15 September 2009

Organized Labor: Prosperity and Conflict

This article is excerpted from the book Outline of the U.S. Economy, published by the Bureau of International Information Programs. View the entire book (PDF, 3.26 MB).

The end of wartime economic controls unlocked pent-up demands by American workers for better wages, leading to a series of major labor strikes that polarized American attitudes toward unions, as in the 1890s. In 1935, the Democratic-controlled Congress had enacted the National Labor Relations Act of 1935 establishing the right of most private-sector workers to form unions, to bargain with management over wages and working conditions, and to strike to obtain their demands. A federal agency, the National Labor Relations Board, was established to oversee union elections and address unfair labor complaints. The Fair Labor Standards Act of 1938 established a national minimum wage, forbade “oppressive” child labor, and provided for overtime pay in designated occupations. It declared the goal of assuring “a minimum standard of living necessary for the health, efficiency, and general well-being of workers.” But it also allowed employers to replace striking workers.

After World War II, a Republican-controlled Congress passed the Taft-Hartley Act of 1947, which reduced union power in organizing disputes, strengthened the rights of employees who didn’t want to join a union, and allowed the president to order striking workers back on the job for an 80-day “cooling-off” period if he determined a strike could endanger national health or safety. United Mine Workers president John L. Lewis called it a “slave labor” law. President Harry S. Truman vetoed it, but was overridden by the required two-thirds congressional majorities.

Together, the Fair Labor Standards Act and the Taft-Hartley Act established the broad legal parameters within which organized labor contended with business leadership and union opponents for economic and political influence. In 1950, when American automobile companies enjoyed substantial global market share, General Motors Corporation and the United Auto Workers union negotiated a contract affording workers extensive health care and retirement benefits. From the employer’s perspective, generous pay and benefits ensured freedom from strikes and motivated the employees. The costs of these benefits, the companies reasoned, could be passed on to consumers. With the rise of competition from Japanese, European, and other foreign auto-makers, American industry became less willing or able to pass through such labor costs.

These issues played out in the political realm as well. As a generalization, labor unions mostly supported Democratic candidates with money and manpower, while businesses backed Republicans. Each side hoped that electoral victories would secure more favorable treatment. But global economic developments intervened. With the recovery of industry in other nations, U.S. industrial unions generally declined in membership. At the end of World War II, one-third of the workforce belonged to unions. In 1983, it was 20 percent. By 2007, the figure had dropped to 12 percent, with union membership totaling 15.7 million.

Union growth today is mostly in arenas less susceptible to foreign competition: the services sector, particularly among public services employees such as teachers, police officers, and firefighters. In 2007, just over one-third of public-services workers belonged to unions, only 7.5 percent of private-sector workers were in unions, and union membership among workers under 24 years of age was less than 5 percent.

One symbol of organized labor’s relative decline came in 1981, when President Ronald Reagan fired striking air traffic controllers. Public employees such as the controllers typically enjoyed great job security but, in turn, were prohibited from striking “against the public.” This is not to say that public employees never struck: Sometimes they did, and usually the illegality of the strike was forgiven as part of the settlement. Not this time. Reagan ordered the controllers back to work, citing the federal law against government employee strikes. He then fired more than 11,000 controllers who refused to return, replaced them with new workers, and broke the union.

Even as unions gained, then lost, influence, other major currents helped shape the postwar American workforce. The Civil Rights Movement began in the mid-1950s with demands to end state and local laws in the South that segregated schools, public facilities, and public transportation, separating blacks and whites, as well as restrictions on African-Americans’ voting rights. After a strife-filled decade, the non-violent campaign for racial justice led by the late Dr. Martin Luther King Jr. led to passage of federal laws to combat racial discrimination and poverty. A wide-ranging series of laws that Democratic President Lyndon Johnson called his Great Society program followed. Education and employment opportunities for minorities expanded. While Americans have debated the fairness of “affirmative action” preferences for minorities in hiring and college admissions, the 1960s’ laws opened increasing workplace opportunities for minorities.

The 1960s civil rights movement also led to laws forbidding discrimination in employment against women, emerging from a far-reaching movement by women to gain equal status with men in the economy and society. Only one-third of adult women had jobs in 1950, but by the end of the century three of every five women were in the workforce. Female chief executive officers have led such major corporations as technology giant Hewlett-Packard and the Ogilvy & Mather advertising firm. Other women have built careers in virtually every arena, from academia, politics, and medicine to manufacturing, the construction trades, and the military. A wage gap between men and women is shrinking, but still remains. In 2000 women working full time earned 77 cents for every dollar paid to men throughout the workforce, while 20 years earlier women earned just two-thirds of what men received.

Another major impact was the arrival of the “baby-boom” generation in the workforce. Between the end of World War II and 1964, 76 million Americans were born, an unprecedented surge that may have reflected the nation’s postwar optimism. This population bulge, in the midst of a long upward economic trend, triggered a sustained boom in housing construction and the expansion of a consumer-focused economy.