American Empire

by Joshua Freeman

  During World War II, government controls had limited increases in wage rates, but steady work, promotional opportunities, and extensive overtime significantly boosted average weekly earnings. As the war drew to a close, workers wanted to push up hourly rates in the face of diminished workweeks and fears of postwar inflation. Union leaders worried that a drop in national income would lead to falling consumer demand and a downward economic spiral. As one CIO memorandum put it, “Nothing short of big and substantial wage and salary raises will bring earnings up to a level where America at least will have a fighting chance of beating depressions and licking unemployment.”

  Many rank-and-file workers thought less about the national economy and more about their own hopes for a better life. Wartime prosperity had begun transforming the lives of working-class families. A 50 percent wartime increase in real wages in the southern textile industry allowed workers to begin buying cars and in some cases their mill village houses, which many companies started to sell off. Still, workers generally lived very modestly, at best. In the heavily unionized steel industry, as late as 1942, 15 percent of workers lived in homes without running water and 30 percent lacked an indoor bathroom. The average steelworker family did not move above the federally defined poverty line until 1953. When in 1948 thirteen-year-old Elvis Presley’s family moved from Tupelo, Mississippi, to Memphis, they could afford to rent only a single room in a boardinghouse, cooking meals on a hot plate and sharing a bathroom with other families, even though Elvis’s father found work at a munitions factory and his mother as a sewing machine operator. Heavy borrowing gave working-class families increasing access to consumer goods but left them susceptible to the effects of unsteady work and the frequent layoffs that characterized many industries.

  Leaders of the CIO—the bulk of whose members worked in mass production industry—hoped that at the end of the war the federal government would shepherd through industry-wide agreements boosting wages while keeping price controls in place. At a November 1945 conference, the Truman administration tried to bring labor and management together, but no consensus could be reached on either a wage policy or the role government should play in industrial relations. Leaders of the American Federation of Labor (AFL)—many of whose members were skilled workers organized along craft lines—wanted minimal federal interference. So did business leaders, who sought to keep labor from using the power of the state to advance its cause.

  With the government, at least initially, on the sidelines and the rank and file in a militant mood, labor leaders turned to mass demonstrations of worker power to preserve the improved living standards their members were beginning to enjoy and to check management efforts to roll back the institutional position unions had achieved. Many postwar strikes were notable not only for their size and duration—General Motors workers struck for 113 days, textile workers for 133 days, glassworkers for 102 days—but also for the solidarity and feistiness workers displayed. Most struck companies did not use scabs or violence, recognizing that the legal, political, and social climate had so changed during the New Deal and war years that crude strikebreaking efforts most likely would rebound against them. Companies that did try to maintain production at struck plants or terminate collective bargaining unilaterally met fierce resistance. In Stamford, Connecticut; Lancaster, Pennsylvania; Rochester, New York; and Oakland, California, union-busting efforts led to general strikes, rarities in American history.

  The militancy of postwar strikers flowed from their fears that peace would bring joblessness, lower income, and weakened unions, but also from their confidence about their social centrality. The years immediately after the war marked the zenith of blue-collar America. In 1950, craft workers, operatives, laborers (not even counting those on farms and in mines), and their supervisors made up 41 percent of the workforce, a twentieth-century high. Manual workers, once treated by those in power as virtual outcasts, had been celebrated in New Deal iconography and rhetoric. During the war, billboards, newsreels, and other propaganda hailed industrial workers, including the two and half million women who took factory jobs, as fighters on the war’s home front, whose efforts and sacrifices would be key to victory. (Total female employment during the war jumped from twelve to eighteen million.) Such social validation, along with higher income, steady employment, and, for many, union protection, brought a jauntiness to the working class that carried over into the postwar years, evident in the Oakland general strike, when strikers ordered bars to put their jukeboxes on the sidewalk to provide music for couples dancing in the streets.

  Unions gave institutional expression to the workers’ power and esprit. During the war, unionists often gained say over production methods, work pace, job assignments, and discipline far beyond what their contracts called for. And with mass memberships, financial resources, and experienced organizers, unions provided much of the clout for liberal coalitions and did nuts-and-bolts political work for Democratic candidates in areas where the Democratic Party itself was institutionally weak.

  Organized labor was largely a regional phenomenon; at the war’s end, two-thirds of all union members lived in just ten states. But where unions were strong, in the Northeast-Midwest manufacturing belt and parts of the West Coast, they used their workplace strength to win political influence and used their political influence to win government benefits and protection for workers. Michigan provided a dramatic example. In the years after World War II, the United Automobile Workers (UAW), United Steelworkers, and their allies succeeded in taking over and vitalizing the state Democratic Party, culminating in the 1948 election of liberal Democratic governor G. Mennen Williams, who held office for twelve years. Labor went on to help elect two liberal, pro-union Democrats to the Senate, the first time since the Civil War that at least one Michigan seat was not held by a Republican. Under Williams’s leadership, Michigan became a pioneer in promoting civil rights, health insurance, recreation, education, and manpower training.

  The postwar strike wave revealed the support labor had amassed inside and outside company gates. During the 1946 steel strike, in town after town where local officials and newspapers had once backed companies in fighting unionism, they now remained neutral or sided with labor. In Chicago, grocery stores and pharmacies extended credit to striking packinghouse workers, and priests joined their picket lines.

  With few exceptions, businessmen loathed the position labor had achieved, for what it meant for their own enterprises and for the balance of power in society. Most believed, as an ideological and a practical matter, that their enterprises should be run by themselves and themselves alone. Unions compromised their ability to do so. The increased political activism of unions particularly frightened businessmen, many of whom saw any step toward fulfilling labor and liberal plans for greater economic regulation and enhanced state benefits as a threat to their firms’ profitability and their personal liberty.

  Businesses fought back in a variety of ways. Many companies that did not already have unions used all the resources they could, legal or not, to resist them. Others accepted collective bargaining as a practical necessity but fought to minimize its scope. Many firms won contractual limits on the number of union shop stewards, severe penalties for unauthorized strikes, and clauses that explicitly spelled out management prerogatives over production methods, job assignments, and worker discipline. By showing their willingness to take long strikes, employers made workers painfully aware of the price of militancy.

  Many business leaders and trade associations also came to believe in the necessity of a long-term effort to win public opinion to their side. Companies began mounting large-scale education and advertising campaigns, aimed at schoolchildren, the general public, and their own workers, which stressed the virtues of capitalism and the social good created by business. Some business-backed propaganda amounted to little more than thinly disguised efforts to elect Republicans or to win public support for company positions in collective bargaining. Other campaign
s more broadly sought to change public attitudes by equating freedom with the free market and labeling any attempt to interfere with the market, by unions or government, as a step toward tyranny. To promote such ideas, companies and wealthy individuals funded policy centers and networks of conservative academics and intellectuals that slowly but effectively made anti–New Deal thinking more respectable and widespread.

  In broad terms, the postwar clash between labor and management ended in a draw. For unions, their ability to survive long massive strikes intact represented a historic achievement in itself, a marked contrast to the strike wave after World War I, when unions suffered numerous defeats that contributed to a sharp decline in their membership and power. With the tacit support of the Truman administration, workers won significant wage hikes in the first rounds of postwar bargaining, with gains of 15 percent and more by the large industrial unions. Many smaller unionized companies and even nonunion firms matched these advances, so that for a brief while unions like the Auto Workers and Steelworkers effectively bargained for much larger constituencies than their own members. In subsequent rounds of bargaining, in addition to further wage increases, unions won a variety of new benefits, including health insurance and pension plans to supplement Social Security. For their part, companies won stricter limits on the parameters of bargaining, clear statements of their “right to manage,” and greater stability, as one-year contracts were replaced by agreements lasting two, three, or even five years.

  Prices

  Workers saw some of their wage gains eaten away by inflation. During World War II, the Office of Price Administration (OPA) set prices. To help enforce its regulations, it recruited a mostly female army of volunteer price checkers, giving consumers an unprecedented position in managing the economy. When the war ended, Truman kept price controls in place, hoping to smooth economic reconversion and check postwar inflation.

  Businesses hated price controls and public debates over pricing. Setting prices for the goods and services they sold, they believed, was their prerogative alone. Once the war ended, business groups moved into open, vociferous opposition to price regulation. If companies could not set prices at profitable levels, they argued, they would have no incentive for reconverting to peacetime production, creating shortages that would generate inflationary pressure.

  Labor saw prices and wages as deeply intertwined. Both determined the working-class standard of living, with any rise in prices diminishing or wiping out gains won through wage increases. Just two days after the Japanese surrender, UAW leader Walter Reuther (soon to be the union’s president) explicitly linked wages and prices when he demanded that General Motors grant its workers a 30 percent wage increase without raising car prices, arguing that large wartime profits made this possible. When the company refused, Reuther announced that he would drop the price demand if GM opened its books to prove that it needed higher prices to pay higher wages. The company ignored Reuther’s challenge, leading 175,000 autoworkers to walk off their jobs on November 21, 1945.

  Reuther’s effort to make unions the agents of price stability won little support. Other unions and many federal officials agreed that companies had the capacity to raise wages without raising prices, but they felt it was the government’s job, not labor’s, to check inflation. The Truman administration ended up establishing the wage/price relationship when it intervened in steel industry negotiations.

  In November 1945, U.S. Steel said that it could not meet the United Steelworkers’ demand for a wage increase of twenty-five cents an hour without the OPA raising the ceiling on steel prices. Hoping to prevent a strike, Truman appointed a fact-finding board that recommended workers get an increase of eighteen and a half cents an hour (nearly a 20 percent raise). The union accepted the proposed settlement, but U.S. Steel rejected it. On January 21, 1946, three-quarters of a million steelworkers walked off their jobs. Fearful that an interruption of steel production would sabotage the economy, the Truman administration upped the size of the price increase it would permit if the steel companies settled, until U.S. Steel accepted the proposed wage increase, ending the strike. With this settlement, the pattern was set: across the economy, companies and unions signed contracts with wage increases patterned after the steel agreement, while the Truman administration allowed offsetting price hikes. When Reuther finally ended the GM strike, he did so on essentially the same terms.

  Truman’s back-and-forth on industrial prices, and the general disarray in his administration over reconversion issues, undercut his effort to get Congress to reauthorize price controls, which were set to expire in June 1946. Just before the deadline, Congress sent the president a bill that kept OPA alive but gutted it of much of its power. In a politically costly miscalculation, Truman vetoed the bill, hoping that Congress would come up with a stronger measure. With no controls in effect, prices shot up, led by food costs, which increased 14 percent in a single month.

  Consumers, infuriated by rising prices and the turn of events in Washington, began mobilizing, with a heightened sense of being a distinct social constituency as a result of the wartime OPA experience. Coalitions of unions and their female auxiliaries, middle-class consumer groups, and cooperative organizations demonstrated against price increases and sent delegations to Washington to lobby for reinstating price controls. In Washington and several other cities, they organized boycotts of high-priced meat and milk.

  Faced with consumer uproar, Congress passed a new bill extending OPA, but again giving it very limited power. This time Truman signed. Now producers protested, unhappy with any return of controls. Meatpackers sharply reduced the number of animals they slaughtered, creating widespread shortages of meat. Consumers, who generally had supported OPA, began blaming it for the empty meat counters. Shortly before the November 1946 election, Truman lifted controls on meat prices to get packers to up their output. Soon thereafter, he ended most remaining price controls.

  Prices soared. In 1947 the consumer price index jumped 14 percent. The following summer, the left-wing Congress of American Women helped organize a new meat boycott that spread from Texas to much of the nation. Three years later, another wave of meat boycotts took place. But by and large, consumers failed to coalesce as a political force.

  With consumer pressure ineffective and price controls gone from the arsenal of government economic regulation (though briefly reinstated during the Korean and Vietnam wars), unions turned to a different device to counter inflation: contractual clauses that automatically raised wages when prices went up, so-called cost-of-living adjustments, or COLAs. The idea had been around for some time but began gaining widespread acceptance only in 1948, when at GM’s suggestion a COLA was inserted into its contract with the UAW. By the early 1960s, about half of all union contracts had cost-of-living provisions.

  COLAs helped protect union members from inflation, but the linkage between prices and union wages nonetheless hurt labor. Many companies began using contract settlements as an occasion for price increases, justifying them by pointing to rising labor costs. By doing so, they shifted some of the public blame for rising prices away from themselves toward labor. Meanwhile, COLAs created a growing distance between those wage earners at least partially protected from rising prices and those who were not, undermining the ability of the labor movement to present itself as a representative of a broad working class, as opposed to simply its own membership. Over time, the gap contributed to the lessening of labor’s social and political clout.

  “Had Enough?”

  Truman’s inept handling of reconversion and wage and price determination had a heavy political cost. Not only were prices shooting up, but many civilian goods were unavailable at any cost. A very slow restart of housing construction left millions without decent dwellings. (In Chicago, things were so bad that the city sold off old streetcars, to be converted into houses.) In the November 1946 congressional elections, the Republicans gained control of both houses of Congress for
the first time since 1930.

  By the time of the 1946 election, many liberals had come to compare Truman unfavorably to Roosevelt, in whose shadow he had the misfortune to labor. His frequent blunders and reversals left him open to ridicule. “To err is Truman,” went one popular joke. His replacement of many Roosevelt appointees (including almost the entire cabinet) with figures of less stature and little commitment to reform, in some cases men whose main qualification was political loyalty, dampened the enthusiasm of many of the liberals who had worked hard to keep the Democrats in power.

  Truman’s failure to control prices and his episodic attacks on labor diminished support for the Democratic Party among working-class voters and their organizations. The president’s May 1946 threat to draft striking railway workers led some labor and liberal activists to begin exploring the possibility of building a liberal, labor-based third party. Although in the end, most unions did support the Democrats, many working-class voters stayed home on election day, contributing to an extraordinary low turnout, with less than a third of the electorate voting.

  The Republicans proved more successful than the Democrats at getting their core supporters to the polls, while winning new backers. Their campaign slogan—“Had Enough?”—meant had enough of strikes, shortages, inflation, and administration blundering. But it also meant had enough of the New Deal, big government, powerful unions, and Democratic rule. Apparently many people had had enough, for the Republicans made major gains among middle-class voters, especially farmers, professionals, and small businessmen, and significant though smaller gains among Catholics of Eastern European heritage (to a large measure a reaction to Soviet control of their homelands, which some voters blamed on the Democrats).