Nelson Lichtenstein is Professor of History at the University of California, Santa Barbara. He was the 2012 recipient of the Sol Stetin Award in Labor History and is the author of twelve books, including Walter Reuther: The Most Dangerous Man in Detroit, Labor’s War at Home, and The Retail Revolution: How Wal-Mart Created a Brave New World of Business.

STATE OF THE UNION

A CENTURY OF AMERICAN LABOR

By NELSON LICHTENSTEIN

PRINCETON UNIVERSITY PRESS

Copyright © 2002 Princeton University Press
All rights reserved.
ISBN: 978-0-691-16027-6

Contents

Preface to the 2013 Edition…………………………………………ixPreface and Acknowledgments…………………………………………xxixIntroduction………………………………………………………1Chapter 1 Reconstructing the 1930s…………………………………..20Chapter 2 Citizenship at Work……………………………………….54Chapter 3 A Labor-Management Accord?…………………………………98Chapter 4 Erosion of the Union Idea………………………………….141Chapter 5 Rights Consciousness in the Workplace……………………….178Chapter 6 A Time of Troubles………………………………………..212Chapter 7 Reorganizing the House of Labor…………………………….246Chapter 8 Obama’s America: Liberalism without Unions?………………….276Notes…………………………………………………………….297Index…………………………………………………………….345

CHAPTER 1

Reconstructing the 1930s

The labor question stood close to the core ofAmerican politics and social imagination during the 1930s. This wasnot because the Great Depression made so many people poor anddesperate, though it did, but because during the era of the New Dealan amelioration of the labor question seemed inexorably bound upwith a structural solution to the crisis of American capitalism itself.Likewise, the impasse confronting republican citizenship, so well explicatedby Progressive-era reformers, seemed soluble only if the democraticprocess, if the rights and liberties inherent in a genuinelyrepublican polity, were given a social and industrial meaning thatfinally breached the walls erected by property and its managerialguardsmen. To this end the state-assisted growth and radical transformationof the trade union movement seemed essential.

Sixty years on, Americans have largely forgotten why the unionsgrew so explosively in the decade after 1933. Indeed, a programmaticallyconvenient mythology has emerged to explain the appearanceof mass unionism in the New Deal era. Embattled trade unionistsat the dawn of the twenty-first century wistfully recall an erawhen the New Deal state seemed to stand solidly on their side,when the 1935 Wagner Act, then dubbed “Labor’s Magna Carta,”effectively protected organizing rights, and when industrial workersbattled for union recognition with one voice and one fist. Suchconstructed memories inspire many a song and story, but they dolittle to aid our understanding of the union upsurge during theGreat Depression.

Social myopia is even greater on the other side of the class divideand among much of the larger public. There, a pernicious, politicallypointed master narrative is peddled by nostalgic Reaganites, contemporarymanagers, and most journalistic heralds of the cyber revolution.They look with equanimity upon the contemporary demise ofthe union idea, imagining an unbridgeable divide separating our erafrom both the economic structures of the depression decade and thetechnology of the mass production regime that was thought to dominatethe first half of the twentieth century. According to this mythichistory, the trade union upsurge during the 1930s took place whenunskilled, assembly-line workers revolted against a brutal set of arrogantbosses. Their movement and the unions that arose out of thisupsurge have an honored place in American history. But since thattime, blue-collar work has declined toward insignificance and managershave learned their lessons. Therefore, unions are today irrelevantbecause they no longer play a useful function, for either workersor capitalists, in our computer-driven, postindustrial, post-Fordistworld.

A closer look at what actually happened in the 1930s and 1940sdemonstrates that the issues faced by unionists, policy makers, andcorporate managers are hardly foreign to our own times. Trade unionsare not merely a product of a given set of technological or managerialstructures. Nor do they simply reflect the economic needs and socialaspirations of a slice of the working population, no matter how pressing.Instead, mass unionism moved to the center of the politicalagenda during the 1930s because the state-assisted growth of theseinstitutions seemed to offer solutions to two of the central problemsconfronting the early-twentieth-century political economy.

“Underconsumption” and Its Remedies

The first problem was “underconsumption,” a concept that explainsthe very nature of the Great Depression itself. During the first threedecades of the twentieth century, the United States had begun apainful and disruptive shift from an economy based on the great industriesof the nineteenth century—steel, coal, textiles, railroads,lumber, meat packing, and shipping—to an electrically driven,gasoline-powered economy more directly dependent upon a highlevel of consumer demand. These new industries included automobilesabove all, but also home appliances, entertainment, petroleum,chemicals, processed food, clothing, and mass merchandizing.

In the 1920s many of the older industries were “sick.” Scores ofrailroads were in bankruptcy and millions of farmers had never recoveredfrom the drastic fall in the price of tobacco, cotton, and wheatthat followed the giddy expansion of World War I. For the quarter ofall Americans who still lived on the land, economic hard times werea fact of life even before 1929. Likewise, in textiles and coal, overproductionand “cut-throat” competition made life miserable for hundredsof thousands of workers who saw their pay slashed by hard-pressedowners determined to squeeze every extra dollar out of thecompany cost structure. These idle factories and underproducing coalmines were a menace, not only to the worker’s standard of living butto the health of American business. “Price cutting and aggressivecompetition for the same business at around or below cost is thegeneral rule,” observed an investment banker on the eve of the depression.3 Wages were still “the main competitive battleground” inthe production of cotton goods, wrote Business Week a few years later.”Price-cutting in textiles inevitably means wage-cutting. And whenthe latter becomes ruthless enough, the premium on good management,good machinery, good merchandizing is removed.”

The United States did have a booming set of consumer-orientedindustries in the 1920s. The automobile had begun to revolutionizethe spatial texture of American life. Likewise housing, commercialreal estate, entertainment, merchandizing and electrical productswere all enjoying an enormous boom, but “overproduction” had becomea plague even here. In 1928 and 1929 sales lagged, inventoriesrose, factories cut their output, and unemployment rose. Even beforeWall Street’s crash in October 1929, many executives thought theirmarkets saturated. For example, in 1923 new cars outsold used carsthree to one, but by 1927 the ratio had been reversed. To solve the”used car evil” Chevrolet was paying dealers twenty-five dollars foreach old car they destroyed.

But what was “overproduction” to the businessman was “underconsumption”to the worker’s family and friends. Although the country’sproductive capacity had soared in the 1920s, the fruits of that abundancewere distributed in a highly regressive fashion. In the decadethat ended with the crash, output per worker in manufacturing leapedupward by a remarkable 43 percent, while wages barely held theirown. Meanwhile, the incomes of the very rich—the top 1 percent ofthe population—rose from 12 to 19 percent of that generated by theentire nation. And wealth itself—in stocks, bonds and real estate—wasconcentrated among these high flyers to a degree never seenbefore or since. Workers and farmers were buying all those used carsin 1929 because they couldn’t afford new ones.

This growing inequality was reinforced by the concentration ofproductive capacity and financial power among but a relative handfulof enormously big corporations. By 1929 the two hundred largestU.S. corporations controlled half of all corporate assets. These institutionswere no longer merely “private enterprises” but had becomequasi-public institutions whose ability to establish prices and directinvestment held enormous consequences for millions of Americans.In 1927 Henry Ford touched off a brief, nationwide recession whenhe abruptly shut down his billion-dollar company, stopped supplierplant purchasing, and laid off 100,000 workers, all in order to retoolhis assembly lines from Model T to Model A production.

During the first two years of the depression the country’s largestmanufacturing firms tried and failed to sustain wages, prices, and production.Many large corporations cut hours, spread the work, andsought to avoid another round of competitive pricing. By reducinghours and reassigning jobs, the Westinghouse Electric Corporationretained almost all employees with over ten years’ seniority at itshuge East Pittsburgh plant; and U.S. Steel did not cut wages until1931. But these large firms were exceptional. Most farms, constructioncompanies, retail outlets, and midsize manufacturers could notafford to retain excess workers, even part-time. Such employerswanted prices to stabilize and wages to rise, but only for their competitors.Even during the boom of the late 1920s industry efforts tovoluntarily stabilize wages and prices had been undercut by the entrepreneurial”chiselers” who sabotaged such schemes in textiles, coalproduction, building construction, and the garment trades.

Thus the downward spiral of the Great Depression continued. Between1929 and 1933 the gross national product (GNP), the sum ofall the goods and services produced in the country, fell 29 percent.Construction was down 78 percent, manufacturing 54 percent, andinvestment a staggering 98 percent. In the summer of 1932, the steelindustry operated at only 12 percent of its capacity. Fewer miles ofrailroad track were built in 1932 than in any year since the CivilWar. At the depression nadir, many people began to think thatAmerican capitalism had failed. In Dearborn, Michigan, a 1932march of three thousand unemployed Ford workers, who appealed toAmerica’s most famous industrialist for jobs, heating coal, and rentmoney, came under a hail of police tear gas and gunfire, killing fourand wounding sixty. As department store magnate Edward Filenelater put it, “the machinery of production choked with its own product,unemployment spread like pestilence, and the world starved inthe midst of plenty.”

The corporate heroes of the 1920s were in disgrace, while the freemarket generated little more than wave after wave of social misery.The state would have to restructure, and continuously regulate, afaltering American capitalism. Adolf Berle and Gardner Means, twoacademics later active in the Roosevelt Administration, codified thisemerging consensus in their 1932 classic, The Modern Corporation andPrivate Property. Big businesses, argued Berle and Means, were controlledby a self-serving strata of managers who had effectively insulatedtheir authority from both shareholder ownership and consumerpressure. Corporate officials “administered” prices, oppressed theirworkers, and ignored shareholder interests. Thus if the power theywielded was somehow illegitimate, then workers, consumers, andgovernment regulators might well intervene to restructure the wage-pricerelation and make corporate decision-making far more democraticallyaccountable.

A broad upward shift in working-class purchasing power was essential.This prescription made the economic and political interest of anew union movement, the only prospective institution then capableof policing an upward revision of industrywide wage standards, largelysynonymous with that of the nation as a whole. This proto-Keynesianidea was embedded within the legislation establishing theNational Recovery Administration (NRA), which was to be FranklinRoosevelt’s principal initiative designed to restore prosperity duringthe first two years of the New Deal. The NRA repudiated laissez-faireeconomics and, in its place, sought to codify American capitalism bypromulgating scores of industry “codes” that would put a floor underwages and prices, and a ceiling on hours and effort. “No businesswhich depends for existence on paying less than living wages to itsworkers has any right to continue in this country,” asserted FDRwhen he signed the National Industrial Recovery Act (NIRA). “Theaim of this whole effort,” the president explained, “is to restore ourrich domestic market by raising its vast consuming capacity.”

Labor’s voice was essential to such industry self-regulation, becauseonly the trade unions possessed an intimate, internal knowledgeof business conditions. Only they could “enforce” government-mandatedminimum-wage standards and maximum-hour regulation.As retailer Edward Filene noted wryly at the NIRA hearings of 1933,”Our labor unions have a better understanding of what is good forbusiness today than our chambers of commerce have.” Thus Section7a of the NRA proved an important and controversial part of eachindustry code. It required that “employees shall have the right toorganize and bargain collectively through representatives of theirown choosing … free from the interference, restraint, or coercion ofemployers.” Such a revolution in the nation’s labor law, argued RobertWagner, the New York senator who championed the depression-eraunion movement, was to ensure that “[t]he fruits of industry mustbe distributed more bounteously among the masses of wage-earnerswho create the bulk of consumer demand.

Consumption, Security, and “The American Standard”

An important strand in the language of the working-class movementin the 1930s was thus “consumerist,” but there was nothing conservativeor deradicalizing about such “bourgeois” aspirations. A centurybefore, when the “producing classes” bulwarked a virtuous republic,the designation “consumer” seemed not far removed from that of thedysfunctional “parasite.” But the New Deal worked an imaginativerevolution: now mass consumption stood shoulder to shoulder withmass production as a foundational component both of a humane capitalismand a reinvigorated democracy. The New Deal and the newlabor movement took the nascent consumer culture of the twentiethcentury and made of it a political project. An “American” standardof living was becoming a right of citizenship, and if the achievementof that new entitlement required a radical transformation of theAmerican political economy, so be it. Roosevelt’s secretary of labor,Frances Perkins, put it this way in 1933: “If … the wages of millworkers in the South should be raised to the point where workerscould buy shoes, that would be a social revolution.

The New Deal and the new labor movement enfolded this newpolitical economy within a powerful set of moral dichotomies. For aconsiderable proportion of the working class, the unemployment andpoverty of the early depression years was nothing new. The fear, insecurity,and shame of those years had been the common, lifelong conditionof perhaps half, and certainly a third, of the American people.But now such distress, or the prospect of falling into such an abyss,became a potent element within the entire political culture. TheNew Deal served to politicize such private nightmares, giving tothem a visibility and legitimacy unknown since the heyday of urbanProgressivism. Gerald Markowitz and David Rosner entitled theirbook of workers’ letters about life on the job, “Slaves of the Depression,”because of the powerlessness and humiliation generated bychronic want and unpredictable employment. These letters did notreflect an honorable poverty: rather the bad times bred deference,subordination, bondage, in short, the negation of republican citizenship.17 “For years and years,” wrote John Peele, a textile union leaderin South Carolina, “those who toil in industry have dreamed of Democracy,[but] for those who produce the wealth there has been IndustrialSlavery.” To Peele, enactment of the NIRA in 1933 put labor”upon the threshold of industrial freedom.”

This was journalist Leona Hickok’s startling discovery when shetoured the nation for relief administrator Harry Hopkins in 1933 and1934. With the depression generating unemployment and insecurityeven among those with solid white-collar credentials, the “old poor”within and just below the employed working class once again becamea highly visible, highly political stratum. The Communists and Socialists,with their unemployed marches and anti-eviction demonstrations,had helped mobilize this discontent and turn working-classeyes to the state for a solution to local problems, both on the job andin the community. These “radical boosters of the state,” as LizabethCohen has termed them, prepared the way for the expansive sense ofentitlement workers came to feel when they looked to the New Dealfor a solution to their problems. A state relief administrator reportedto Hickok that among poor clients, the attitude was “changing fromone that used to be a modest request for help temporarily,” to one”demanding their share of what the government has to give.” Farfrom generating a sense of passive dependency, New Deal relief programs,and especially those involving work and wages, generated anactive sense of citizenship. As Cohen has put it “the New Deal’simpact should be measured less by the lasting accomplishments of itsreforms and more by the attitudinal changes it produced in a generationof working class Americans who now looked to Washington todeliver the American dream.”
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