benefits fund that the United Mine Workers had won for its members in a 1946 strike. This change made it necessary for unions to share responsibility for benefit funds with management (Brown 1999, p. 158).
In addition, the act legitimated laws already passed in 11 states that allowed employees to decline to pay dues to an established union if they so desired, in effect holding out the temptation to workers of being "free riders," i.e., people who benefited from any union successes, but did not have to help pay for the efforts to win them (Dempsey 1961, pp. 25-27). (These laws are called "right-to-work laws" because employers insist that their support for the right to resist joining a union is based upon a principled defense of the rights of individual workers). Although 12 more states passed such laws by the end of 1963, they were repealed in Delaware, Indiana, Louisiana, and New Hampshire, which meant that there were 19 right-to work states in 1965, when the union movement still had considerable political muscle. By the end of 2012, there were 24 right-to-work states, twelve in the South, five in the Great Plains, five in the Rocky Mountain region, and two in the Midwest, due to successful campaigns in Louisiana in 1976, Idaho in 1986, Oklahoma in 2001, and Indiana and Michigan in 2012 (Dixon 2007; Dixon 2010, for good sociological studies of right-to-work laws).
Although there was no strong evidence that right-to-work laws impeded unionization in studies carried out through the late 1980s, more recent research suggests a modest decrease in unionization rates, but not in wages, during the first 40 years after Taft-Hartley (Moore 1998). Whatever the facts may be, the important point is that both the corporate community and the liberal-labor alliance thought that these laws mattered greatly. The result was decades of legislative conflict over "Section 14b," the clause that allows states to have right-to-work laws (Gall 1988).
In 1948 the AFL and CIO worked together even more closely to help restore strong Democratic majorities to both houses of Congress, with the hope of undoing key aspects of Taft-Hartley. They also worked very hard for the re-election of Truman, but their efforts were complicated by a third-party challenge by former Secretary of Agriculture and Vice-President Henry A. Wallace on the Progressive Party ticket. Although this third-party effort ultimately had no impact on the electoral outcome, it did have a big impact on the union movement, and has been a point of scholarly contention between left and liberal scholars ever since. So it is worth a quick look because it is a likely case of self-inflicted wounds.
Wallace ran for his own reasons, but union leaders felt sure, based on their own informants, that the Communist Party and the CIO unions it controlled were the backbone of the new party. Communists denied these claims at the time, and there were some non-Communist leftists in the Progressive Party, but in fact the AFL and CIO leaders were absolutely correct, as historical archives fully demonstrate (Devine 2003). The decision to back Wallace was made by the left wing of the Communist Party in late 1947 as the best way to fulfill Moscow's October directive that everything should be done to stop the Marshall Plan (Stepan-Norris and Zeitlin 2003, pp. 292-295). Sympathetic histories of the Progressive Party, often by its former members, tried to argue the Communists did not dominate it (e.g., MacDougall 1965). However, the full records available in recent years prove otherwise. Even several key left-liberals close to Wallace, who were said to be the best evidence that Wallace was not surrounded by Communists, turned out to be secret Communists (Devine 2003).
In any event, the head of the CIO believed he had solid information on this issue from informants, including Communist union leaders who refused to accept the CP directive, so he began the process of eliminating Communists from the union movement for backing a third party. This decision was the beginning of the end for the Communist Party in terms of any influence within the CIO, but it also deprived the CIO of activists and organizers that were useful to the union movement when they were not following Soviet foreign policy directives. In terms of the fortunes of militant leftists, the Communists' risky venture into a third party meant the demise of the "combative, class-conscious industrial union movement" they had built within the larger context of the CIO (Stepan-Norris and Zeitlin 2003, p. 296). It was the final sudden change in a series of such changes by the Communists in the labor movement that were never forgiven by the non-Communist union leaders.
Despite the initial threat posed to the liberal-labor alliance and the Democratic Party by the Progressive Party challenge, the Democrats nonetheless returned Truman to the White House and reclaimed majorities in both houses of Congress, in part due to the efforts of organized labor. Labor leaders therefore had every hope that they could reverse some of the changes brought about by the Taft-Hartley Act. In particular, labor wanted to remove 14b, the clause that legalized state-level right-to-work-laws. However, the union movement was stopped cold in its effort to make any changes in Taft-Hartley. Once again, the power of the southern segment of the ownership class was the determining factor. As historian Robert Zeiger (1986, p. 119) points out, a united working class could do nothing against the Southern Democrats, who of course had the support of most Republicans as well:
"But despite labor's electoral and financial contributions and the Democrats' successes in 1948, the Eighty first Congress failed to move energetically on Taft-Hartley. Although President Truman dutifully supported revision of Taft-Hartley, even under Democratic control Congress remained in conservative hands. Southern Democrats, almost uniformly hostile to the labor movement, dominated key congressional committees. While the tally sheets of labor lobbyists suggested that most Democratic senators and congressmen from northern, eastern, and blue collar districts loyally supported labor's goals, they also revealed that labor simply could not muster the strength to gain significant revision of the law."
Several provisions in the Taft-Hartley Act very likely played a significant role in the gradual decline of the union movement since its passage. However, it is difficult to pinpoint any one act or ruling, or any one piece of the Taft-Hartley Act, as "the" turning point in undermining the union movement. To begin with, that's because unions already had lost their most potent pre-war organizing tactic, the sit-down strike. Moreover, the Taft-Hartley Act was followed in the 1950s by numerous anti-union rulings by the NLRB and further legislative changes and court decisions that hampered union organizing. One of the most damaging decisions by the Supreme Court was issued in 1951, which declared that it was illegal for a union to close down an entire construction site over an argument with a single contractor or subcontractor, an issue that is usually discussed using the phrase "common-situs picketing" (Gross 1995, pp. 83-84, 341).
When union leaders signed on with liberals in supporting the National Labor Relations Act in 1935, they were well aware of the risk they were taking by giving up traditional organizing tactics in exchange for promises of government protection through the NLRB and the courts. They took that risk in part because they were having little or no success except for a few business sectors in which employers could not afford to bring in replacement workers for one or more of several reasons, including high skills levels (e.g., printing), geographic isolation (e.g., coal mining), and time-sensitivity (e.g., railroads) (Kimeldorf 2013). Furthermore, the usefulness of the original act for union organizers was not automatic. Its value depended on the protection and possible extension of the several specific statutory guarantees that were included in it. But the Taft-Hartley Act and many later decisions by both Congress and the NLRB narrowed or withdrew those guarantees in what turned into a class struggle at the legislative and regulatory levels.
However, the Taft-Hartley Act did result in one unanticipated consequence for the corporate community. It reinforced union leaders' resolve to bargain for health and pension benefits, despite strong opposition by most corporate leaders, as the only way to overcome the challenges to the long-term viability of unions created by the new law. The possibility for such negotiations was created by two separate government decisions during World War II. To begin with, the Internal Revenue Service ruled that corporations could count health and pension benefits as expenses for tax purposes. Then the National War Labor Board ruled that wage controls did not apply to increases in fringe benefits. After a post-war drive to unionize the South failed badly, thereby making it impossible to unseat Southern Democrats or force compromises from them, several labor leaders realized that any improvements in worker security would have to come through collective bargaining for social benefits, not government programs.
But it was the Taft-Hartley Act's challenge to the very existence of unions that changed the terms of the power equation. As political scientist Michael K. Brown concludes, "unions found that collectively bargained social rights provided an escape hatch from the threat to their security posed by Taft-Hartley. Fringe benefits obtained on union terms provided the 'virtual equivalent' of a closed shop." When the National Labor Relations Board backed wartime government rulings in 1948 by deciding that bargaining other health and welfare funds was legal, and then received support for that decision from the courts, it "opened the door to bargaining over social rights and left legislative derailment as the only way to shut down unionized welfare capitalism." After a Truman-appointed strike settlement board ruled in 1949 that the steel industry had to accept the United Steelworkers' demand for pensions and social insurance "in the absence of adequate government programs," the die was cast, to the outrage of steel executives and other industrialists (Brown 1999, pp. 154, 159, for the information and quotes in this paragraph).
Although the established unions were able to withstand the worst of the Taft-Hartley setbacks, and even gain a more solid base within major industries by winning good benefit packages, the union movement as a whole lost its momentum. It could not organize the unorganized in the face of the strategic weapons it had lost due to the courts and Congress. Its members enjoyed another 25 to 30 years of good wages and improved benefits in several mass-production industries, including steel and autos, but it was not very successful in the strongly anti-union industries in staunchly anti-union states. The percentage of wage and salary workers in unions stagnated at an average density of about 33% for the next 13 years, with a temporary boost during the Korean War, and then began a gradual decline in the late 1950s from which the union movement never recovered (Goldfield 1987).
Contrary to those who think that the unions might have done better if they had had their Communist organizers to aid in the struggle, especially in the southern states, I don't think they would have mattered much at all. By then there were plenty of non-Communist activists who were just as determined. It was the strength of the corporate community, the dominance of Congress by the conservative coalition, and the racial, ethnic, and religious divisions among workers that were too much to overcome for the best of activists at that juncture.
Building on the Taft-Hartley Act, the corporate community made further progress during the Eisenhower years in limiting the regulatory and legal support for unions. It did so first and foremost through the deployment of corporate-oriented practitioners of labor law, who often had experience as aides for Republicans on Congressional labor committees, or as former staff members for the National Labor Relations Board. To start with, Eisenhower made conservative appointments to the NLRB, which soon began to issue rulings that strongly favored corporations. For example, the new board majority rapidly expanded the rights of employers to resist unions through speeches and pamphlets that bordered on threats of job loss, going beyond what the Taft-Hartley Act had mandated. Then it further restricted union organizers' ability to use some of their most potent economic weapons, such as boycotts of companies and picketing of delivery sites. In addition, Eisenhower appointees to the board exempted even more medium-sized and strictly local firms from its purview than was called for in the Taft-Hartley Act, and made it easier for employers to fire union activists (Gross 1995, pp. 102-103).
The board majority replaced long-time staff members in regional offices with conservatives, and by December 1954, it had reversed most of the precedents developed by Democratic boards between 1937 and 1952. At the same time the new NLRB majority ignored the dubious and questionable practices used by the increasing number of firms that aided corporations in defeating unionization drives and in developing ways to bring about the decertification of already established unions. Their methods included the use of psychological tests to screen out potential employees with leadership abilities and of seemingly neutral discussion groups to identify employees who might be sympathetic to unions (Smith 2003, Chapter 4).
Buoyed by their success within the NLRB, the ultraconservatives turned their attention to corrupt leadership and criminal behavior in several unions through hearings in the Senate, chaired by the senior Democratic senator from Arkansas, John Stennis. Although the main fireworks came a few years later, the hearings began in 1955 and provided material for headlines and television clips from testimony, wiretaps, and subpoenaed documents, with the International Brotherhood of Teamsters, the International Longshoremen's Association, and the United Mine Workers as the major targets. The legislation that emerged from these hearings, the Labor-Management Reporting and Disclosure Act of 1959, had a complex and circuitous history, starting with rival bills created by the labor committees in the House and Senate in 1958. However, the final act was based for the most part on a version written by corporate lawyers serving on the Chamber of Commerce's Labor Relations Committee, and it dealt further setbacks to unions (Gross 1995, p. 140). The Chamber's draft was introduced on the floor of the House through a rarely used parliamentary procedure by a Democrat from Georgia, Phil Landrum, and a Republican from Michigan, Robert Griffin, leading the bill to be called the Landrum-Griffin Act in most accounts.
The Landrum-Griffin Act was aimed first and foremost at boss control and racketeering in the labor movement, requiring unions to hold secret elections that could be reviewed for fairness by the Department of Labor. It gave more rights and protections to union members, required unions to file financial reports with the government, and in other ways limited the power that leaders had over their members. However, the Chamber's lawyers also used the legislation to hamper union organizing by making it illegal for a unionized business to agree to demands by union organizers that it cease doing business with non-union companies that unions were trying to organize. It also strengthened the laws against secondary boycotts through the closing of small loopholes. Laws that restricted picketing were made even more constraining by prohibiting roving pickets from being present when the delivery trucks of anti-union companies arrived at their destinations (Gross 1995, p. 139).
Unions were clearly on the defensive in the face of the revelations during the Congressional hearings, but leaders within the AFL-CIO were confident they could limit the damage. Their confidence was heightened because they had contributed campaign workers and money to the Democratic Party's success in the 1958 mid-term elections, which gave the party margins of 64-36 in the Senate and 283-153 in the House in the context of a sluggish economy (McAdams 1964, p. 4). They further believed they might be able to remove some of the more onerous provisions of the Taft-Hartley Act as a trade-off for accepting the new restrictions on the unions' management of their financial resources. In making their calculations, however, organized labor ignored the fact that the conservative coalition still had the potential for 59 votes in the Senate (24 Southern Democrats, 35 Republicans) and 245 in the House (92 Southern Democrats, 153 Republicans).
The chair of the Senate Labor Committee, John F. Kennedy of Massachusetts, who already had his eye on the 1960 presidential race, tried to convince his union allies that changes in the Taft-Hartley Act should not be included in the new legislation, but the labor leaders rejected his arguments. With Kennedy's acquiescence, the Senate passed the union's version of the bill in April 1959 (Gross 1995, p. 141). But the Senate version was not able to survive in the House, in which the conservative coalition had the support of 95 Democrats, including all 92 Southerners, and 136 of 153 Republicans. The result was a surprising victory for the Landrum-Griffin version of the act.
Before joining with Republicans in voting for the revised legislation, however, the Southern Democrats insisted upon the elimination of several clauses they feared might provide openings for civil rights efforts in the South. In addition, the Republicans promised to continue to join the Southern Democrats in blocking civil rights legislation in the future, casting aside any pretense that it was any longer the "Party of Lincoln" when it came to civil rights. All the while, the NAM and Chamber of Commerce reminded Southern Democrats that passage of the act was essential to keep unions out of their region and thereby maintain its attractiveness to industry (McAdams 1964, p. 212). The final version of the act that emerged from the compromises within the conference committee was not as restrictive for unions as the House bill fashioned by Landrum and Griffin had been. But the outcome was primarily a defeat for unions nonetheless because it strengthened the regulation of internal union affairs by government officials far more than AFL-CIO leaders desired and added the restraints on secondary boycotts and roving pickets discussed earlier in this section. However, the impact of these defeats was obscured by the fact that the new legislation had no immediate negative effects for the large established unions that practiced some semblance of internal democracy. Instead, its impact was more serious for the long run because it made organizing new unions much more difficult, especially in smaller industries, and particularly in the South.
Moreover, there were small favors for construction unions on picketing issues in the final bill, suggesting that some Republicans hoped to win support from them. In addition, the bill also required anti-union consulting firms to "file an 'Agreements and Activities Report' within thirty days after agreeing to persuade their client's employees to reject unionization" (Smith 2003, p. 102). This provision quickly led to the decline of this new form of union busting. The most important of these firms, Labor Relations Associates, which figured prominently in the Senate hearings, was a thinly disguised arm of Sears, Roebuck. Founded by the director of the company's employee relations department in 1939, with the ostensible goal of providing advice to any company that needed its services, it primarily funneled Sears, Roebuck money to the Teamsters in exchange for the Teamsters' help in decertifying unions. Fully exposed during the Senate hearings, it went out of business in 1962 (Smith 2003, pp. 98-102).
By 1956 the Eisenhower Administration faced what would later be seen as mild inflation, but it was no laughing matter to either moderates or ultraconservatives in the corporate community. It was quickly diagnosed as "cost-push" inflation, which is caused by increases in the costs of factors of production, such as raw materials and higher wages due to union demands. No longer was inflation simply a matter of "demand-pull," which is characterized as too much money seeking to buy too few available goods. All talk of raw materials aside, the power of unions to extract what were alleged to be economically unjustified collective bargaining agreements from corporations, especially contracts with annual cost-of-living adjustments, were considered to be the main culprit. The corporate talk about unions causing cost-push inflation signaled even more serious conflict between corporations and unions in the legislative arena.
When inflation increased to about 5% in 1957 and 1958, mainstream economists and corporate leaders alike expressed both surprise and consternation: inflation within a recession was not something they had anticipated (Schriftgiesser 1960, p. 199). As inflation continued into 1958, the White House announced the creation of a Cabinet Committee on Price Stability for Economic Growth, chaired by Nixon, and including several cabinet members and the chair of the CEA. Allen Wallis, the dean of the business school at the University of Chicago, and an advisor to the corporate moderates' primary policy-discussion group, the Committee for Economic Development, was appointed executive vice chair to carry out the detail work for the committee. The committee issued several reports with the help of economists in the private sector, and sent Wallis on a nationwide speaking tour in an attempt to alert a wide range of civic associations to the grave dangers of inflation.
The liberal-labor alliance opposed the White House's approach from the start. Its leaders and economists said that administered prices, whether set by overt collusion among corporations or through price signals sent by the actions of the dominant corporation in an industry, were the main cause of inflation, which should be remedied by more vigorous anti-trust activity by the government. Moreover, according to its spokespersons, the low level of inflation was not a serious problem. Instead, it claimed that rising unemployment was the primary issue at this juncture because it left many families destitute while slowing the overall growth of an economy that needed to produce more in order to provide for everyone. As usual, then, the rival power alliances had developed very different analyses of the problem, with most Republicans agreeing with the corporate community that union power and cost-push inflation were a major concern, and most non-Southern Democrats agreeing with the liberal-labor alliance that the emphasis should be on administered prices and policies to reduce unemployment.
The arguments about inflation between the White House and the liberal-labor alliance were paralleled by similar debates within the aforementioned Committee for Economic Development, which is an ideal window into the mindset of corporate moderates. Established in 1942 by members of the Business Advisory Council, its primary focus was an effort to create conservative policies that would be good enough to guard against the return of depression-era economic conditions after World War II. Moreover, it was the most accessible, research-oriented, and transparent of several moderate policy-discussion organizations. Its published policy statements, along with its letters and memos in archives, reveal how corporate moderates dealt with ultraconservatives, the liberal-labor alliance, and government officials in its years of significant influence, from the 1940s to the early 1980s. Usually called the CED, its official policy statements are especially useful because they included memoranda of comment, reservation, or outright dissent that were crafted by individual trustees, and then sometimes joined by other trustees, which makes it possible to ascertain the nature and size of dissident coalitions within the moderate camp on specific issues.
The CED is also an ideal window into the corporate moderates' collective mindset because it was at the center of a corporate-financed policy-planning network during this time period. More specifically, the CED trustees, who grew in number from a few dozen to 200 over the decades, shared the central point in the network with the 60-member Business Advisory Council. These two policy-discussion groups, in turn, had director and financial links to the foundations, think tanks, and more specialized discussion groups within the policy-planning network. Several sophisticated network studies using new methodologies and large databases demonstrate the existence of an interlocking corporate community, an interlocking policy-planning network, and the large overlap between these two networks (Alba and Moore 1978; Bonacich and Domhoff 1981; Burris 2008; Moore, Sobieraj, Whitt, Mayorova, and Beaulieu 2002; Salzman and Domhoff 1983).
In terms of what was in store for unions, a CED subcommittee on inflation established in the fall of 1955 provided a foreshadowing. Contrary to the claim by the liberal-labor alliance that price-fixing by corporations was the main problem in controlling inflation, the CED felt that the market already was protected from oligopolistic corporations by the anti-trust laws. The CED claimed, however, that there was no comparable protection for the general public interest from powerful unions.
Although one of its top economic advisors, a Harvard professor, told CED trustees that gradual inflation in the range of 2% to 4% was not a problem, they did not accept his analysis (Schriftgiesser 1967, p. 77). Instead, subcommittee members largely echoed the position taken by the White House. Like Eisenhower, they considered inflation to be a cause for alarm, "an evil which must not be tolerated...a cruel tax on people who live on fixed incomes," leading in 1958 to very conservative policy recommendations in Defense Against Inflation (CED 1958, p. 11). While frankly stating that a good understanding of inflation did not exist, the report primarily blamed unions for both inflation and rising wages.
According to the CED analysis, wage demands by unions were the main problem because they tended to outrun increases in the "rate of productivity," a concept defined by a relatively simple index, the rate of increase in total output per worker per hour. Although increases in the rate of productivity depend primarily on the introduction of new machinery and improved work organization, corporate leaders used the index to imply that their employees were the problem, either through lack of effort or union rules that stifled organizational and technological innovations. Making the corporate claim even more questionable, the index is distorted by the movement of workers from occupations in which productivity gains were low at the time, such as farming, to manufacturing jobs in which productivity often increases rapidly due to the introduction of new technologies. Moreover, the productivity index can decline if workers move from manufacturing to service jobs that are labor-intensive, as began to happen in the 1960s and 1970s. In addition, issues that have nothing to do with technology, work organization, or worker effort, such as inflation and changes in currency valuation, also can distort the index (Berkowitz 2006, pp. 66-67). As early as 1957, the Joint Economic Committee of Congress registered criticisms of the index, but its various shortcomings were lost from sight as it became the basis for major political battles over the next two decades (Gordon 1975, p. 119 ).
Problems with the measurement of productivity gains aside, the CED policy statement recommended that the package of wages and benefits for employees "should rise as fast as -- but not faster than -- the rise of output per man-hour for the economy as a whole..." However, the wage-benefit package should not absorb the whole productivity gain because the rate of profits should grow, too. CED then offered a suggestion for "voluntary restraint" by corporations and unions that was resisted by some trustees and advisors, who feared it seemed to confer legitimacy on voluntary wage-price guidelines set by the government: "We must rely on the forces of competition and on the voluntary exercise of restraint in price and wage policies by business and labor to prevent this [inflation] from happening" (CED 1958, p. 15, my italics). However, voluntary restraint did not fit with the laws of competition, as CED advisor Neil Jacoby, pointed out in the context of a long letter to the chair of President Eisenhower's Council of Economic Advisors: "The hortatory approach to the problem of containing inflation is not merely ineffective; it is also contradictory in the sense that it asks people to behave noncompetitively" (Gordon 1975, p. 116). Thus, as in-house critics of the CED formula for wage-price guidelines had feared, it generated tensions within CED for the next 17 years. As also feared by the in-house critics, CED's formula opened the door to wage-price guidelines, however voluntary, that would be determined by economic experts employed by the federal government. And, within a few years, the Kennedy Administration tried to take advantage of the opportunity. The issue was usually debated using the vague concept of an "incomes policy," which can be broadly defined as any approach to influencing the economy (and especially controlling inflation) that does not rely exclusively on the traditional market system and the minimal governmental laws needed to support it. By the late 1950s, one form or another of an incomes policy had been tried in a few Western European countries, usually involving multi-party negotiations that brought together employers, organized labor, and government officials to determine prices, wages, and taxes.
Although union demands were seen as the immediate problem, the CED inflation report said that the federal government bore the ultimate responsibility for inflation because it did not take the actions that were necessary to combat it. The subcommittee then advocated higher interest rates through actions by the Federal Reserve Board. Next, in a clear indication that most CED trustees did not think that the Taft-Hartley Act went far enough in limiting the power of organized labor, the report concluded "There is an urgent need for objective consideration of the proper extent, character and uses of union power in our society. Existing laws should be reviewed to see whether they give or leave a degree of power to labor organizations that is not in the public interest" (CED 1958, pp. 15-16). That is, it would be up to the government to tame organized labor.
Despite the setback on the Landrum Griffin Act and corporate talk about union responsibility for cost-push inflation, the labor movement appeared to be politically robust at the end of the 1950s, in part due to a merger of the AFL and CIO in 1956. The visibility and strike successes of several big unions that had major contracts with the large companies in steel, auto, rubber, and other major industries contributed to this impression, as did the activism and calls for greater government spending by the UAW. Appearances to the contrary, unions were in fact in a defensive and declining position in the overall power structure. To begin with, less than a majority of union members were registered to vote, and not all of them voted Democratic (Boyle 1995, Chapter 5). Further, the number of workers in unions had stagnated at about 17 million between 1954 and 1960, and the percent of wage and salary workers in unions had declined from its near-high point of 34.8% in 1954 to 30.9% in 1960 (Mayer 2004, p. 22, Table A1).
Although the national-level leadership of several unions voiced strong support for civil rights legislation, with the hope that African American voters would help to liberalize the Democratic Party in the South and thereby break the Southern Democrats' stranglehold on Congress, unions faced serious internal problems because of the unwillingness of white workers to support the integration of African Americans into craft unions, especially in the construction industry (Frymer 2008, pp. 54-65). In 1959 the NAACP passed a resolution warning labor leaders that it might ask the National Labor Relations Board to decertify the many unions that were discriminating against black workers at the local level in both the North and the South. When black trade unionists brought several resolutions concerning discrimination to the floor of the annual AFL-CIO convention in that same year, the only support for the defeated measures came from the UAW (Quadagno 1994, p. 62; Roof 2011, p. 120).
The long history of racial discrimination within the labor movement did not bode well for union success as the civil rights movement captured public and government attention in early 1960, just as Democratic John F. Kennedy was beginning his quest for the presidency. But the Kennedy victory temporarily papered over these problems because he made very liberal appointments to the NLRB.
Most of Kennedy's high-level appointments in his cabinet and other important positions were moderate political figures or members of the corporate community, but this was not true for the appointments to the NLRB. Taking advantage of the unexpected opportunity to make two appointments in his first month in office, Kennedy quietly liberalized the board. His first appointment, Frank McCulloch, came from a liberal family that in the early twentieth century had been strongly supportive of integration. McCulloch graduated from Williams College in 1926, earned a law degree from Harvard, and then worked for a law firm in Chicago for five years in the mid-1930s. Leaving his legal career behind, he took a position as the industrial relations secretary for the Chicago-based Council of Social Action, a church-based organization. From 1949 until his appointment as chair the NLRB, he worked as an aide and liaison to unions for the liberal Democratic Senator from Illinois, Paul Douglas.
Kennedy's second appointment was a longtime NLRB employee, Gerald Brown, a regional director working out of San Francisco at the time of his appointment. Brown had a BA in history from West Texas State and an MA in economics from the University of Texas in Austin. McCulloch and Brown joined with a holdover Eisenhower appointee, John Fanning, a Democrat with a law degree from Catholic University, to give the board a liberal majority throughout the 1960s. Fanning's first job after he received his law degree was in the Department of Labor, followed by a high-level position in the Department of Defense in which he was in charge of industrial relations and had dealings with many craft unions working on the construction of military installations. He was appointed to the board in 1957 at the urging of Eisenhower's secretary of labor, a former defense department executive and industrial relations manager at Bloomingdale's (Gross 1995, pp. 147-152).
Kennedy's labor advisors and friendly Democrats in the House attempted to aid the NLRB in its work by formulating a reorganization plan. It allowed the board's regional offices to make final reviews on issues of fact, rather than allowing appeals to the board itself. Their aim was to decrease the large backlog of undecided cases, which grew from 410 in 1958 to 1,151 in 1961, due in good part to the increasing number of requests by corporations for board-level reviews. But the Chamber of Commerce and the NAM objected vigorously, claiming that any delegation of authority would deny the right of review by "presidentially appointed board members," which they preferred because they thought that board members "were more vulnerable to political and public pressure than trial examiners obscured from public view" (Gross 1995, pp. 157-159). The conservative coalition then blocked the reorganization plan by a 231-179 vote in the House in July 1961. This outcome served notice that the NLRB was under close scrutiny by ultraconservatives in the corporate community as well as Congressional conservatives. It was also another defeat on labor issues for the liberal-labor alliance.
The new Democratic majority on the labor board then moved quickly to regulate collective bargaining more fully than in the past in order to force resistant corporations to take the process seriously. It began by restricting what employers could say to their employees about joining a union, ruling out any claims that they would go out of business, relocate, or shut down for some period of time. It also ruled that unions had greater latitude in picketing businesses and in passing out information about a company's anti-union tactics than the Republican-dominated board had allowed. In addition, it made penalties for violations of labor laws somewhat stiffer, although it was hampered in this regard by the refusal of many courts to enforce such orders and by the conservative coalition's ability to block new labor legislation. The new board majority further aided unions by defining the size of bargaining units in ways that gave labor organizers an advantage. Most critical of all in the eyes of employers, the three Democrats on the board ruled that authorization cards signed by a majority of employees in a company, stating their willingness to join a new union, were sufficient to merit union recognition. This decision made it possible to by-pass the usual procedure of holding a representation election using secret ballots, a procedure the corporations often successfully thwarted by using various means to delay elections for many months.
These and other decisions elicited immediate protests from the corporate community, but the NLRB majority dismissed these outcries as the usual overstatements by ultraconservatives. They did so based on the false assumption, widely shared at the time in liberal and academic circles, that the biggest and most reasonable corporations had come to accept collective bargaining as a stabilizing influence, especially when they could raise prices after a contract settlement to levels that more than compensated for the higher wages and benefits they had to pay. But these decisions were nothing to the corporate community compared to National Labor Relations Board rulings in 1963 and 1964 that took the conflict to a new level, which represented a distinctly greater threat to the corporate community. Although the issues were barely worthy of media attention in the context of the rising civil rights movement, they provided new openings for organized labor to take part in management decisions, including such volatile issues as the removal of some in-plant functions to other companies ("outsourcing"), the closure of whole factories, and the movement of factories to new locations. In the eyes of all members of the corporate community, the labor board's decisions on these issues were a challenge to their "right to manage," a phrase that had been invoked since the 1940s to indicate that a sacrosanct line had been crossed (Harris 1982).
The first round in this protracted conflict, which the corporate community did not win until 1971, involved a seemingly minor matter, the outsourcing of maintenance work previously carried out by employees in a plant owned by Fibreboard, the 364th largest publicly held company in the country. By farming this work out to a low-wage company, Fibreboard lowered its labor costs and undercut the union at the same time. To make matters more complicated, the Republican majority on the NLRB originally decided the case in favor of the corporations in early 1961, before Kennedy made his appointments to the board. But the local union protested that the company's decision should have been subject to collective bargaining because it involved changes in the work process and the lay-off of workers, so the AFL-CIO lodged a strong protest. Shortly thereafter, with the two Kennedy appointees on the board, the holdover general counsel to the board decided that the case needed a new hearing. One board member was unable to participate, and another volunteered not to participate so that the case could be reconsidered in a timely fashion, which resulted a 2-1 decision in favor of the union.
Corporate leaders were not only upset by a highly unusual board action that put the right to manage at stake. They also worried that the decision would "hamper economic expansion by prohibiting the movement of capital to lower wage areas; prohibiting employers from obtaining the lowest cost of production; preventing the discontinuance of unprofitable lines or products; inhibiting automation, mergers, and consolidations..." (Gross 1995, p. 173). In addition, they thought it would hinder them in meeting the foreign economic competition they had encouraged through their advocacy of lower tariffs in order to create an international economic system that would allow for greater profits and at the same time defend again the expansion of Soviet and Chinese communism: "Employers were particularly interested in becoming more efficient through technological change, ending inflationary contract settlements with unions, and in other ways seeking to overcome the labor cost advantage enjoyed by foreign competitors" (Gross 1995, p. 190). Fibreboard, with the encouragement of the corporate community in general, made an immediate appeal to the courts.
Moreover, the Fiberboard decision was not an isolated example of a controversial ruling. The board also generated corporate hostility through a ruling on an ultraconservative textile company owners' decision in 1956 to close his plant in Darlington, South Carolina, simply because its local workers had voted for a union. Although the NLRB began its investigation of the shutdown soon after it occurred, a series of delays and legal challenges kept the case from reaching the board until the 1960s. Joined by one Republican holdover, the three Democrats voted that it was an unfair labor practice to shut down a plant in order to eliminate a union. The board held the company liable for back pay and ordered it to offer jobs to its former employees in its other mills in the South. The result was another court appeal.
In theory, it would be easy enough for the federal government to use a variety of its economic powers to force companies to comply with decisions by the National Labor Relations Board. It could, for example, exclude companies that violate the law from bidding on government contracts, which involve far more than defense spending, including purchases of everything from food to linens to trucks and automobiles for government departments and agencies. It could even launch anti-trust investigations and conduct more frequent and careful inspections for safety violations. But the conservative coalition could block legislation to implement such penalties when it came to labor issues, and presidents Kennedy and Johnson were reluctant to issue executive orders to implement such changes. In a context of stalemate, the Supreme Court in effect made labor law in the 1960s, and it did so to the detriment of unions. This step in the decline of unions was a subtle one, and did not have immediate impacts on existing unions, so it is often overlooked, but it was crucial to events that unfolded during the presidency of Richard M. Nixon.
The court setbacks for unions seem all the more unusual because the "Warren Court," overseen by chief justice Earl Warren, was an anathema for ultraconservatives and Southern Democrats. They had come to believe that it was a hotbed of liberals and radicals because it had allegedly destroyed the country's foundations through its earthshaking 9-0 ruling against school desegregation in 1954. Moreover, it had further inflamed ultraconservatives North and South with its "one man, one vote" reapportionment rulings between 1962 and 1964, which outlawed the thinly populated rural House districts that greatly favored the conservative coalition. It also outraged ultraconservatives between 1962 and 1966 by outlawing mandatory school prayer, extending the right to privacy into the bedroom, and giving new rights and protections to those arrested for alleged criminal acts. The court seemed to be remaking America in many ways.
However, for all the court's liberalism on the rights of individuals, its decisions on labor issues tilted in the direction of the corporate community and set the stage for a corporate counterattack on unions. The court first upheld the Fibreboard decision on extremely narrow grounds, in effect saying that the top leaders' "freedom to manage the business" had not been abridged because "no capital investment was involved" and the company "merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment" (Gross 1995, p. 192). So the decision was not the sweeping vindication the board needed, leaving the more general decision for perhaps another day.
|Justice Potter Stewart|
But even this narrow victory was a hollow one for the labor board, because Associate Justice Potter Stewart wrote a damaging separate concurring decision, which was joined by two other justices. It included the vague but clearly pro-management assertion that employers were not obligated to bargain over decisions that were "at the core of entrepreneurial control" or were "fundamental to the basic direction of the corporate enterprise" (Gross 1995, p. 193). Those two phrases became the basis for many future anti-union court decisions at all levels.
As disheartening as the Fibreboard decision was for the liberal-labor alliance, the decision concerning Deering Milliken's shutdown in Darlington was an even greater setback. It gave employers the right to go out of business for any reason whatsoever, "even if vindictiveness toward the union was the reason for the liquidation" (Gross 1995, p. 193). It then sent the case back to the labor board for further consideration. The court also overturned two NLRB rulings that were based on the idea that employer lockouts created too great an imbalance of power over unions. The court held that power imbalances were not the issue. Employers had the right to lock out workers whenever they wished to do so, including during contract negotiations.
Despite these apparent victories in the Supreme Court for the corporate community, the decisions did not go far enough to satisfy even the corporate moderates, who decided to join with ultraconservatives in an attempt to bring about changes in labor law through the legislative process. The outcome of this attempt was not what they originally hoped for, but it did set the stage for victory by another route in the 1970s. It is also important to describe this all-out effort so readers can decide for themselves if the reigning academic school of though on corporate power is right when its leaders say that business was not well organized until the early 1970s and did not really start to win on labor issues until the late 1970s or early 1980s. Put more specifically, political scientists David Vogel (1989) and Jacob Hacker and Paul Pierson (2010), along with historian Kim Phillips-Fein (2009) seem to be nearly oblivious to the class conflict that went on in the 1960s at the legislative, regulatory, and factory levels, which was rendered all the more volatile and difficult because white pushback against the integration of neighborhoods, schools, and workplaces was at the same time weakening the unions at the ballot box.
The corporate community began its counterattack in 1965 through the "No-Name Committee," a small group of management lawyers and industrial relations vice presidents from a dozen major companies, including AT&T, B.F. Goodrich Ford, General Dynamics, General Electric, Macy's, Sears, Roebuck, and U.S. Steel (Gross 1995). The organizational chores for the new committee, which eventually changed its name to the Labor Law Reform Group (LLRG), fell to Douglas H. Soutar, a lawyer employed as an industrial relations manager by American Smelting and Refining. In the course of carrying out his role within the LLRG, Soutar also inadvertently secured himself a place in the history of labor-management struggles because he was a detailed note-taker and careful record-keeper, including for his innumerable telephone conversations. After his retirement, he donated his files to the Industrial and Labor Relations Library at Cornell, thereby making it possible for James A. Gross (1995, pp. 200-205, 234-237) to tell the full story of the origins of the corporate community's new offensive in detail for the first time.
With the LLRG providing the general framework, the corporate leaders hired three seasoned pro-management labor lawyers to draft new legislation for eventual introduction into Congress. One worked as a legislative counselor to General Motors, Chrysler, and General Electric, a second represented Chrysler and General Motors after working on both the Taft-Hartley and Landrum-Griffin acts, and the third was an influential management attorney in Washington. Two had served on the National Labor Relations Board at one time or another. Their work was then checked over by a "Blue Ribbon Committee," which consisted of management lawyers specializing in labor issues at 100 large corporations. The drafting work was also coordinated with the Labor Policy Association -- a meeting ground for hundreds of corporations with labor-law units -- through its president, who was a former lobbyist for several corporations (Gross 1995, p. 202-203). So this was an extensive effort involving a large number of corporations, not the work of a few isolates
With the work of the three draftsmen under way, aided by financial support from the Chamber of Commerce and NAM, the LLRG laid plans for "phase two," a large public education project aimed at the country's "thought leaders." It would also include a widespread media campaign directed by a major public relations firm. There was a third phase as well, an attempt to gain the help of a Southern Democrat in the Senate, who would hold hearings on the National Labor Relations Act. Lawyers involved with the LLRG would use the hearings to criticize the act and lay the groundwork for the changes suggested by the drafting committee and the Blue Ribbon Committee (Gross 1995, pp. 205-207). However, it was early 1968 before phases two and three could be put into action.
Meanwhile, two new issues were increasing the tension between corporate executives and union leaders, which we can turn to briefly while the LLRG and the Blue Ribbon Committee are busy preparing their legislative counterattack.
While its problems with the National Labor Relations Board were unfolding, the corporate community was facing another challenge, this one in part of its own making, the possible imposition of wage-price guidelines by the federal government to control inflation. Despite the mention of their possibile usefulness in the CED report on inflation during the Eisenhower years, any wage-price committee or agency was strongly opposed by most corporate moderates as well as all ultraconservatives as an impediment to the proper functioning of the corporate system and a challenge to corporate power to determine prices and wages. Although it turned out that unions had their own reasons for disliking wage-price guidelines, corporate leaders nonetheless feared the possibility of an eventual government-labor alliance on this issue. Fully aware of the possible minefield that lay before it, the Kennedy Administration made plans to introduce voluntary wage-price guidelines into the policy mix soon after it took office. It did so gingerly by first appealing to the need to preserve foreign markets in the face of a potential wage-price spiral that might jeopardize the international competitiveness of American corporations: "We cannot afford unsound wage and price movements which push up costs, weaken our international competitive position, restrict job opportunities, and jeopardize the health of our domestic economy," Kennedy wrote in a special message to Congress two weeks after the inauguration (Barber 1975, p. 141).
As a first step, Kennedy appointed an Advisory Committee on Labor-Management Policy, consisting of top business leaders and major union presidents, which was charged with the responsibility of recommending measures to meet the goal of wage-price stability. However, the committee could not achieve consensus, and the corporate members strongly rejected any semblance of government guidelines or hearings in relation to price increases. While the labor-management advisory committee floundered, the administration carried out discrete efforts behind the scenes (largely through members of the Council of Economic Advisors and its staff) to limit the size of any wage increase resulting from the 1962 contract negotiations between the United Steel Workers and the steel industry. As part of this effort, Secretary of Labor Arthur Goldberg, a former lawyer for the steelworkers union, put his credibility on the line with organized labor by urging the steelworkers to keep their wage demands within the bounds set by productivity gains. Kennedy then talked personally with the president of the steelworkers, leading to his reluctant acceptance of the Kennedy-Goldberg pleas to maintain political solidarity with the pro-labor president. The White House also thought it had reached an understanding with U.S. Steel, the industry's price leader, that it would not raise prices. In fact, Kennedy and Goldberg had met with the president of the steelworkers and Roger Blough, the chair of U.S. Steel, as a way to finalize an agreement that had involved lengthy negotiations (Barber 1975, pp. 167-168).
|Roger Blough |
Two weeks after the settlement was announced, Blough asked for a White House appointment on only a few hours notice and told Kennedy that U.S. Steel had decided to raise its prices by $6 a ton. Kennedy was taken by surprise, but he knew he was not the first president to have problems with the steel industry. Truman faced three similar confrontations between 1946 and 1952, ordering the combatants to the White House to resume negotiations in 1946 and temporarily taking over the industry in 1952, only to have the Supreme Court rule that his action was illegal. The Eisenhower Administration was drawn into an intermediary role in a steel strike in 1956, but kept its involvement secret, and it had to set the terms for the settlement of a 116-day steel strike in 1959, which specifically prohibited an increase in steel prices (Gordon 1975, pp. 128-129). A study prepared by two economists for the Joint Economic Committee in 1959 concluded that increases in steel prices "had contributed greatly" to inflation in the late 1950s (Barber 1975, p. 155).
With the prestige of the presidency and the concept of wage-price guidelines at stake, as well as his own image in the eyes of the union movement, Kennedy immediately took several highly publicized actions to force Blough to rescind the price increase. His strong reactions to what he saw as a double-cross by Blough included the exercise of powers he would not consider using in order to help unions: threats of anti-trust actions, other types of government investigations, and the transfer of government steel purchases to companies that did not raise their prices. The battle was over in 72 hours when U.S. Steel announced that it would rescind its price increases. For Blough and other corporate leaders, it was a worrisome reminder of the potential power of the government to dictate to the corporate community, at least in the short run (Schlesinger 1965, pp. 636-639).
Although the administration soon claimed that the outcome of its first serious attempt at institutionalizing restraint by both corporations and unions was on balance a successful one, even though there were subsequent piecemeal price hikes by most steel companies, it was hesitant thereafter to become actively involved in contract negotiations. In the aftermath, one of Kennedy's CEA appointees did a careful study of the experience of several European governments with wage-price policies. He concluded that they did not do any better in holding down wages and prices, even though they had more power over these issues than did the American government (Barber 1975, p. 175). Moreover, the episode reinforced organized labor's wariness of guidelines as more likely to restrain wages than prices, partly because wages are more easily monitored than prices, but also because of the corporate community's general clout. In addition, agreeing to wage-price guidelines would imply that organized labor tacitly accepted the current distribution of income between wages and profits as being fair, but that seemed morally wrong to many union activists, liberals, and leftists, especially at a time when profits were soaring (Dark 2001, pp. 64-66).
The same story repeated itself for President Johnson when he assumed office in late 1963. Two weeks after he assumed office, one of the labor leaders he worked very hard to cultivate, Walter Reuther, told members of the Council of Economic Advisors that the UAW intended to demand large wage increases in the light of record profits at General Motors and other automobile companies during the previous year. Since the industry was making great gains in productivity as well as profits, Reuther in effect challenged the administration to "enforce the price guideposts in the automobile industry," which would mean wage increases without price increases (Cochrane 1975, pp. 199-200). Not only were automobile company profits high, but Reuther also worried that he would look weak to the rank-and-file by accepting only moderate wage gains while the Teamsters and the construction unions were winning large increases. When the CEA checked with its main contact at General Motors, it learned that GM would insist on a price increase if it had to raise wages by a significant amount.
In response to the likelihood that other union and corporate leaders were thinking much the same way, Johnson approved plans for a more elaborate system of gathering information and influencing contract negotiations in 1964 than Kennedy had been willing to consider. However, the AFL-CIO made its opposition to these efforts clear in May of 1964 with a long statement saying that guidelines were unnecessary because "inflation is not today's threat. Today's threat is idle men, idle plants, and idle machines" (Dark 2001, p. 65). Still, the steelworkers did limit themselves to a 3.2 percent increase during contract discussions in 1965, only to see the steel companies ignore the implicit bargain once again by making small price increases on different products over a period of several months. Shortly thereafter, the wage-price guidelines were a dead letter as far as labor, corporations, and Johnson were concerned.
Wage-price guidelines aside, by late 1966 tax increases seemed to be the proper remedy for dealing with inflation in a situation in which government spending could not be cut due to the escalation of the Vietnam War and the need to spend money to deal with rising tensions in inner cities. Tax increases for high-income earners and profitable corporations appeared to be especially needed. Johnson completely understood this basic point, but political considerations once again made him hesitate. Asking for a tax increase would be to admit that the Vietnam War was expensive and going badly. It would also incur the wrath of the large number of Americans with strong anti-tax sentiments, and perhaps put the large contingent of new Democratic members of Congress at risk in 1966 in their traditionally Republican districts and states. Equally problematic, the conservative coalition made it clear that the price for such an increase was cutbacks in social spending. But the reductions in social spending sought by ultraconservatives risked more conflict among black activists, organized labor, and city officials.
Thus, the options for dealing with the wage-price spirals were narrowing. Neither corporations nor unions found wage-price guidelines acceptable, and the ultraconservatives rejected the increase in taxes on higher-income citizens that were part of the remedy for inflation according to Keynesian economics. By a process of elimination, the only acceptable remedy for inflation became higher interest rates, which reduced inflation by reducing consumer demand and throwing people out of work. This remedy had the added advantage of weakening unions. I think this turn to high interest rates is the reason why the corporate moderates deserted the commercial Keynesianism they had created through the Committee for Economic Development and instead turned to "monetarism" as their new preferred economic theory. In other words, the issue was power, not economic theory. The concerns of the corporate community had changed from a need to insure consumer demand, due to a lingering fear of what happened in the 1930s, to a need to control inflation and labor unions. The best rationale for making the pivot was an academic theory that in effect allowed the corporate community to defeat labor through high interest rates set by the untouchable Federal Reserve Board. Monetarism first triumphed in the halls of power, and only later in the groves of academe.
As if all this were not enough for the corporate community, which was also trying to deal with the civil rights movement in a conciliatory way and provide political support for the Vietnam War, public-employee unions suddenly became another potential problem for them. Public-employee unions not only could bring in many new members and win new benefits for public employees, but they could add muscle to what was in fact a sagging union movement in the private sector.
Although the origins of the American Federation of Teachers, the International Firefighters Association, and the National Federation of Federal Employers go back to World War I, few public-employee unions managed to gain a toehold in cities and states until the 1950s, usually signing up white-collar workers in municipal government. A bill introduced into both the House and Senate in the late 1950s to give federal employees the right to organize offered new hope, but it did not cause a stir until it was introduced once again at the outset of the Kennedy years. Suddenly, the bill was not only seen as threatening to most members of the conservative coalition, but to government executives as well. Several Kennedy aides, fearful that Congress "might enact a bill that gave workers too many rights and unions too much power," suggested that the president issue an executive order "intended to placate his labor allies while ensuring that the advent of collective bargaining in the federal service would alter labor relations as little as possible" (McCartin 2011, pp. 35-36). Organized labor, on the other hand, greeted the proposed legislation with enthusiasm, hoping to organize workers at the federal level, and then turn to state and municipal employees in the parts of the country in which union organizing had failed.
Lawyers for the Department of Defense wrote the first draft of the preemptive executive order based on the claim that unionized employees might impede defense production. Ninety-two work stoppages between 1956 and 1961 by skilled craftsmen at the National Aeronautic and Space Administration were the primary basis for their concern. After learning of this effort, Secretary of Labor Goldberg took control of the process by creating a task force that included representatives from several departments and agencies, including the Department of Defense, the Bureau of the Budget, and the Civil Services Commission, all three of which wanted the most narrow order possible in order to limit union powers.
The executive order finally issued in 1962 was indeed narrow in scope. It emphasized that federal employees need not join a union, ruled out strikes, included few of the procedures the AFL-CIO requested, and was soon made even more restrictive through interpretations by the Civil Service Commission. But union leaders praised it in public because it gave them the right to organize federal workers. As the labor organizers had anticipated, there was a rapid rise in membership for most public-employee unions, including at the state and local levels, with 23 states passing laws permitting public sector bargaining by 1970. For the most part, they were states in which liberal unions had used a variety of activist tactics and the Democrats had a legislative majority (Miller and Canak 1995a). The growth in public-employee unions was "the biggest breakthrough for labor since the New Deal" (McCartin 2011, p. 43).
The corporate community's reactions to this new organizing drive broke along the usual moderate/ultraconservative lines. The NAM and Chamber of Commerce insisted that public-employee unions should be restricted to the right to meet and confer, but with no right to collective bargaining. The corporate moderates proceeded more cautiously by using their positions as foundation trustees to suggest background studies. The Carnegie Corporation provided money in 1966 for a joint study by two associations of governmental executives, the National Government Center and the Council of State Governments, which were part of a large urban policy-planning network that had been in place since the 1930s with the help of financial support from Rockefeller philanthropies (Brownlow 1958; Roberts 1994).
Shortly thereafter, in 1967, the Ford Foundation provided The Brookings Institution with funds for a parallel study. Formally published in 1971, but widely circulated before that date, the Ford/Brookings report suggested that public officials stress the right not to join a union in talking with their employees, and offered specific ways to discourage unionization effort. In effect, sociologists Berkeley Miller and William Canak (1995b, pp. 28-29) conclude, the report suggested ways in which public officials could "avoid unionization by contracting out public services to private employees, leaving them entirely to free enterprise, or by skillfully resisting union organizing drives." The corporate moderates thus wanted to use contracting out in government agencies in the same way they wanted to use outsourcing in their corporations to lower labor costs and weaken unions. By 1970, the Ford Foundation had given $445,000 to a consortium of urban policy-planning groups to establish a new Labor-Management Relations Service to train government administrators to deal with unions. The Ford Foundation also helped create the National Public Employers Association, a national-level labor relations association for public officials at all levels of government. Its Business Research Advisory Committee included representatives from Eastern Airlines, Ford Motor, General Electric, and Republic Steel (Miller and Canak 1995b, pp. 28-29).
But for all the corporate efforts in the 1960s and later decades, the corporate community now had a new thorn in its side, which helped to sustain the union movement politically throughout the 1970s. All that was in the future, however. The focus of the Labor Law Study Group was on the industrial unions that the corporate community now saw as a threat to its right to manage as well as the primary cause of inflation.
By late 1967 the Labor Law Reform Group had a final draft of its proposed changes in the National Labor Relations Act. First and foremost, the draft put more emphasis on the right of employees to join or not join a union, and on the right of management to talk with employees about this decision. The plans to shape public opinion and influence Congress were also in place, but at the same time members of the LLRG "knew that there was no chance of changing the law unless Republicans triumphed in the 1968 presidential and congressional elections" (Gross 1995, p. 205). The public education phase of the campaign was carried out by Hill and Knowlton, the world's largest public relations firm, which handled publicity and lobbying for numerous industries, including tobacco (by denying that smoking was bad for health), pharmaceuticals (providing advice throughout Senate hearings concerning the marketing of untested drugs), and steel (during large strikes in 1952 and 1959). Its plan involved a nationwide effort that would be conducted without revealing its origins in the LLRG. As part of its effort, Hill and Knowlton said it would "meet privately with leading liberals" to learn how to overcome liberal objections; it also prepared editorials to send to hundreds of small newspapers and longer stories for nationwide magazines with which it had close connections (Gross 1995, pp. 207-208).
The LLRG's main legal counsel (i.e., main lobbyist) for the Congressional phase of the campaign was a Washington lawyer who had worked on the Landrum-Griffin Act with other corporate lawyers, first as the general counsel to the House labor committee, then as a White House liaison to Congress. With Soutar of American Smelting and Refining playing a coordinating role, the LLRG then directed its efforts through Senator Samuel Ervin of North Carolina, a strong supporter of the textile industry. A 1922 graduate of Harvard Law School, Ervin orchestrated public hearings beginning in late March 1968, through a very unusual venue. He created a select subcommittee of the Senate Judiciary Committee, appointed himself chair, and then added a strong majority of anti-union senators to the committee. This strategy allowed the corporations and their supporters in the Senate to by-pass the more liberal Senate Labor and Education Committee. The subcommittee was created ostensibly to examine the freedom to join or not join a union from several independent perspectives, but 70% of the testimony came from corporate lawyers working with the LLRG, although none of them mentioned this fact.
Many LLRG witnesses were especially critical of the Fibreboard decision, calling it "codetermination," which a labor lawyer from Olin-Mathieson attacked as "an alien doctrine, fundamentally contrary to the structure of U.S. industry because it involved the worker in the management of the enterprise," a "socialist" idea imported from Europe. Their concern was to return to "traditional collective bargaining," which meant discussions limited to wages, hours, and working conditions. Problems arose, however, in early August when a liberal Senator from Oregon, Wayne Morse, who was first elected as a Republican in 1945 and then became a Democrat in 1955, revealed the full story behind the hearings in the Congressional Record. Two days before the 1968 elections, the Los Angeles Times ran an in-depth report in which spokespersons for both the Chamber of Commerce and Hill and Knowlton acknowledged that a coordinated campaign had taken place (Gross 1995, pp. 211-212, for the information and quotations in this paragraph).
In terms of impact, the hearings were completely obscured by anti-war demonstrations, the scramble for the Democratic presidential nomination after Johnson announced he would not run again, and the assassinations of Martin Luther King, Jr., and Robert F. Kennedy. Although the Republicans gained five seats in the Senate in 1968, including the one held by Morse in Oregon, and five in the House as well, the labor committees in both houses still had too many non-Southern Democrats to make significant changes in labor laws possible. The overall campaign therefore ended in failure, but it once again revealed just how coordinated 100 or more corporations were for lobbying Congress and connecting with opinion-shaping organizations. It also showed their determination to prevail one way or another on this issue, and prepared them to work closely with future presidents on labor issues. They were to get their chance very soon due to divisions in the liberal-labor alliance and the election of Republican Richard M. Nixon to the presidency in 1968. Historical institutionalists and other contemporary scholars sometimes write with near-nostalgia about how liberal Nixon really was, but they don't take labor issues into consideration in making that claim. They are also wrong to take the growth in spending on welfare and Social Security as evidence of Nixon's liberalism, since the moderates in the corporate community were all for it, but that mistake is a separate story from the one being told here (Domhoff 2013).
Union decline began in the 1960s for two separate reasons. First, corporate resistance to unions stiffened as manufacturing companies faced stronger competition from abroad and a need to automate their production processes. Corporate leaders were not willing to have their "right to manage" challenged under any circumstances, but they thought the issue was especially critical in the new competitive environment they had created for themselves through their strong lobbying for tariff reductions. From the point of view of liberal union leaders, though, it still seemed possible that the corporate leaders might accept the need for government insurance programs to socialize the growing costs of expensive corporate benefit programs. However, the corporate community did not want to risk government gaining any more legitimacy and power than it already had, and in any event the Southern Democrats would have fought such plans with great intensity in order to preserve the low-wage economy and racialized way of life in the South. The union leaders in the liberal bloc proved to be very wrong, perhaps because they thought the primary issue for corporate leaders was profits, not power.
|Walter Reuther (UAW) at the 1963 March on Washington|
Secondly, the growing divisions between liberals and labor over how to react to the civil rights movement's demands for integration of neighborhoods, schools, and workplaces made the union movement vulnerable to a renewed corporate attack. As the disruption generated by activists in the black community (and then the anti-war movement) continued to escalate after 1965, it soon became apparent that the liberal trade unions could not organize a large voting coalition in favor of the government programs they favored. Even in the case of the most progressive industrial union, the UAW, its leaders' hopes for an enlarged welfare state on the basis of a black-white worker's coalition in both the North and the South, with the segregationist Southern Democrats finally displaced, were "little more than ashes" by 1968. The UAW simply did not have the ability "to maintain a cross-class, biracial coalition committed to continued reform." Instead, it lost the support of its major allies and the confidence of many of its white members: "For very different reasons, African-Americans, white workers, liberals, and the New Left all came to see the UAW, as they saw the Johnson Administration, as a prop for the status quo," historian Kevin Boyle concludes in a concise summary of his study of the UAW between 1945 and 1968. Far from any notion that labor had sold out or betrayed its promise, its story was one "of struggles fought -- and lost" (Boyle 1998, pp. 230-231 for the information and quotations in this paragraph).
|George Meany (AFL-CIO)|
To make matters worse, longstanding tensions became worse between Walter Reuther, the president of the UAW and the de facto leader of the liberal unions, and the president of the AFL-CIO, George Meany, a former plumber with a classic craft-union mentality and little interest in helping African American workers, if any. What made the old tensions worse were Meany's support for the Vietnam War and foot-dragging on integration. Reuther withheld UAW dues to the AFL-CIO to express his displeasure with Meany's leadership, which led Meany to suspend the UAW from the AFL-CIO. Reuther then formed a new Alliance for Labor Action that drew "the most unlikely of partners," the Teamsters, noted for corruption and political conservatism. The failure of the Alliance for Labor Action reflected the UAW's isolation, and that of the liberal unions in general, from the rest of the labor movement at that point (Boyle 1995, pp. 246-247).
Although union membership in the private sector declined during the 1960s, that fact was cold comfort for the corporate community. It was far more concerned that the most powerful of the private-sector unions, such as those in construction, steel, and autos, could still use slowdowns, work stoppages, and strikes to win wage increases, cost-of-living clauses, and better benefits in a context of tight labor markets and domestic turmoil, which would raise costs for the largest corporations. As a consequence, reducing union power became the primary concern for both moderates and ultraconservatives in the corporate community by 1968, whether the immediate issue was inflation, wage rates, profit margins, or foreign trade.
This renewed emphasis on defeating unions occurred just as Richard M. Nixon prepared to assume the presidency, thanks to a narrow victory over Hubert Humphrey in the popular vote by a 43.4 to 42.7% margin, which lead to a 301 to 191 victory in the Electoral College. Nixon's triumph was in part made possible by the defection of white Democrats to the third-party candidacy of Alabama's segregationist governor, George Wallace, who won five Southern states and 13.5% of the nationwide popular vote, thereby showing that his success in Democratic primaries in 1964 was no temporary aberration. His strong support in 1968 in two highly populated Midwestern industrial states, Ohio (where he had 11.8% of the vote) and Illinois (where he had 8.5%), may have contributed to Nixon's narrow victory in them. All that said, Nixon's victory probably owed even more to the white Democrats who cast their votes for him instead of Humphrey. Whether they turned to Wallace or Nixon, the white vote for the Democratic ticket plunged by nineteen percentage points between 1964 and 1968 in many industrialized Northern cities. As a case in point, "Half of the voters in UAW areas [i.e., city neighborhoods or suburban communities] had cast their ballots for conservative candidates, a profound change for a union whose members had been among the Democrats' most loyal supporters" (Boyle 1995, p. 256).
Yes, the Vietnam War was extremely divisive, and it left undying enmity between some groups and unending recriminations between many young adults of that era and war veterans from older generations. However, it is unlikely that very many defections to Nixon or Wallace by previous Democratic supporters can be attributed to support for the war or opposition to the anti-war movement. Instead, polls suggested that even though a majority of blue-collar and white-collar employees disliked the anti-war movement, they were opposed to the war as well (Hamilton 1975, Chapter 5; Mueller 1973; Mueller 1984). It therefore seems more plausible that the defections were due to the backlash against the Democrats' support for integration. Within the UAW, for example, a majority of the members were resolute in their belief that the civil rights movement had gone too far too fast, and should go no further (Boyle 1995, Chapter 10).
It is this defection by white trade unionists from the Democrats, not the alleged sudden organization of the corporate community, which explains the right turn in the United States on labor and many other issues. A fractured liberal-labor alliance was defeated by an enlarged corporate-conservative alliance that was revitalized by the resentments of white Democrats and independents over the demands by the civil rights movement, feminists, environmentalists, and soon thereafter, the gay-lesbian movement. I know it sounds strange coming from a class-dominance theorist, but the problem was not that the corporate community somehow got its act together and asserted itself. This corporate-assertiveness theory is the great conceit of the liberal conventional wisdom of the twenty-first century, which comes close to explaining away the defections from the liberal-labor alliance that were the main cause of its demise, or at the least, the start of its decline and fall (Hacker and Pierson 2010; Phillips-Fein 2009).
Many of the headlines during the Nixon years concerned the Vietnam War and rising government payments for various kinds to low-income people. There was also a kerfuffle over Nixon's proposed Family Assistance Plan, a kind of guaranteed annual income for low-income families with children, which ultimately was vetoed by the conservative coalition. But the biggest issue by far in the eyes of the decision-makers was inflation, and behind inflation stood their beliefs about unions being the chief cause of inflation, especially in the construction, heavy metals, and automobile industries.
The Nixon Administration took the usual commercial Keynesian steps to deal with the inflation problem, raising interest rates and moving towards a balanced budget. But inflation went up, not down, during Nixon's first two years in office. Despite the government efforts, leaders within the corporate community complained that not enough was being done in a timely fashion. This was especially the view of executives who managed companies rushing to complete new factories, because wages and fringe benefits for construction workers had increased by 10% between June 1968, and June 1969. Wage increases in plant construction also contributed to a rise in housing prices due to the fact that the unionized workers who built residential housing insisted on the same wage and benefit scales established in industrial construction.
Although the corporate chieftains publicly blamed the resulting wage increases on unions, they had contributed to the problem, and many of them understood that fact. In their search for higher profits and greater market share in a booming economy, they encouraged contractors to take on extra workers, and to pay overtime wages if necessary, to finish new projects on time. They thereby tightened labor markets over and beyond what a strong economy was already causing, which also made it possible for unionized industrial and construction workers to keep up with the inflationary spiral. In some cases, workers were able to win settlements that improved their wages, temporarily pushing their gains above increases in the Consumer Price Index (Edsall 1984, p. 157).
The result was the creation in August 1969 of a new corporate organization to enforce self-restraint and provide aid to construction companies in trying to restrain unions from playing catch-up through their cost-of-living adjustments and also new contracts when the old ones expired. More generally, it was the beginning of another escalation in the corporate battle with unions. Called the Construction Users Anti-Inflation Roundtable, its members included many of the companies already in the Labor Law Reform Group, such as Alcoa, AT&T, General Electric, General Motors, Standard Oil of New Jersey, Union Carbide, and U. S. Steel. As part of their effort to help construction companies resist demands by unions, they encouraged them to become "double-breasted," a euphemism for having a unit of the company that bid for non-union contracts. Backed by the big industrial corporations, the Associated General Contractors of America developed a strike insurance fund to provide money to companies that resisted union demands for wage increases that exceeded the inflation rate. (See Linder, 1999, for stunning detail on how all this was planned, based on the use of the organization's archives — which were never made available to researchers again after Linder's bombshell of a book came out.)
The new group was informally called "Roger's Roundtable" because Roger Blough, the retired chair of U.S. Steel, was its prime mover and founding chair. As Douglas Soutar, the convener of the Labor Law Reform Group, said many years later, he thought Blough was the key person "in everything," self-effacing and widely respected for his leadership throughout his long business career (Soutar 1996). But it was also the case that the steel industry was under especially strong pressure to hold down construction costs due to increasing international competition from foreign mills that were more productive than the American plants and had lower labor costs (Swenson 2002, pp. 308-310). In fact, Blough (1968/1972) had already called for import quotas because the steel industry was losing a big part of the American market and could no longer pass along rising production costs to its corporate customers.
In a dagger aimed at the heart of the construction unions, the Construction Users Anti-Inflation Roundtable asked the White House to suspend a 1931 law that put a floor under construction wages. Championed in that bygone era by Republicans James Davis, a senator from Pennsylvania, and Robert Bacon, a representative from New York, the law has been known ever since simply as "Davis-Bacon." Originally intended to keep contractors from making the lowest bids on a contract on the basis of extremely low wages for workers they would bring in from low-income regions of the country, Davis-Bacon required federal contractors to pay the local "prevailing wage" to construction workers. In practice, though, the prevailing wage soon came to be set by government officials through informal negotiations with construction unions, which meant that the wage usually did not decline and often increased.
Reacting to the wage increases in construction, Arthur Burns, one of Nixon's key economic advisors, with many links to the corporate community, made similar suggestions to Nixon and his cabinet. In addition to suspending Davis-Bacon, the Construction Users Anti-Inflation Roundtable and Burns also wanted to expand training programs to increase the labor supply, reduce federal spending on construction, and forbid contracts that restricted hiring to private employment centers controlled by the trade unions. The secretary of labor, who came to government from his post as dean of the business school at the University of Chicago, opposed suspending Davis-Bacon and by-passing union hiring halls. However, with the help of one his assistant secretaries, a former vice president of labor relations at Standard Oil of New Jersey, he reshaped apprenticeship programs by taking the power to select new apprentices away from construction unions. The secretary of labor thereby brought about some integration of the construction trades while also diminishing the unions. Based on predictions of an imminent labor shortage that never materialized, he also increased the size of apprenticeship programs. In tandem with the Construction Users Anti-Inflation Roundtable and the construction unions, he next established a Construction Industry Collective Bargaining Commission to mediate disputes and find new ways to moderate wage increases (Marchi 1975, pp. 310-311).
In the short run, though, inflation continued to rise. In late April 1970, Burns, by this time the chair of the Federal Reserve Board, gave a speech in which he said that demand-driven inflation was giving way to cost-push inflation caused by the wage-price spiral, which meant that "making monetary and fiscal policies still more restrictive not only would be ineffective but would invite recession" (Marchi 1975, p. 316). He therefore advocated short-term controls. Then the Business Council sent the White House a "message of censure" in October because it had failed "to check excessive wage and price increases" (Marchi 1975, p. 326). In effect, the corporate executives wanted to rely on two confrontational options for dealing with inflation, which could be used separately or together. One would hold the line on wage increases, thereby forcing blue-collar and white-collar employees to absorb the costs of inflation through cuts in their real wages. This course was justifiable in employers' minds because they thought that workers had been making excessive wage demands. The other option would increase unemployment by using high interest rates set by the Federal Reserve Board, despite the warnings by Burns as to their efficacy, to reduce consumer demand and business investments.
Faced with these criticisms, Nixon nonetheless tried to maintain a gradualist policy for dealing with inflation to avoid alienating the union leaders that supported his Vietnam policies. But with the inflation rate averaging 18% for the first year of new government construction contracts, he asked the members of the Construction Industry Collective Bargaining Commission in mid-January 1971 to come up with a plan for dealing with inflation within 30 days. When the business executives and labor leaders on the commission could not agree to a plan. Nixon then turned to the remedy favored by the Construction Users Anti-Inflation Roundtable, a suspension of the Davis-Bacon Act in February 1971. The suspension ended a month later with the trade unions agreeing to a new Construction Industry Stabilization Committee, "whose task it was to abate wage increases to something like the rate that had prevailed from 1961 to 1968" (Marchi 1975, p. 332). All settlements would have to be approved first by craft-level dispute boards and then by the new industry stabilization committee.
Nixon was not yet prepared to institute a wage-prize freeze or make the transition to a government board to recommend caps on wage and price increase, partly because of strong divisions within his administration over taking those steps. But the Business Council decided that it did not want to wait any longer for action. In a meeting at the White House with Nixon in May, the president of a major corporation of that era, Cummins Engine "espoused the immediate adoption of temporary wage and price controls." Then the Business Council as a whole took "the unprecedented step of taking a straw vote on the issue, subsequently conveying to the president an expression of discontent at the administration's failure to secure smaller wage and price increases" (Marchi 1975, p. 340). Strikes in several different industries in the summer of 1971, which resulted in major wage hikes, including a 30% wage increase over a three-year period for the United Steel Workers, finally forced Nixon's hand (Matusow 1998, p. 110).
The new government plan announced in early August instituted a 90-day freeze on wages and prices, but not on dividends, interest, or profits. Even imminent pay raises negotiated earlier by unions on behalf of 1.3 million employees were frozen. Most interest groups and the general public, including the corporate community, responded to the freeze with strong approval, but unions reacted negatively because they thought it was aimed at them. As historian Allen Matusow (1998, p. 157) explained, "Everyone knew the real purposes of the freeze. It was to halt the excessive wage settlements driving up cost-push inflation." The noose was tightening around the unions and their attempt to stay even with inflation.
At the end of the 90-day wage-price freeze, Nixon established separate pay and price boards, which were fashioned in part to satisfy organized labor. Their charge was to establish guidelines and limit the size of any increases that went beyond them. The pay board, with five labor representatives, five business representatives, and five public representatives, voted ten to five against retroactive pay increases for the 1.3 million employees whose raises had been frozen (Matusow 1998, p. 162). Its later decisions may have restrained wage increases somewhat, but several of its early settlements were very permissive. The price board, with seven public members, didn't even do that well. However, it turned out that inflation was declining for normal economic reasons, and unions were being somewhat more cautious in what they demanded.
While all this drama over inflation and wages was providing fodder for press conferences and media pundits, the Labor Law Reform Group was working patiently with the White House to change the composition of the National Labor Relations Board in ways that would have long-term impacts on a whole range of management-union issues. LLRG members understood that the changes had to be gradual because of Nixon's desire to maintain labor leaders' support for the Vietnam War while at the same time controlling civil disturbances and gaining as much blue-collar electoral support as possible. They also realized that pro-labor Democrats controlled the labor committees in both Houses and could block anti-labor appointees. Despite these obstacles, the direction of the board was quietly changed in dramatic ways by late 1971.
With Soutar of the LLRG designated by his corporate superiors to work with the Nixon Administration on all labor-related appointments, including to the NLRB, the secretary of labor rejected the LLRG's initial suggestion for a new chair of the labor board. Instead, he asked for a Republican who was not from either wing of the party. The result was the appointment of a corporate lawyer, Edward Miller, a partner in a large Chicago firm, and a member of the Blue Ribbon Committee that helped guide the work of the LLRG. Miller said little about his views before or after his appointment, but he did indicate he believed that protecting the freedom of employees to join or not join a union was more important than the encouragement of collective bargaining. George Meany formally opposed Miller's appointment, but not so vigorously that Democrats on the Senate labor committee voted against him. Nor was there any opposition to Nixon's second appointment, Ralph Kennedy, a long-time staff member of the NLRB, who had become a regional director during the Eisenhower Administration (Gross 1995, pp. 220-221).
Joining with a Republican holdover on the board, Miller and Kennedy diluted or reversed many of the decisions made by the board during the Kennedy-Johnson years. They began by ruling that the board was limited in the penalties it could impose on companies that violated the law, and then gradually allowed more anti-union statements by employers in the name of free speech. However, their most important decision came in 1971, when they ruled that there was no duty for corporations to bargain on decisions that involved "fundamental managerial issues," which effectively overruled the board's 1963 Fibreboard decision without explicitly doing so (Gross 1995, p. 226).
The case concerned General Motors' right to sell a truck dealership to an independent company that would be doing business in space it leased from General Motors. (In other words, the independent company wasn't really very independent at all). But the majority ruled that General Motors only had to bargain about the "effects" of the sale, not about the sale itself. It drew that fine distinction because the sale "was financial and entrepreneurial in nature" (Gross 1995, p. 193). The difference may seem small, but the Democratic majority had ruled in the Fibreboard case in 1962 that there was a duty to bargain about the decision itself, which meant that it had to happen before the decision was made. Although the Supreme Court supported the labor board's Fibreboard decision on narrow grounds in its 1964 opinion, the Republican majority on the NLRB now focused upon the comment in Justice Potter Stewart's concurring decision about management control over decisions that were "at the core of entrepreneurial control" or were "fundamental to the basic direction of the corporate enterprise" (Gross 1995, pp. 225-227).
This change opened the way for outsourcing and plant removal without any notice or consultation. It thereby facilitated the unimpeded movement of production to low-wage American states and third-world countries at the same time as communication and transportation costs continued to decline. In other words, the outflow of jobs that is now viewed as one inevitable part of "globalization" did not just naturally somehow happen due to the "efficiency" of the market and technological changes, but due to a power struggle that the corporations won and the unions lost. This is what those who don't take detailed historical studies seriously usually fuzz over in one way or another in historical glosses at the big-picture level. It's also where the assumptions of economics and traditional organizational sociology, which ignore power and class conflict, are smuggled into the story without any discussion. At the least, a more powerful union movement could have won larger and longer transition benefits for all members, bigger and better retraining programs for younger members, and better buy-out packages for older members. But no, the corporate rich and their corporations reaped all of the benefits of globalization.
From 1971 on, once the NLRB made its killer decisions, the battle between the corporate community and organized labor was fully joined at all levels. The new anti-union offensive also included the return of consulting firms that advised corporations on how to keep out or disestablish unions. By the late 1970s there were dozens of such firms, with one of the largest, West Coast Industrial Relations Associates, claiming as many as 1,500 clients a year (Smith 2003, pp. 102-104). Anti-union consultants often encouraged corporations to fire workers who tried to create unions, even though such an action was illegal. They calculated that it was worth paying the relatively small fines and back wages when the case was finally decided after the exhaustion of their delaying tactics, if unions could be defeated in the meantime. They also attempted to decertify unions that already had been established. In addition, the ongoing movement of unionized factories out of Northern states to the South and lower-wage foreign destinations made workers more hesitant to ask for large wage increases. This wide-ranging corporate attack, from the labor board to the factory gates, and the consequent loss of union power, is one of the major reasons for the decline in income for average workers during the 1970s (Bluestone and Harrison 1982; Volscho and Kelly 2012; Western and Rosenfeld 2011).
Encouraged by their success in shaping the National Labor Relations Board and in combating the construction unions, corporate leaders decided to turn the Labor Law Study Group and the Construction Users Anti-Inflation Roundtable into committees within a more general business organization. The Business Roundtable, which is treated with awe by Vogel (1989) and Hacker and Pierson (2010), was incorporated in October 1972, announced in mid-November, and began putting together an administrative structure by early 1973, just as Nixon's second term began. Contrary to historian Kim Phillips-Fein's (2009, p. 192) breezy overview of the group's origins, the Business Roundtable did not originally include the March Group, a gathering of 40 chief executives leaders and their Washington representatives, who were working on ways to influence Congress and sway the electorate. The accurate story is presented by Gross (1995, pp. 234-235) in his account based on a detailed look at the Business Roundtable's archival papers in the School of Industrial and Labor Relations at Cornell.
The renamed Labor Law Reform Committee continued to be chaired by Soutar, carrying on the effort initiated in 1965 to bring about changes in labor law and to influence appointments to the National Labor Relations Board. The Construction Users Committee, chaired by an industrial relations lawyer at General Electric, continued the lobbying and legal work started by the Construction Users Anti-Inflation Roundtable. When the March Group was incorporated into the Business Roundtable several months later, it became in effect the Public Information Committee, which continued (without any luck) to try to shape the climate of opinion concerning corporations. These details aside, the Business Roundtable is worthy of mention in an account of the decline of the labor movement because of the anti-union substance of its founding manifesto and its coordinating role in a major anti-union legislative conflict a few years later. The Business Roiundtable was a sign of the times, and of things to come.
The Business Roundtable's early 1973 statement of purpose, "The Business Roundtable: The Purpose and Challenge," begins by claiming that inflation had been the most "persistent" and "pervasive" of all the problems that faced the United States in the previous decade, and predicts that it was "likely to be the dominant economic challenge of the Seventies." It then quotes a statement by Federal Reserve Board chair Arthur Burns asserting that cost-push (i.e., union-caused) inflation results "in a never ending circle [that] is the most difficult economic issue of our time." Burns's claim is softened a few paragraphs later with the qualification that the government's fiscal and monetary policies share "some of the blame" because they create demand inflation, and it is noted that food prices were "advancing rapidly." Still, the concentration is nonetheless on "the cost of labor" because "runaway unit labor costs will make economic stability impossible." It then explains that "a limited recovery from low profit margins" would necessitate that increased labor costs "would have to be quickly transmitted to the public through higher price costs" (BRT 1973, pp. 1-3). Once again, that is, the power of organized labor was at the heart of the inflation problem, and government was at fault for aiding unions. Government interference in capital-labor relations, couched in terms of interference in the market and bureaucratic over-regulation, was the primary object of the Business Roundtable's lobbying over the next eight years.
The manifesto contained many suggestions. For example, Business Roundtable leaders wanted to repeal the prevailing wage rules in Davis-Bacon and to block future increases in the minimum wage. They claimed that restrictive work practices were cutting into the rate of growth in productivity. The Roundtable founders were especially annoyed by what they believed to be a rise in the use of food stamps by strikers. Although the House had rejected attempts to ban the practice in both 1971 and 1972, the Business Roundtable nonetheless claimed it violated the intent of the law for the relatively few families of strikers that actually qualified for support. While noting that it could not put a dollar figure on the amount of support food stamps provided to strikers, the manifesto cited case studies by industrial relations experts at the Wharton School in claiming that the amounts were substantial enough to add to inflation (Thieblot and Cowin 1972).
Working within the new political climate of the early 1970s, the resistance organized by the Construction Users Anti-Inflation Roundtable and the Business Roundtable put the building trades unions on the defensive. It augmented the Nixon Administration's initiatives to weaken unions through its restructuring of apprenticeship programs and the integration of construction sites financed by federal contracts. As a result, an estimated 40% of new construction jobs were non-union by 1975 (Levitan and Cooper 1984, p. 120). More generally, the National Labor Relations Board's anti-union decisions after 1971 made it even more difficult to organize or maintain unions, which opened the way for outsourcing and "off shoring" to low-wage third-world countries. Although strong unions were still winning good contracts in the first half of the 1970s, overall membership fluctuated between 18 and 19 million between 1968 and 1973, and union density declined from 27.9 percent to 23.5 percent (Mayer 2004, p. 22, Table A1). The fall-off would have been even greater if not for the continuing growth of the public-sector unions, which gained over 1 million members and reached a union density of 38 percent in 1974 (Miller and Canak 1995b, p. 19,
For all the problems unions faced in the early 1970s, few people were thinking that they were down for the count. In fact, hope sprang anew when the Democrats won big in the 1974 elections in the aftermath of Nixon's resignation in early August of that election year. Most crucially, Democrats from outside the South had an even larger delegation in the House (211) than they had enjoyed in 1965 (194), and their representation in the Senate was up to 49, just three fewer than it was in 1965. Neither of those numbers added up to enough to beat the conservative coalition in the House or the Senate, and the new Republican president, Gerald Ford, was an anti-union conservative with a veto power that would be tough to override.
Liberals in Congress understood these realities, and decided to wait until after the 1976 elections to push their full agenda, when they thought their majority would grow larger.
However, organized labor insisted that it could win on a bill that would allow common-situs picketing in the construction industry, a high-level priority for union leaders since the Supreme Court banned such activity as an illegal secondary boycott in 1951. The new legislation included compromises with Ford's secretary of labor, who was a Harvard professor and prominent labor mediator. The two sides agreed on a 10-day notice of union intentions to picket and a 30-day limit on how long the picketing could last. After the bill passed in the House and the liberal-labor alliance overcame a Senate filibuster with a cloture vote, Ford broke his promise to sign the compromise bill due to enormous lobbying pressure from a united corporate community, including the Business Roundtable and the construction industry's trade association. The Secretary of Labor, who had worked for several years to craft a management-labor accord in construction that could tame inflation, resigned shortly after the veto (Greene 1995, pp. 96-98). The defeat did not portend well for unions, but at least it did not involve the loss of an existing right.
Democrats got their wish in 1976 with the election of a moderate Southern Democrat, Jimmy Carter, to the White House, although the House and Senate hardly changed in their overall composition. Still, the threat of a veto no longer made new legislation all but impossible. In addition, Carter and all of his main advisors supported the unions' agenda for changes in labor law, and thought these changes should be brought forward in one package to maximize their chances for success. However, union legislative strategists once again insisted that common-situs picketing could pass easily on its own because virtually the same Congress had supported it so strongly in 1975. After making the bill slightly stronger than the one Ford vetoed, union leaders focused most of their lobbying on the Senate, assuming the bill would face its greatest opposition there.
A united corporate community, guided by a group called the National Action Committee on Secondary Boycotts, put a very large effort into the House in an effort to stop the bill even before it reached the Senate. It framed the issue as one in which union bosses were trying to gain even higher wages for overpaid construction workers, and then targeted undecided or hesitant representatives, especially those who had been elected for the first time in 1974 or 1976. As the vote neared, the liberal-labor alliance fell back to a more moderate bill similar to the one vetoed by Ford, but even this retreat and a few other compromises could not save the bill from a 217-205 defeat. Despite a large contingent of Northern Democrats in the House and a Democrat in the White House, labor was unable to overcome the efforts of the corporate community (Eccles 1977; Levitan and Cooper 1984, pp. 121-122). It lost again on common situs picketing for the second time in four years.
With virtually all members of the corporate community breaking labor laws with impunity throughout the first seven years of the 1970s, and using a variety of tactics to delay votes on union recognition, organized labor also wanted several procedural changes in the laws that ensured and protected workers' rights. In particular, it wanted to (1) expand the size of the National Labor Relations Board from five to seven members to deal with a backlog of 19,000 cases; (2) introduce procedures that would lead to certification votes only a few weeks after labor organizers filed petitions asking for them; (3) provide stronger penalties against companies that fired activist employees; (4) increase the back payments owed to workers fired for union activities; and (5) prohibit companies that violated the law from bidding on government contracts. The final bill had President Carter's endorsement after lengthy negotiations with union leaders in which he insisted that their challenge to right-to-work laws be dropped because his advisors were sure it would sink the other reforms. He also insisted that new owners of a business should not have to honor an existing union contract (Fink 1998, p. 245).
For the purposes of this campaign, the corporate community created the National Action Committee on Labor Law Reform, with a vice president for industrial relations from Bethlehem Steel directing the lobbying team. The Council On A Union-Free Environment, founded in 1977 by the NAM in anticipation of the effort by unions to reform labor legislation, aided the effort. Although the bill covered only 20% of American businesses, the corporate campaign stressed the dangers of the legislation for small businesses (Akard 1992, p. 605). Due to this emphasis on the plight of small business, social scientists later paid a great deal of attention to the efforts of the National Federation of Independent Business, the organization that they mistakenly see as the representative of the smallest of small businesses (Hacker and Pierson 2010, p. 119; Vogel 1989, p. 199)
In stark contrast to its image, however, the National Federation of Independent Business is best understood as an ultraconservative political lobby, a spin-off from the Chamber of Commerce. In fact, it began as a small business itself, created in 1943 by a former Chamber of Commerce employee, who became a political entrepreneur in order to make profits on membership fees while lobbying for conservative policy preferences (Zeigler 1961, pp. 31-32). The organization switched to a nonprofit status in the late 1960s, with another former Chamber of Commerce employee as its president. However, it continued to be based on annual memberships sold to small businesses by several hundred traveling sales representatives, working strictly on commission. Unlike standard voluntary associations, there were no general meetings or votes for officers, and membership turnover was very large each year (White 1983)
Business owners who signed up with the National Federation of Independent Businesses received membership stickers for their store windows, a newsletter with suggestions for small businesses, and periodic surveys on a wide range of issues. Called "mandates" to give them more apparent heft, the surveys were slanted to evoke conservative responses, the results of which were compiled at national headquarters and mailed to state and national legislators. Comparisons of the results of these surveys, which typically were returned by only about 20% of the members, with those from national surveys, suggest that the ultraconservative claims made on the basis of the mandates were not representative of small business owners, who mostly share the attitudes of their ethnic group and/or local community (Hamilton 1975, Chapters 2 and 7; Kazee, Lipsky, and Martin 2008). Moreover, only a small percentage of the federation's paid-up members had enough employees to be subject to the proposed reforms.
There was one moment of drama shortly before Congress took up the legislation because of differences within the Business Roundtable on whether or not to join the coalition. Several companies that were said to have good relationships with their unions, along with some companies that had small or harmless unions, did not want to become involved. In the end, the Roundtable's policy committee voted 19-11 to enter the fray on the anti-reform side, but the fact that there had been an argument and that the vote was made public gave the Roundtable some legitimacy with corporate critics. The split vote nurtured the liberal-labor hope that at least some corporate leaders might be as flexible on this labor issue as they were on Social Security and civil rights. It also caused some ultraconservatives to complain about corporate moderates in private interviews. An anonymous employee of the National Federation of Independent Businesses criticized the Roundtable for "sucking eggs with the president." Another anonymous Chamber lobbyist told the same interviewer, "We view the Roundtable a little bit as lacking guts and selling out." The chair of NL Industries (formerly National Lead Company) defended the Roundtable with the comment that "the organization tries to deal rather pragmatically with what is possible," and he viewed any danger of alienating the Chamber and NAM as "an acceptable loss" in pursuing Roundtable goals (Green and Buchsbaum 1980, p. 103).
The campaign by the National Action Committee on Labor Law Reform was large and extensive, and it included a very expensive effort to influence public opinion. Business-oriented journalists also claimed that organized labor's resistance to the Carter Administration's inflation guidelines might make some members of Congress less favorable toward the legislation. But in spite of all these efforts by the corporate community, the bill passed the House by a large margin, 257-163, in early October. Nor did the efforts of organized business or any alleged Senatorial hostility towards labor for opposing inflation guidelines keep the Senate's Human Resources Committee from approving the bill by a 13-2 vote in late January 1978. However, the bill was then delayed for four months while the Senate debated the Panama Canal treaty, which was higher on Carter's list of priorities than labor law reform. Even with this extra time for the National Action Committee for Labor Law Reform to lobby Senators and influence public opinion, it could not keep 58 senators from going on record to end a filibuster that was undertaken by the hard core of the conservative coalition (Roof 2011, pp. 157-162).
Despite its ability to achieve strong majorities in both the House and the Senate, the liberal-labor alliance could not overcome the filibuster sustained by most Republicans, virtually all Southern Democrats, and Democratic senators from the right-to-work states of Nebraska and Nevada. They were bolstered in their efforts by the full support of Business Roundtable lawyers, who provided 65 time-consuming amendments and an Employee Bill of Rights that were introduced for debate. Along the way, organized labor offered further compromises, exempting even more businesses, but the filibuster still could not be broken. The bill was recommitted to the Senate Committee on Human Resources for further review in late June, never to emerge again. The corporate community won, but it did so with a minority vote by the conservative coalition in the Senate. As political scientists Taylor Dark (2001, pp. 111-113) and Tracy Roof (2011 p. 161) rightly stress, this fact is often overlooked by those who say that organized labor lost all of its political power in the 1970s,. In fact, the liberal-labor alliance won 58% of the vote in the House and 59% in the Senate, which would be more than enough in a society in which the majority rules.
That said, it is not at all certain that the enactment of the Labor Law Reform Act would have helped organized labor in its attempt to reverse the decline in private-sector union density because it "still would have had to undergo the same judicial and agency review that so effectively gutted the legislative intent of the NLRA" (Fink 1998, p. 241). Nor was it clear that union organizers could overcome employer resistance at the company gates. Racial divisions among workers, the continuing movement of factories to the South and overseas, and anti-union industrial relations firms might have been too much to overcome.
Unions were just one of several items on President Ronald Reagan's cutback agenda when he took office in 1981, but they were high on that agenda. He received an unexpected, and even unwanted, opportunity to zap labor at the outset of his presidency. PATCO (the air traffic controllers' union), which had supported him for the presidency after years of relative failure under Democratic presidents, threatened to violate federal law by going on strike. Although Reagan initially tried to arrange a very generous settlement with the union, its adamant and frustrated leaders demanded even more. The president then felt he had no other recourse but to fire them, and the legend of his determination to set an example by breaking the union began to develop
|Ronald Reagan (flanked by Attorney General William French Smith) issues an ultimatum to the striking air traffic controllers|
Whatever his original intentions, Reagan's decision was dramatic and decisive, sending shock waves through both the corporate community, which knew an opportunity when it saw one, and the union movement, which knew a disaster was in the making when the president disbanded one of its unions. For starters, there was an immediate decline in actions by public-sector unions, although they were able to hold on in most areas of the country (McCartin 2011, pp. 338-350). The corporations swung into action. Taking advantage of a 1938 Supreme Court ruling declaring that companies had the right to hire "permanent replacements" for workers who went on strike for "economic reasons," they were emboldened to make even more use of union-busting consulting firms that offered replacement workers. The consulting firms also became more confrontational in dealing with strikers, using video cameras and other high-tech devices as part of their intimidating surveillance efforts. One firm, Vance International, founded by President Ford's former son-in-law, had its own heavily armored SWAT team (Goldfield 1987, pp. 189-195; Smith 2003, pp. 119, 121-123).
With unemployment rates high, production moving overseas, and corporate attacks decimating unions, Reagan applied the final blow by appointing a series of ultraconservatives to the National Labor Relations Board. The appointment process was drawn-out and contentious because the low-key ultraconservatives suggested by Soutar on behalf of the Business Roundtable were not considered conservative enough by some Reagan advisors. After tumultuous confirmation hearings and the exchange of personal insults among the ultraconservative appointees, which almost turned into a circus, the board made extremely conservative decisions even while experiencing turnover and tension. In the process, it reversed several pro-labor decisions by the Democratic majority during the Kennedy, Johnson, and Carter administrations (Gross 1995, pp. 246-265).
With the help of several Supreme Court decisions, many of the statutory guarantees of protection against employers that had been granted to workers by the National Labor Relations Act in exchange for labor peace were taken away. Decisions made by the board during the first Reagan Administration and the two previous post-war Republican administrations also created a long list of prohibitions on actions by unions and their organizers. By 1985 a law that was originally meant to facilitate unionization and collective bargaining as a moderate way to handle class conflict had been turned into an anti-union employer protection law (McCammon 1990; McCammon 1994; McCammon and Kane 1997). The only solace for organized labor was that it fended off repeated efforts by the conservative coalition to eliminate the Davis-Bacon Act and restrict union involvement in politics (Roof 2011, pp. 190-191).
There was no chance for labor to win any legislative changes during the administrations of George H. W. Bush, Bill Clinton, and George W. Bush between 1989 and early 2009, a long 20 years for the union movement. But there was a glimmer of hope with the election of Barack Obama to the presidency in 2008, along with a Democratic congress. Labor had one main legislative goal in return for the money and campaign workers it put into the field for Democratic candidates, including Obama. It needed a way to have newly organized unions certified if employers used their very successful strategy of delaying elections for as long as possible while at the same time threatening and supposedly reeducating their workforces. Labor leaders therefore advocated their Employee Free Choice Act, which would instruct corporations to recognize and bargain with unions if a majority of their employees signed a card expressing their desire to be represented by a union (Greenhouse 2008). As a senator, President Obama had voted for a similar (unsuccessful) proposal in 2007, and he expressed his support for the Employee Free Choice Act during his 2008 presidential campaign.
In anticipation of a Congressional vote on the bill in 2009, the corporate community launched a multimillion-dollar media campaign through new lobbying coalitions, with names like Workplace Fairness Institute and the Coalition for a Democratic Workplace, which claimed that the legislation would take away workers' right to vote for or against unionization in a secret ballot. From the union point of view, this claim was especially galling and hypocritical because it was the corporations that did everything they could to block such elections. The president of the National Association of Manufactures, a former Republican governor of Michigan, warned that the unionization of Wal-Mart's 1.4 million workers alone would add $500 million a year in union dues, part of which would be used to support pro-labor Democratic candidates (Greenhouse 2009). "We like driving the car," the CEO of Wal-Mart told stock market analysts in October, 2008, "and we're not going to give the steering wheel to anybody but us" (Kaplan 2009, p. 10).
Three Chicago billionaires that had backed President Obama's first presidential campaign, all of them with interests in hotels that unions were trying to organize, let it be known to him that they opposed the bill. One of them was Penny Pritzker, one of the 250 richest Americans in 2008 and Obama's National Campaign Finance chair; more generally, her extended family owned the Global Hyatt and had an estimated worth of $15-20 billiion. Another hotel investor had raised $160,000 as a bundler. The 83-year-old patriarch of another super-rich family spoke out against the pro-union legislation in a published interview. However, even while doing so, he emphasized that he still supported Obama and added, "I think the world of him. This doesn't have anything to do with other relationships" (Lippert and Rosenkrantz 2009).
Meanwhile, while all this was going on, the 41 Republican senators remaining in the Senate after the large Democratic gains in 2008 announced they would not support new labor legislation, and three Democrats said they would not support it either. Since only 41 votes were needed to sustain a filibuster, the bill never came up for a vote.
Unions continued to hope, or at least assert in public, that they could come back, even after their 2009 legislative defeat, but the writing had been on the wall since the late '70s. With outsourcing taking its toll, the private-sector unions were in decline. The story can be seen in union densities. Although union density in the public sector held steady near 36% between 1980 and 1985, it fell from 20.6% to 15.5% in the private sector during that same five-year period. The drop in the raw numbers was dramatic, too: from a high point of nearly 17 million private-sector union members in 1970, the number had fallen gradually to 16.2 million in 1975, to 15.3 million in 1980, to 11.6 million in 1984 -- a 32% decline in just 14 years (Miller and Canak 1995b, p. 19,
After 1985, union density in the public sector stayed roughly even, standing at 35.9% in 2012. In the private sector, however, the figure was down to 6.6%, less than a fifth of what it had been in 1945 and only half of what it was as recently as 1985. Overall, the percentage of wage and salary workers in unions declined to 11.3% (BLS 2013). There was very little left of the industrial unions that had provided campaign donations, campaign workers, and votes to pro-labor political candidates for most of the post-World War II era. The fate of unionism was now in the hands of public-employee unions, service unions, communications-sector unions, and the craft unions in the construction industry.
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