Labor: Post-WWII to 1960

An earlier post dealt with the role of the business community and national affairs from the end of WWII to 1960. This post focuses on labor and the business community in the same time period.

Full Employment Act

After the removal of WWII price controls as well as the excess profits tax, unions undertook widespread strikes to protest the rapid end of these war mechanisms. The Truman administration was also concerned about employment. War production had ended and many in the military would be returning to civilian life.

In this atmosphere the administration drafted the Full Employment Act of 1946. The draft was warmly supported by the liberal-labor alliance because it made full employment a right guaranteed to the American people. It committed the federal government to underwrite the total investment necessary to ensure full employment. This meant the federal government could make loans available to private industry and state and local governments if economic projections indicated an investment shortfall necessary to ensuring full employment. Additionally, if the funds were not fully used to bring about full employment the federal government would appropriate money for public works and other federal projects. The draft embodied the active Keynesianism developed in the late war years.

Just about the entire business community opposed to the bill. The NAM and later the Chamber organized to kill the bill. Congress eventually passed a very water-downed version of the bill. It made full employment, full production, and stable prices only general goals of the government. The Employment Act of 1946 did create the Council of Economic Advisors and the Joint Economic Committee of Congress, organizations still active today.

Taft-Hartley Act

Labor suffered in the next year a decisive defeat when Congress enacted the 1947 Labor Relations Act, better known as the Taft-Hartley Act. The law, still in effect, significantly restricted the activities and power of labor unions. Labor leaders called the legislation the “slave labor” act. The legislation was enacted after Congress overrode Truman’s veto. The most prominent lobbying force behind the bill was the NAM.

The law prohibited (1) jurisdictional strikes (a union could no longer strike in order to assign particular work to employees it represents), (2) wildcat strikes, (3) solidarity or political strikes, (4) secondary boycotts and common situs picketing (actions in which a union pickets, strikes, or refuses to handle the goods of a business with which they have no dispute but is associated with a targeted business), (5) closed shops (a contractual agreement that required an employer to hire only union laborers), and (6) monetary donations by a union to federal political campaigns.

It also heavily restricted union shops and gave states the right to enact right-to-work laws that ban union fees. The executive branch gained the ability to obtain strikebreaking injunctions if an impending or current strike endangered national health and safety. The legislation excluded supervisors from coverage of the act and allowed employers to fire supervisors who engaged in union activities or otherwise did not support the employer’s position. It permitted employers to deliver anti-union messages in the workplace. And, among other things, it required the general counsel of the National Labor Relations Board to seek injunctions against either employers or unions that violated the act.

Three notes regarding Taft-Hartley are important. First, a similar piece of legislation failed to pass Congress in the prior year. But a few months later Republicans took control of both the Senate and House in the1946 elections. Second, the union activities prohibited by the Act were tools unions used very successfully in the 1930s to win union recognition. Third, an unanticipated consequence of the Act made unions more focused on bargaining for gains in health and pension benefits.

The “Treaty of Detroit”

In 1948 the United Auto Workers under the leadership of Walter Reuther made an extraordinarily successful effort to enlarge union membership in General Motors. More than 25,000 workers joined the union in preparation of the union’s contract talks. Among the 132 demands the union made were (1) a pay increase of 25 cents an hour (about $2.60 in 2018 dollars), (2) a guarantee of a minimum of 40 hours of a week of income, (3) a pension plan for factory workers, and (4) 52 weeks of disability coverage, double the then current level.

GM thought the demands were extravagant and braced for a major showdown with the union. Nonetheless, the union and GM agreed to negotiate in private, a mode of bargaining quite a bit different than the public political forums that earlier negotiations produced. The union walked off the job at Chrysler. With the strike deadline only weeks away, GM said it would offer an hourly pay increase of 11 cents to all its 225,000 production employees. This was much lower than what the union was demanding. But GM also said that 8 cents of the 11 cents would be tied to the government’s Consumer Price Index. This portion would be adjusted annually in the future to keep up with the cost of living. It would be paid automatically without any collective bargaining.

The UAW agreed to the proposal when GM also agreed to a minimum 3 cents increase if the CPI was below that amount. GM also agreed to make the remaining 3 cents productivity increase eligible for bargaining in future contracts. The proposal sounded good to the UAW because of post-war inflation (18.1% in 1946 and 8.8% in 1947). Inflation had more than wiped out earlier wage increases won by the UAW and other unions. The negotiated agreement essentially gave GM’s auto workers a 20% increase in their standard of living by 1955. The GM-UAW agreement became known as the “Treaty of Detroit.”

GM’s president and chief executive officer, Charles Wilson (who later joined the Eisenhower administration as Secretary of Defense), joined with Reuther to praise the agreement. Wilson said working people did not create the postwar inflation. He remarked that people should talk about the price-wage spiral and not the wage-price spiral. Reuther and Wilson had the defend their agreement both from business interests, such as the National Association of Manufacturers, the Barron newspaper, and other CEOs, and labor interests, such as blunt criticism by the United Mine Workers.

The 1950s became known by many as the golden age of American business. In 1950, the United Mine Workers signed contracts with coal operators that provided 13 peaceful no-strike years. The rubber industry as well as the steel industry developed no-strike provisions that lasted for a quarter of a century. By the early 1960s, about half of all union contracts contained cost of living adjustments. Eventually COLAs found their way into many white-collar pay packages, government employees and retirees, and Social Security beneficiaries.

The Eisenhower Years

In the 1950s, the business community made further inroads into union strength. The business community rallied against Eisenhower’s first secretary of labor, Patrick Durkin, a Democrat and long-time member of the plumber’s union. Several of Ike’s cabinet members, especially the secretary of commerce, took actions with the media that eventually led to Durkin’s resignation after less than eight months of service.

Ike nominated conservatives to the National Labor Relations Board. During his tenure the NLRB issued rulings that strongly favored corporations by (1) expanding the rights of employers to resist unions through actions that bordered on threats of job losses, (2) restricting union activities at delivery sites, (3) exempting many more medium size firms and strictly local firms from review by the labor act, and (4) making it easier for employers to fire union activists. Additionally the conservative majority on the board replaced members at the regional and local levels with more conservative members. The now conservative-dominated NLRB ignored the increasingly numerous ways businesses were using to defeat unionization drives and to decertify already established unions.

Probably the biggest win for the labor-liberal alliance in the 1950s was a 1955 amendment to the Social Security Act that included disability payments for anyone over age 50 who was permanently disabled. To get approval of the bill the alliance had to agree to assign control of the program to the states, a change that was pushed by Southern Democrats. (In much of welfare-related legislation from the beginnings of the New Deal through at least the mid-1960s, Southern Democrats nearly always made their support of a bill conditional on state administration and/or excepting low-wage and/or agricultural workers from receiving benefits. Mandating state administration was a significant tool Southerners used to maintain their way of life.) A 1958 amendment included benefits for the families of disabled workers and a 1960 amendment extended the disability program to employees under age 50.

As a result of instances of corrupt and criminal behaviors in some unions (especially the Teamsters, Longshoremen, and Mine Workers unions) the conservatives in Congress enacted the Labor-Management Reporting and Disclosure Act of 1959, better known as the Landrum-Griffin Act. Among other items, the Act (1) required unions to hold secret elections, (2) prohibited convicted felons from holding union office, (3) required unions to submit annual financial reports to the Department of Labor, (4) required every union officer to act as a fiduciary in handling union assets, and (5) tightened restrictions regarding secondary boycotts and picketing and otherwise made union organizing more difficult.

By the end of the 1950s the power of unions was diminishing. At the end of WWII only Arkansas and Florida had right to work laws. By the end of 1958 16 additional states became right to work states: Arizona, Nebraska, Virginia, Tennessee, North Carolina, Georgia, Iowa, South Dakota, Texas North Dakota, Nevada, Alabama, Mississippi, South Carolina, Utah, and Kansas. Additionally, the labor-liberal alliance was beginning to deteriorate due to the unwillingness of white workers to support the integration of black Americans into the craft unions, especially in the construction industry.

Why is this significant?

While the business community often opposed labor unions and won significant legislative and regulatory victories, many business executives agreed, sometimes under pressure from union threats and other times more voluntarily, to work cooperatively with unions on wage issues. At the same time, fissures sometimes occurred within the labor community. First, antagonisms existed between the craft unions and the industrial unions. While these issues were generally dismissed during the merging of the AFL with the CIO, construction workers became a focal point for labor dissension. A conflict that was to grow in the 1960s.