home | history

Labor, Capital and Government Intervention, 1870 to 2015

The industrial revolution and urbanization came later to the United States than it did to Britain. In the early 1800s there were mill towns in America's northeast. Later that century, more people were working as miners, and in the early 1900s farms were becoming more mechanized. More people went from working in home industries, working the land, of others or their own, and they sold their labor to businessmen manufacturers. These were men free to choose whom to hire, and they paid as little as necessary to acquire their supply of labor.

In Germany, working conditions were horrible. Impoverished workers in desperation wanted power and to be rid of their bosses by creating collective ownership of their enterprises. They wanted to share the rewards of their labors with their fellow workers – what they called communism. They wanted a revolution, and so did their fellow German from a middle-class family who took up their cause: Karl Marx. This gave the labor movement its communist element.

In the late 1800s in Europe and the United States, some employees were working long hours and under dangerous conditions, and there were businessmen using their freedom to choose to hire child labor. In the US, workers were trying to increase their power against their bosses by uniting into labor unions. Owners felt their freedom threatened. Railway workers went out on strike in 1894, and the courts ruled in favor of the railway owners. The learned judges held the strike an illegal restraint on trade. President Grover Cleveland (1893-97) sent troops to break the strike. Dozens of strikers died and the American Railway Union folded.

But in general in Germany, Britain and the United States, real wages were rising. Factory workers lived in crowded tenements, but common people at the beginning of the century were buying more than they had in previous decades. More farm products were available. In the United States in 1901, President McMcKinley running for re-election spoke of the prosperity that had come to the United States during his four years in office. Middle and upper-class Anglo-Americans were feeling brash and optimistic. Despite centuries of preaching about the depravity of man, they were cheerful.

In 1912 in Massachusetts, democracy intervened on the side of reformers. A state was supply a power alternative that the labor movement had wanted for itself. Massachusetts reduced the maximum number of hours that women and children could work from 56 hours per week to 54. The owners of Everett Cotton Mills retaliated by matching the reduction in hours with a reduction in pay. Workers responded with what became known as the Lawrence Textile Strike. President Taft (1909-13) asked his attorney general to investigate. Conditions in the Lawrence mills were exposed. Facing government hostility, Mill owners decided it was in their interest to improve relations with their employees and to settle the strike. They gave their workers in Lawrence and throughout New England raises of up to 20 percent.

In West Virginia in 1912, coal miners went out on strike. Strikers were killed. Mine owners evicted miners from their company-owned houses and brought in replacement workers. A Republican governor imposed conditions for a strike settlement. This included a 9-hour work day, the right of employees to shop in stores not owned by the mining company, and elimination of discrimination against union members.

In 1913-14 in miners called a strike, hoping for a shorter work-week, higher wages and union recognition. This was the Michigan the Copper County Strike. It was beaten down, with worker deaths and the infamous Italian Hall disaster. But during the strike, to appease their workers, owners adopted the eight-hour day.

In September 1913, miners in Ludlow, Colorado, struck against Rockefeller-owned coal mines. They wanted an eight-hour day, recognition of their union as a bargaining agent, the right to use any store and to choose their boarding houses and doctors, and they wanted enforcement of Colorado's mine safety laws, among other reasonable benefits. The National Guard was called out, and in April 1914 it attacked a tent colony of 1,200 miners, to be known as the Ludlow Massacre. The strike encouraged the normally frugal John D Rockefeller to improve relations with his employees, to pave roads and create recreational facilities. He ended his company's opposition to workers belonging to a union. He created a company union and the inclusion of workers on committees dealing with working conditions, safety, health and recreation. The strike ended with the workers accepting the settlement. Their union, the United Mine Workers of America (UMWA) remained l unrecognized as the workers' bargaining agent, and the UMWA rejected the settlement.

In October 1914, Congress involved government more in the labor-management issue. It passed the Clayton Antitrust Act. The Act included a declaration that favored unions by declaring the strikes could not be assumed unlawful and that strikes, boycotting and picketing were not violations of federal law. The Act empowered people injured by violations of the law to sue for damages.

The Supreme Court supported the Clayton Antitrust Act, but the Court became a frustration for the Roosevelt administration in 1933. A 25 cents per hour minimum wage was created in 1933 as part of the National Industrial Recovery Act ($0.25 in 2015 is $4.23). It was part of a bill the also fixed the maximum number of hours poultry employees could work. Conservative justices of the Supreme Court believed that the Act went beyond what Congress could constitutionally regulate. Temperamentally they were opposed to regulations and to welfare programs, and at least one of them, Justice McReynolds, would oppose Social Security.

In 1935, Congress passed the National Labor Relations Act, to be known also as the Wagner Act. It was explicit in allowing private sector employees to organize into trade unions, to engage in collective bargaining and to strike, and it created the National Labor Relations Board (NLRB). The Act was bitterly opposed by the Republican Party and business groups. The American Liberty League viewed the Act as a threat to freedom and encouraged employers to refuse to comply with the NLRB. This continued until the Supreme Court in 1937 found the National Labor Relations Act constitutional.

Meanwhile, sit-down strikes had begun in the steel and automobile industries. General Motors auto workers sought recognition of the United Auto Workers (UAW) as their only bargaining agent. They also wanted the company to stop sending work to non-union plants and to establish a fair minimum wage scale, a grievance system, and to establish a set of procedures that would help protect assembly-line workers from injury. GM workers stayed at their work place. GM got a court order demanding their evacuation. The strikers stayed put. GM turned off the heat in the buildings, but the strikers wrapped themselves in coats and blankets and hunkered down. Sit-ins were illegal, and police tried to cut off the strikers' food supply. This was followed by a riot known as the "Battle of the Running Bulls," 16 workers and 11 policemen were injured and the UAW took over the adjacent Fisher Two plant. GM's output went from a robust 50,000 cars in December 1936 to just 125 in February 1937. Although the sit-ins were illegal, Michigan Governor Frank Murphy refused to use force to break the strike, saying "there'd be no telling how many would be killed," that state authorities would not take sides. The strike ended with General Motors recognizing the United Auto Workers.

In 1937 another sit-down strike occurred: the Chocolate Worker's Strike in Hershey Pennsylvania. The Depression had cut the Hershey company's revenues in half, and it was firing workers as it saw fit. It was also restricting Italian-born workers to lower-wage jobs. Local sentiment sided with the company and its founder, and the strike threatened the livelihoods of those who were selling 60,000 to 70,000 gallons of milk each day. There was a Loyalty Parade, with marchers holding signs that read: Down With Communistic Idiotic Laws; CIO Can't Make a Monkey Out of Us; and Hershey Fills Our Breadbaskets, not the CIO. Hershey supporters with clubs and hammers rushed and evicted the strikers, outnumbering them about four-to-one.

The National Labor Relations Board (NLRB) investigated and demanded that the company hold a union election. This resulted two years later in a contract between the company and the American Federation of Labor that included an increase in overtime rates, paid vacations, and a procedure for arbitrating grievances.

The New Scene, 1938 to 1945

Labor activism was on the rise, and some employers were changing their attitude as had Rockefeller. They were wising up to the benefit of good relations with their employees for the sake of worker morale and productivity – an approach better than bullying and threats.

The conditions in the 1800s that had given rise to the labor movement supported by Marx and his avid supported, Lenin. Conditions created by the First World War had given rise in 1917 to the anti-tsar uprising and then the Bolshevik (communist) revolution led by Lenin. The Bolsheviks outlawed independent labor unions, declaring such unions unnecessary and hostile because the Bolshevik revolution had put the labor movement in power.

By 1938, much of Europe's labor movement was led by Social Democrats and hostile toward the Leninist approach. So too was the Roosevelt administration and the Democrats who controlled Congress. It favored an increase in government intervention for what it saw as the common good. In 1938, Congress made a second try at a federal minimum wage, and it succeeded. Again it was set at 25 cents per hour.

Conflicts between Capital and Labor were not about to go away. The year 1938 saw the Chicago Newspaper Strike, the Maytag Strike, what was to be called the Hilo Massacre in Hawaii. In 1939, there was the Chrysler Auto Strike, the Tool and Die Strike, Disney animators strike, and the Ford Motor Strike.

Henry Ford has been described as a pioneer of "welfare capitalism." He intended to better lives of his workers, but he was adamantly opposed to labor unions. There was a sit-down strike at the Ford plant in April 1941. Ford was almost eighty-years-old. His son Edsel was running the company. The old was giving way to the new. Henry Ford gave in. The Ford Motor Car company signed a contract with the United Auto Workers in June 1941.

By 1940-41, 27 percent of the work force in private industry was unionized, up from 7 percent in 1934. In 1941 liberal economists claimed that higher wages would improve the economy by creating greater purchasing power. The Supreme Court in 1941 upheld the Fair Labor Standards Act, holding that Congress had the power under the Commerce Clause to regulate employment conditions.

World War II ended in 1945 with many leaving the military, and there was a decline in buying. Union activists accused Big Business of having acquired excessive profits. In 1946 there were more than 5,000 strikes in the coal, electrical, steel and other industries. President Truman saw strikes by railroad employees and miners in the coal industry as not in the nation's interest, and he ordered strikers back to work. In the 1946 election campaigns, Republicans asks voters if they had had enough coddling of unions, enough strikes and union entanglement with Communists. The Republicans won control of the House of Representatives, 246 seats to 188 for the Democrats, and the Republicans took control of the Senate, 51 to 45 seats. In 1947, Congress mustered the two-thirds majority needed to override President Truman's veto of the Taft-Hartley Act. Organized Labor hated that Act because it outlawed their ability to maintain all union shops. The bill gave workers the right to choose whether to belong to a union or not (referred to as Right to Work) and it weakened labor's ability to organize. Some manufacturers would relocate in states with Right-to-Work laws, in the South.

In the 1970s, union membership began to decline, and with this decline came also a decline of labor union influence in politics. In the 1950s more than 30 percent of the nation's private-sector workforce had been unionized. By 2014 union membership among private-sector employees declined to 6.6 percent. (Public-sector employees, including teachers, were as a whole 35.7 percent unionized.) Robert Reich in his book Saving Capitalism describes reason for the decline as "globalization combined with labor-replacing technologies. Companies relocating where they could get cheaper labor, and consumers were buying what was manufactured abroad because it cost less.

There was still government looking out for worker safety, and there were laws against various kinds of discrimination, especially in hiring. There were still minimum wage laws. A new model of integrating workers with the managing process had risen. But dividing up the profits still appeared to favor upper-management.

With the decline of labor union membership in the private-sector since the 1970 there has been a parallel decline in comparative wealth for the middle-class. Robert Reich describes net productivity from the 1970s to 2012 rising 240.9% and "real hourly wages" having risen only 107.8 percent – advantage to the financiers.

People with a lot of money are still able to make more of it faster than others. Any correction can be expected to be political – government action involving taxation. And this is without seeking wealth equality. (Even in Sweden and China there is no seeking wealth equality.) Government legislation can pass laws in the interest of employees, but some of us still see a need for labor unions as a source of contributions to political candidates focused on the common interests of their members.

Copyright © 2015 by Frank E. Smitha. All rights reserved.