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Labor and the War Administration


ISSUE:  Autumn 1944

The conflict of public opinion about the treatment of labor under President Roosevelt’s war administration suggests the need of objective analysis. On the one hand, conservative opinion regards labor as the spoiled child of the government, believes that the unions have taken advantage of national peril to gain more than they deserve, and charges the President with having surrendered to them for political purposes. On the other hand, many union officials and members believe that they have been treated unfairly and have been sacrificed to the demands of the pressure groups of agriculture and business. The most reliable polls of public opinion indicate that there has been a steady decline of support for the President in labor ranks since 1930. While most of the influential leaders and a majority of the members favor the re-election of the Administration, they regard it with less enthusiasm than in previous years.

A rough judgment would be that when a public official is denounced by both sides in a controversy he probably has been following a sensible middle course. But it would be unsafe to infer that a middle course between powerful pressure groups is necessarily one which brings advantage to the people as a whole. Compromise may be a political necessity, but it is not always a creative policy, It would be well to have both a closer look at the facts and an opinion framed in terms of national welfare.

First of all, it is necessary to look at the role of labor both in war and peace on a somewhat broader historical scale. A fundamental fact about the position of labor in modern war, when there is urgent demand for manpower both in the armed services and in industry, is that its economic power is enormously increased. When unemployment exists and there are numerous applicants for every vacant job, the bargaining advantage of the employer is superior to that of the individual employee, and the balance can only partially be restored if the employees are organized and act collectively. When, however, there is a severe labor shortage, even the unorganized employee is often in a position to dictate the terms of employment. It should be remembered that even if there were no unions, labor might have the upper hand in war time. Unchecked pressure by organized labor is therefore almost irresistible.

In these circumstances the task of a war government representing the community as a whole is, in a free society, to enlist the co-operation of unions in maintaining production on terms which will not upset the national economic policy, Responsible union leaders in their turn are motivated to offer this co-operation in so far as they have concern for the aims the nation is seeking, as well as to avoid an unfavorable public opinion which might in the long run be disastrous for a labor movement which endangered the national existence in time of war. In practicing this co-operation with the government, union leaders must frequently exert a moderating influence on the demands of their own membership, and in extreme cases must exercise severe discipline. In order to he able to retain power while doing this, however, the leaders must be able to satisfy the members that their legitimate interests are not being sacrificed. The only possible alternative to enlisting this kind of co-operation from organized labor is to install in some degree a totalitarian or police state which keeps men at their work through fear of punishment. This, of course, is the policy of our enemies in the present war, and is one of the reasons why we are fighting them.

In the First World War organized labor in the United States had much less foothold in industry than today. Many of the new or basic industries such as automobiles or steel were not organized at all. The craft and trade unions in the A. F. of L. technically claimed jurisdiction over the various occupations in these industries, but on account of their separatism they were not prepared to organize them. The employers were averse to the confusion which would arise from dealing with so many different units, especially in view of the quarrels about jurisdictional issues. President Gompers of the A. F. of L. was both a strong patriot and an advocate of a somewhat narrow trade-union policy. He and his executive board gave full support to the war effort on the basis of an agreement with employers and government that there would be no strikes and no change in status of unions, provided hours of work were limited and wages were increased in step with the cost of living.

In compliance with this agreement, the labor officials loyally discouraged strikes and made no effort as long as the war continued to organize the unorganized industries. They were not, however, in a position to exercise much authority over the industrial workers who had not been members of unions. Many spontaneous strikes of unorganized workers occurred. New unions were formed by the rank and file, and wages got out of hand in the industries where labor shortage was most severely felt. In the plants where the authority of the established unions did not extend, war production suffered severely from the lack of any regularized means of collective bargaining or labor-management co-operation.

After the war, when depression brought unemployment, a large number of important employers conducted a vigorous campaign against the unions. They could cite many genuine abuses, especially where labor was not firmly organized and disciplined. But they carried the warfare beyond these limits by attempting to disestablish unions which had existed before the war and by a campaign to reduce j wages generally. Organized labor, left nearly defenseless by unemployment and by the withdrawal of government as a force in labor relations, lost much of the status which it had previously held. It was therefore natural that there should arise in labor ranks an opinion that Mr. Gompers had been tricked and had unnecessarily sacrificed labor’s interests. Whereas he had loyally refrained from attempting to advance the status of labor during the war when labor had the upper hand, the employers had not reciprocated by respecting labor’s status after the war when they had the upper hand. The government had acted to check labor’s self-advancement when it needed workers during the war, but it had offered no protection of what labor regarded as its rights when the need became one of the workers for jobs rather than of industry for labor.

This experience had much to do with the changed attitude of labor and government during the early days of the New Deal. The trade unions, which traditionally had clung mainly to craft organization, veered in the direction of industrial unionism in order to organize the newer mass-production industries. They also abandoned the orthodox position that they must win their status and economic advancement purely through collective bargaining, without depending on governmental intervention. Instead they turned to government for a positive guarantee of their right to organize without interference on the part of the employer. In doing so they had the support of progressive non-labor opinion, which regarded a strong labor movement as an essential factor in a sound democratic economy.

The result was a significant change both in the status of organized labor and in national labor policy. It now became an accepted principle of law not only that workers had the abstract right to form unions and bargain collectively but that it was desirable from the point of view of public welfare that they should do so. Consequently, any peaceable and orderly attempt to do so should be protected from employer interference by federal police power.

When the war overtook the United States, labor was still engaged in establishing in fact this theoretical advancement in status. It had experienced a large gain in numbers and in the extent of its recognition in important industries. The process, however, was far from completed, and many of those who had been recently organized were not experienced and disciplined in the practices of unions.

Still another and more subtle change had taken place in the attitude of organized labor. Since it had come to see the importance of government not only in safeguarding its own rights but in establishing desirable employment conditions and protecting the standard of life of those at the bottom of the scale, it became much more concerned than before about the general tendency of government and broad public policies. Whereas the traditional activity of labor in politics had been merely to “reward friends and punish enemies,” the more progressive unions now believed it necessary to participate actively in influencing governmental policies and to achieve in administrative agencies positions equal to those occupied by representatives of management or agriculture.

II

When the United States entered the war, no rounded labor policy for the emergency was formulated. Prominent business men had been called in to administer war agencies, but labor had little representation as such. A Defense Mediation Board had been established to handle disputes, but few general principles were laid down to guide it. The immediate results were naturally confusing and unsatisfactory to all concerned.

One of the first issues to make trouble was that of the closed shop. As the demand for labor increased, the unions proceeded even more rapidly with the organizing effort in which they were already engaged. Where they had previously been firmly established they had in many cases succeeded in negotiating closed shop agreements with their employers. These agreements cover about 6,500,000 workers. The union argument for this provision is that it guarantees the union against undermining by the introduction of non-members when new workers are being hired. The employer in turn is often persuaded that it is to his advantage to deal with a responsible and firmly established organization, which is enabled to enforce its agreements by the disciplinary power over the members which the closed shop provides. The possible abuses of the closed shop have many times been explained. While such abuses exist, they are exceptional. In the majority of cases the members are well satisfied with it, and many bitter strikes have been fought to establish it. Numerous employers, however, disapprove of it, and at this period their refusal to grant it occasioned important interruptions in production. The employers summoned to their support the argument that, as in the First World War, organized labor should not attempt to improve its status by use of the national emergency. Labor replied that improvement in status had already become a national policy, and that the employers who denied the closed shop were really hostile to unions and would use its absence to destroy them.

This controversy offered a difficult problem to the mediation authorities. The formula which they employed to solve it was worked out, not in the abstract, but in a particular strike over the closed shop—the Snoqualmie Falls Strike— and was accepted in that case by both sides as well as subsequently by many other disputants. It later came to be known as the “Maintenance of Membership” clause. According to its provisions, no worker who was a member of the union at the time of the signature of the contract would cease to be a member until the expiration of the contract. All members, however, had a fifteen-day grace period when the contract went into effect to resign from the union if they were dissatisfied with it or with the agreement which it had made. The employer made no promise to hire only union members or to enforce union membership upon new employees. It was felt that this arrangement safeguarded the existence of the union against aggression on the part of the employer, but did not substantially interfere with the freedom of the employees, whether newly hired or not.

It was John L. Lewis of the United Mine Workers who destroyed the authority of the Defense Mediation Board by refusing to recognize its jurisdiction. He did so not only on the issue of its decision as to wages in the case of his union, but also on the ground that the “Maintenance of Membership” clause was equivalent to the open shop and abrogated labor’s rights. Since the authority of the Mediation Board was in any case somewhat ambiguous, it was decided to begin anew with a more formal procedure. Representatives of employers and labor were called together and instructed by government to find a basis for agreement which would avoid interruptions in production. Though these representatives failed to produce any set of principles to guide future decisions (the closed shop being the main point on which there was no unanimity), they did agree on the creation of a tripartite board representing equally labor, management, and the public. They agreed to submit to this board all disputes which could not otherwise be settled and which threatened interruption of production. Labor leaders gave a no-strike pledge and employers promised not to engage in lockouts. It should be carefully noted that when a union takes a strike vote it is often merely a formality preliminary to bringing a dispute before the War Labor Board, since the Board does not intervene without the request of both parties unless an interruption in production is threatened. This fact has caused much public misapprehension.

The establishment of the War Labor Board did not supersede the authority or activity of the National Labor Relations Board, which previously had been established by law to safeguard labor’s rights to organization and collective bargaining. The N. L. R. B. never has handled and does not now handle disputes about wages and hours, but it does enter the picture when any employer refuses to recognize or contract with a union or when an employer illegally interferes with the process of union organization. It was on this ground that the N. L. R. B. took part in the Montgomery Ward dispute, although the original issue over the “Maintenance of Membership” clause in that case had been adjudicated by the War Labor Board. The “Maintenance of Membership” clause, by the way, was taken over intact by the War Labor Board and became its official policy. In almost all cases in which it has been part of the Board’s decision it has been accepted by both parties to the dispute. The Board has consistently refused to enforce this clause on the employer in cases where the union did not have the reputation for honoring the anti-strike pledge, or did not hold regular elections or failed to audit and publish its accounts. The clause has been voluntarily accepted in cases involving about 2,000,000 workers, and has formed part of the Board’s decisions in cases covering 1,750,000.

A frequent complaint in the press, especially in the form of publication of letters from outraged soldiers, is that labor has not kept its no-strike pledge and thus has endangered not only victory but the very lives of the men at the front. As a matter of fact, during most of the time since the beginning of the war the number of man-hours lost through strikes has been insignificant, amounting to a fraction of one per cent of the total man-hours worked. Strikes have been far less serious than during the First World War and than in Great Britain during this war. Almost all of them have been unauthorized by the union officials responsible for the pledge, and have been quickly terminated. Resentment against wartime strikes is natural and justified, but the impression has gained ground that they have been more frequent and serious than is the case, because strikes or threats of strikes make the headlines, whereas the absence of strikes does not.

The chief union offender has been the United Mine Workers under the leadership of John L. Lewis, who has long been hostile to the Administration and reluctant to recognize the legitimacy of its war powers. In the latest instance of interruption of production by the miners, it was necessary for the government temporarily to take over the mines in order to end the stoppage. There was much public criticism of this action because the seizure of the mines seemed to be a measure directed against the owners, whereas the union was the party which failed to recognize the authority of the War Labor Board. This opinion overlooks the inherent difficulty of maintaining production by any governmental action which could be directed against a union or its leadership. As the miners frequently said at the time, soldiers cannot mine coal. The leaders might have been jailed and the union funds might have been tied up, but it is probable that the resentment which would thus have been aroused in the rank and file would have caused them to remain away from work as long as they possibly could do so. Though the strike would have been defeated in the end, many precious days would have been lost. Only the oppressive measures of a totalitarian regime enforced through a powerful and extensive secret police would be capable of preventing such a strike altogether. In the end the union obtained what amounted to a wage increase, but at least the formal authority of the War Labor Board was preserved by the invention of a formula which did not contravene its accepted principles.

III

The controversy concerning the relation between wages and the cost of living on one hand and the effect of wage increases on possible inflation on the other is an exceedingly complex one. Judgment upon it depends largely upon one’s point of view. The argument, however, would be greatly simplified if the essential facts were better known. It is true that the earnings of industrial labor have greatly increased since the start of the war. It is also true that the national income as a whole has risen markedly, and that the net incomes of both farmers and corporations have increased by a larger percentage than those of the average industrial worker. The jump in labor’s earnings has come about more through lengthened hours of work and fuller employment than through increases in wage rates. It may justly be said, therefore, that workers have earned the money through harder work and more production, rather than through profiting at the nation’s expense. Their gains may fairly be compared to those of business enterprises which have profited through larger volume of production. Farmers have profited not only by increased sales of their crops but by increase of crop prices, increases which have been greater than the average rise in wage rates.

It may be said that the farmers were entitled to this preference because ever since the First World War they had suffered from low prices and therefore started from a lower base. There is much truth in this contention, yet as Joseph S. Davis of the Food Research Institute of Stanford University has pointed out, “parity incomes” for farmers were in the main attained by 1937, because while price equality had not been fully achieved, agricultural efficiency had increased and unit costs reduced. At any rate, farmers can make little justified complaint about the income gains registered by industrial labor.

There has been heated debate about the stabilization of wage rates on the basis of the “Little Steel” formula. According to this formula, a maximum of 15 per cent was placed on wage increases above the rates paid on a date corresponding roughly to the beginning of the war effort. Exceptions were allowed only in specially deserving cases. The calculation was based on an estimate of the increase in the cost of living at the time of the adoption of the formula. At the same time, other agencies of government gave a pledge that the cost of living would not be allowed to rise further. Labor now hotly protests that although this pledge has not been kept, there has been no revision in the “Little Steel” formula and the 15 per cent limit still is in force. Labor also has produced its own figures to indicate a much larger rise in the cost of living than is shown by the official Bureau of Labor Statistics index. The failure of the Administration to give way on this point is one of the main causes of labor’s growing dissatisfaction with it. On the other hand, conservatives strongly have urged the government to hold the line on the “Little Steel” formula in order to avoid inflation.

Examination of the statistics by non-governmental experts has in the main upheld the official index, although the experts point out that no national average can fairly be applied to every locality or in the cases of the lower paid groups of workers. There is, however, no question that even according to the official index the cost of living has risen considerably more than 15 per cent. The government at first defended its obduracy by a promise to roll back prices to the point at which the wage formula was adopted. Largely because of the influence of pressure groups it has been unable to do so, though it can contend that in recent months the increase of retail prices has been halted in most cases.

How much would inflation be encouraged if the demand of labor for higher wage rates were granted? On the side of increased cost of production, moderate increases probably would have little effect, since efficiency of production has been increasing in the new war industries and profits are in many cases large enough to absorb higher costs without raising prices. On the side of purchasing power, the effect might be more serious. It is undoubtedly true that the greatest threat of inflation has arisen from the enlarged demand in retail markets resulting from the increased pur-chasing power in the hands of consumers. It is pointed out, however, that in this respect the wage earners are no more at fault than farmers and business men, and that the real remedy lies in adequate taxation of incomes and governmental borrowing through War Bond drives. It is these measures, plus price control and rationing, which probably have been most influential in preventing any unmanageable inflationary tendencies so far.

It would be possible to quote official statistics in support of the points made and to enter upon long and involved statistical arguments. There is no important dispute, however, as to what the figures reveal about incomes, profits, and wages. The disputes concern mainly the proper interpretation of these figures and the policies which should be based upon them. It is said, for instance, that industrial profits have not been reflected in any great increase in dividends, and that the profit surpluses may melt away if after the war a depression brings a sizeable reduction in industry’s output. Similar arguments are made on behalf of the farmers. It is also contended that the welfare of the workers should be measured by the relation of their total earnings to the cost of living rather than that of wage rates. To the latter argument the answer is made that many wage earners have not gained appreciably through extra work, but find their budgets really pinched by the rising prices. It is also said that industrial workers have as much right as anyone else to extra income which can be saved up for postwar eventualities.

It is undoubtedly true that the drive of the workers for higher wages originates not so much from sub-standard conditions of life as from a feeling that they have not been treated with even-handed justice in comparison with business and agriculture. Their leaders, who have demanded of them not only adherence to the no-strike pledge but co-operative efforts to increase output and steady attendance at the job in spite of unusual difficulties, feel that they must do something to satisfy the rank and file that unfair advantage is not being taken of them.

IV

Another area of misgiving, which is likely to endure longer than the controversy over wages, is the relationship between labor and government in terms of power. At the beginning of the defense program the war organization was placed mainly under the control of industrialists, and labor had little or no voice in it. Even the New Dealers in the Administration were gradually retired to the background. At the same time the war powers of the government led it to exert more and more authority over the working lives and conditions of labor. Spokesmen for the unions attacked this state of affairs, not only for abstract reasons but also because in many respects they disapproved of the way in which production problems were being handled. It was charged for instance, with a good deal of truth, that contracts were being handed out almost exclusively to the big concerns wdiile facilities among the small competitors were lying idle. In an effort to change the tendency of war management, a proposal was made by President Murray of the C. I. 0. that war production in each industry be directed by an industrial council in which labor should have equal representation with management and in which a representative of government should have the deciding voice in the event of a disagreement.

The President tried to satisfy such complaints by appointing a labor leader, Sidney Hillman, to a position of equal rank in the war mobilization authority with the business representatives. Mr. Hillman in turn called together a number of labor advisory committees. This arrangement failed to satisfy the movement as a whole, because Mr. Hillman was not chosen by it as its representative and because his committees were without power. Mr. Hillman failed to approve the proposal for industrial councils, because the experience of the NRA had convinced him that it was unsafe to turn over decisions about production and price to men acting as representatives of industry and labor. He felt that their role must be confined to an advisory one, and power of decision must remain in the hands of official government representatives.

Similar dissatisfaction arose in labor ranks because of the lack of direct representation in the War Manpower Commission and other agencies. This dissatisfaction has gradually been allayed, as the business men at the top have been re-shuffled and those who remain have come to know the labor leaders better and to work more closely with them. In addition, there has been a considerable infiltration of labor men into positions of responsibility. While this development was going on, conservatives who believed that labor should have no share in management and were distrustful of its power in government were complaining that the administration was allowing itself to be ruled by labor leaders.

Still another attitude has had a growing influence on the more conservative trade unionists. Observing the disappointments which labor has suffered under governmental authority and the dependence which labor has recently come to place on governmental power, they have gone back to the old theory that labor should disentangle itself from government and fight its own battles. Some of them have even expressed fears of a decline of democracy and the growth of an American brand of Fascism if the present development should continue much further. They combine this attitude with an endorsement of the determination of employers to defend private enterprise, and count on a cooperative attitude on the part of industrialists.

The more progressive unionists have concluded that it will be impossible, as industrial civilization advances, to avoid close contacts between government and labor on the one hand and government and business on the other. They accept the responsibility which the situation has thrust upon them and believe that they must enlist a sufficient measure of public support by administering it wisely. The consequence of this attitude is a much keener interest in establishing the power of labor in national politics, not for narrow union ends, but for progressive national policies which have the support of liberals in general. The C. I. 0. Political Action Committee is one expression of this attitude.

These leaders are not hostile to the enlightened type of business management and have established a considerable degree of co-operation with a number of the leading industrialists in study of reconversion problems and the national policies necessary to maintain full employment after the war. Their new political vigor is not in any sense a revolutionary activity and is not aimed at the existence of an efficient and profitable private industry. It is directed mainly against political isolationists and the more reactionary representatives of other pressure groups.

It is obvious in these circumstances that the more progressive unionists must, in spite of their minor conflicts with the Roosevelt Administration, support its leading tendencies. The trade-union conservatives are more inclined to the Republican program of less regulation and a subordination of governmental activity. No matter which wins in the 1944 election, the ultimate decision will be made by the evolution of industrial society itself. Doubtless the sympathies of any individual will be consistent with his opinions on these broad issues. It is a real paradox, however, that the strongest supporters of the Republicans in labor ranks, like John L. Lewis, are those upon whom the most abuse has been heaped by conservatives for their failure to co-operate with the national program in the prosecution of the war.

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