Employment, Industry, and Labor

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Employment, Industry, and Labor

"I can remember the first week of the CWA [Civil Works Administration] checks. It was on a Friday. That night everybody had gotten his check. The first check a lot of them had in three years. Everybody was celebrating.… I never saw such a change of attitude. Instead of walking around feeling dreary and looking sorrowful, everybody was joyous. They had money in their pockets for the first time. If Roosevelt had run for President the next day, he'd have gone in by a hundred percent." Hank Oettinger, who was laid off in 1931 and remained unemployed for two years, in Studs Terkel's 1986 book, Hard Times: An Oral History of the Great Depression.

The Great Depression (1929–41) was a time of crisis and change for the American worker. The number of unemployed workers rose to a level never before seen in the United States. With few other options for assistance, many turned to the federal government for relief. However, during the early years of the Great Depression, 1929 to 1932, President Herbert Hoover (1874–1964; served 1929–33) appealed to private charities and local government relief agencies to tend to the needy. He also called for voluntary efforts from industry
to employ as many workers as possible. These appeals proved highly ineffective, and employment opportunities and industry production continued to decline.

In early 1933 newly elected president Franklin Roosevelt (1882–1945; served 1933–45) introduced a new approach involving a massive federal commitment and considerable government spending. Roosevelt's approach included many new federal programs, collectively known as the New Deal, that were designed to help the nation recover from its economic slump. Some of the programs provided funding for jobs. Others provided standard industrial codes for industries to operate by.

During the 1930s many workers organized labor unions for the first time. A union is an organized group of workers joined together for a common purpose, such as negotiating with management for better working conditions. As a group, workers have stronger bargaining power when dealing with company management. Union members hoped for higher pay, shorter hours, and better working conditions. Unions gave millions of workers a greater voice and a sense of unity. However, the road to better pay and improved working conditions was rocky. Strikes became commonplace in 1936 and 1937. Some turned violent.

Although the New Deal programs turned out to be quite effective, employment and industry did not fully recover from the Great Depression until 1941, when the United States entered World War II (1939–45). Then, all at once, millions of jobs became available as almost every part of the economy was called upon to support the war effort.

"Hoover" This and That

During the early years of the Depression, a vocabulary evolved using the name of the president at that time, Herbert Hoover (1874–1964; served 1929–33). Hoover had staunchly opposed granting money to relieve the suffering of people who were struggling in the economic crisis. Many Americans bitterly blamed Hoover for their miserable situation.

In cities all across the United States, including Washington, D.C., clusters of makeshift shelters sprang up on vacant lots. The shelters were made of scraps of metal, lumber, and cardboard and were occupied by the Depression's homeless. Shelter residents did their grocery shopping at restaurant garbage cans and in city dumps. These hapless communities were called "Hoovervilles."

Several other commonly used "Hoover" phrases were coined: "Hoover hogs" were jackrabbits caught for food. "Hoover flags" were empty pocket linings turned inside out. "Hoover blankets" were newspapers. "Hoover wagons" were broken-down cars being pulled by mules. "Hoover tourists" were homeless people catching rides on trains.

Boom of the 1920s

During the 1920s the U.S. economy, with the exception of farming, boomed. Many industries adopted the assembly-line technique introduced in 1914 by Henry Ford (1863–1947), the automobile manufacturer. As a result, the overall productivity of industry rose rapidly; more consumer goods were available than ever before. Many believed the economic good times in industry were permanent.

Because jobs were plentiful and economic times were good, labor unions did not attract large memberships during the 1920s. Companies would offer retirement pensions or stocks to nonunion employees, hoping to keep them from joining a union. They also freely used force to suppress union strikes. Supporting this antiunion atmosphere were the Republican administrations of Warren G. Harding (1921–23), Calvin Coolidge (1923–29), and Herbert Hoover (1929–33). They refused to adopt any policies recognizing the rights of workers to organize and strike. Still, unemployment was low—less than 5 percent of the workforce through the 1920s—and workers had hope for a bright future.

The Great Depression begins

For most Americans prosperity came to a sudden end. The initial drop in stock values occurred on October 24, 1929, when the price of stocks and bonds on the stock market began plummeting. The sale of stock in a company provides that company with operating money; however, in late 1929, in only a month's time, the value of stocks had dropped by 40 percent. No one was buying stock because they could no longer expect a return on their investment. Many individuals and businesses went bankrupt (legally declared unable to pay one's debts due to lack of money) and could not repay loans they had taken from the bank. As a result, banks also began going out of business, causing depositors to lose their savings. The average citizen lost confidence in the nation's economy and spent money cautiously, buying necessities only. This led to more companies shutting down and more workers becoming jobless. Increasing unemployment led to a further drop in spending, causing still more cutbacks and layoffs (being let go from a job, usually due to lack of work or lack of funds to pay workers). It was a vicious downward spiral.

Across the United States workers were forced to accept lower wages and fewer work hours; many lost their jobs altogether. Unemployment swept through factories. The economic decline was baffling for most Americans. They did not understand how the problem had started or what to do about it. In March 1930 President Hoover confidently predicted that the worst of the unemployment would pass by that summer. Yet the unemployment rate climbed from almost 9 percent in 1930 to 16 percent in 1931 and 24 percent in 1932. Without jobs people could not pay for shelter, clothing, or food. Thousands of people stood in breadlines at shelters waiting for free meals of soup and bread. It became increasingly clear that the country was experiencing something much worse than a short-term setback. Nevertheless, Hoover refused to consider federal relief programs (government-sponsored assistance, often in the form of food or money), because he thought they would undermine the people's will to work.

By 1932 relief provided by charities and local governments was falling far short of the need. In January of that year, in an effort to provide some federal assistance for the economy, Hoover had pushed legislation through Congress to create the Reconstruction Finance Corporation (RFC). The RFC provided government funds to struggling banks to keep them in business so that they could provide loans to businesses and thereby boost employment. However, the RFC proved incapable of making any real difference in the economy.

The economy hits bottom

With a complete loss of confidence in President Hoover, American voters gave Democratic candidate Franklin Roosevelt (1882–1945) a landslide victory in the presidential election of November 1932. However, Roosevelt would not officially take office until March 4, 1933, so the nation had to endure four more months of government inaction. By early 1933 thousands of banks had failed, factory production was down 50 percent, and more than 25 percent of American workers (over twelve million people) were without jobs. Companies, suffering a loss of profits and revenue, began cutting back on their operating expenses. As a result, workers who still had jobs faced long hours, low wages, job insecurity, and poor working conditions. For some, workweeks extended up to sixty or even eighty hours. Industrial accidents were common as workers grew tired and less vigilant of dangers, and companies spent less money on safety measures. Despite these poor conditions, union membership stood at only 2.5 million workers, less than 5 percent of the workforce. (More than 4 million workers had been union members in the 1920s.) Those who belonged to unions were, for the most part, miners, construction workers, or skilled craftsmen. Workers knew that management disliked unions, and many feared that they would lose their jobs if they joined a union. In addition, companies hired spies and armed guards and stockpiled weapons to combat the formation of unions in their factories. Many of the big employers believed the best way to assure that unions did not form among their workers was through threats, if not actual displays of violence. When union workers did strike, companies would give their jobs to strikebreakers (workers who replace those on strike).

The New Deal arrives

In the first one hundred days of his presidency, Roosevelt pushed through Congress numerous bills that would create the programs collectively known as the New Deal. New Deal programs were designed to bring economic relief and recovery to the nation. After first reviving the U.S. banking system (see Banking and Housing chapter), Roosevelt began establishing programs to bring relief to the unemployed. The first New Deal program to provide jobs to the unemployed was the Civilian Conservation Corps (CCC), created on April 5, 1933. The CCC would employ 2.5 million young men between eighteen and twenty-five years of age in conservation projects around the nation.

Congress passed the Federal Emergency Relief Act on May 12, 1933, creating the Federal Emergency Relief Administration (FERA). The FERA provided large cash payments directly to city and state relief programs. This marked a dramatic change in the relationship of the federal government to the states, a change Hoover had previously resisted. For every three dollars a state set aside for relief, the FERA would contribute one dollar. This system encouraged states to establish and operate ongoing relief agencies rather than spending lump-sum federal gift money on short-term projects that would only benefit a few. On May 17 Congress created the Tennessee Valley Authority (TVA), which would eventually employ thousands of workers building dams, power plants, and other facilities in the Southeast.

The National Industrial Recovery Act

Unlike the previous presidents, Roosevelt and his key advisers, particularly Secretary of Labor Frances Perkins (1882–1965), supported the interests of labor. This major change in the government's attitude toward industry and labor became evident when Congress passed the National Industrial Recovery Act (NIRA) on June 16, 1933. The NIRA represented a key part of the New Deal's attempt at national economic planning. It also formally recognized organized labor, and that gave unions greater credibility in the eyes of workers. As a result, union membership began to grow. During the first year after passage of the NIRA, over a million workers joined labor unions.

The NIRA was a complex law that did several things: First, the law regulated industry and labor through the newly created National Recovery Administration (NRA). Under the NRA each industry would create a code of standards for both management and labor to follow in that industry. Some 546 industrial codes were written. The industries covered included shipbuilding, banking, textiles (clothing), insurance, transportation, and public health. The codes varied greatly from one industry to the next. The textiles industry code was one of the first ones established for the major industries under the act. It banned child labor, raised wages for workers, and reduced production to keep prices for products higher. Businesses that complied with the NRA could publicly display a Blue Eagle emblem to indicate their participation.

Second, the NIRA supported the workers' right to organize into unions, select representatives, and engage in collective bargaining. Collective bargaining is negotiation between representatives of an employer and representatives of labor, with both sides working to reach agreement on wages, job benefits, and working conditions. Under the new law, labor representatives were to be included in the development of industry codes. Wages, hours, and working conditions became key subjects of negotiation, during the development of the codes and during collective bargaining sessions.

Third, under authority of the NIRA, President Roosevelt created the Public Works Administration (PWA). He chose Harold Ickes (1874–1952), the secretary of the interior, to lead the program. Ultimately $3.3 billion was provided through the PWA for massive construction projects such as roads, dams, bridges, and public buildings; these projects would offer jobs for thousands of workers.

Unemployment rates remain high

By October 1933 it became apparent that recovery was not taking place as quickly as originally hoped. Millions remained unemployed. To address the situation, Roosevelt created the Civil Works Administration (CWA) on November 9, 1933, and appointed Harry Hopkins (1890–1946) to be its director. The CWA provided another $400 million for a work relief program. In just two months, the CWA had hired over four million workers across the country. However, the CWA projects only lasted until the spring of 1934.

It was thought that providing jobs would stimulate the economy by pump priming. Pump priming is a strategy that involves spending government money in ways that quickly put cash into the hands of consumers. Theoretically, if enough people received wages and began buying goods and services again, the economy would eventually come back into balance.However, by late 1934 New Deal programs had not significantly eased unemployment. Unemployment rates remained above 20 percent through 1934 and into 1935.

Critics of the New Deal gained momentum. Some claimed Roosevelt's programs were not benefiting the average worker. Big business, however, was thriving under the NIRA codes. Under these codes, prices for goods were rising faster than workers' wages. In addition noncompliance with the codes was growing, because temptations to violate them were too great and the NRA had few enforcement powers. Also, the NIRA allowed companies to form their own unions, squeezing out the regular unions. Workers were coerced to join these unions rather than independent unions. The company unions, of course, were biased and favored management over workers in most disputes. Many workers soon lost the desire to join unions.

The New Deal for employment is renewed

In the face of mounting criticism and continuing economic problems, President Roosevelt renewed his effort to ease unemployment. He introduced the Second New Deal in April 1935. On April 8 Congress passed the Emergency Relief Appropriation Act. Under authority of the act, Roosevelt created the Works Progress Administration (WPA) a month later on May 6. The WPA would ultimately provide jobs for over three million people and spend over eleven billion dollars in its relief programs. WPA workers built or improved hospitals, school buildings, streets and roads, power plants, airport buildings and landing strips, public parks, and sidewalks (see Works Progress Administration chapter).

However, another stumbling block soon arose: the U.S. Supreme Court. On May 27, 1935, the Court ruled in Schecter Poultry Corp. v. United States that the NIRA was unconstitutional (not in keeping with the U.S. Constitution). Hence the NIRA became invalid. The Court reasoned that the regulation of business was the responsibility of Congress, not the president as designated by the National Recovery Administration. In addition, Congress could only regulate interstate commerce (business occurring across state lines). Because the businesses involved in the lawsuit were not directly involved in interstate commerce, the Court ruled that these businesses could only be regulated by the states, not the federal government. In striking down the NIRA, the Court also erased the workers' legal right to organize and engage in collective bargaining.

National Labor Relations Act

Only five weeks after the Supreme Court decision that invalidated the NIRA, Congress passed legislation re-asserting support for organized labor. The National Labor Relations Act (NLRA), passed on July 5, 1935, is more commonly known as the Wagner Act; its key congressional sponsor was Senator Robert F. Wagner (1877–1953) of New York. The act addressed several aspects of industry and labor relations. It protected the right of workers to join unions. Workers could no longer be fired for joining a union. It prohibited companies from certain unfair business practices, such as interfering in union activities, refusing to bargain with a union, or gaining control over a labor organization. The act also barred unions from forcing workers to join a union. To enforce these provisions the new law created the National Labor Relations Board (NLRB). The NLRB was given considerable leeway to administer the law. If a company was found to be in violation of the Wagner Act, the NLRB could issue "cease and desist" orders to tell an employer to halt questionable activities. If the company persisted in its violation, the NLRB could go to the U.S. Court of Appeals to seek a ruling that would force the company to stop unfair practices. The board could also help employees hold elections to establish unions and select their representatives. After passage of the Wagner Act, union membership rapidly increased.

Union activity rises

A key moment for the labor movement came in 1935, when eight unions at a meeting of the American Federation of Labor (AFL) decided to form the Committee for Industrial Organization (CIO), a labor organization within the AFL. The CIO focused on mass-production industries such as automobile manufacturers and steel plants. Since 1886 the AFL, a loose federation of independent craft unions, had been the primary unifying force for American labor. The AFL member unions represented highly skilled workers such as electricians and plumbers. The AFL was not eager to represent less skilled industrial workers. Thus a battle with the new CIO developed over whether the AFL should also represent the lesser skilled workers. The CIO was gaining members among rubber workers, laborers in automobile factories, redcaps handling baggage at railroad stations, longshoremen working on the docks, and truck driver (teamster) unions. Unions joining the CIO were not organized by shared skills like the AFL member unions. Instead they were based on a particular type of industry or a shared workplace.

Despite the National Labor Relations Act and the growth of union membership, companies still were unwilling to recognize and bargain with unions. Workers found it necessary to become more confrontational with management. The automobile industry, including related tire manufacturers, had been a leader in U.S. industry since the late 1910s. However, the Depression triggered a major decline in car sales, which led to a drop in the demand for tires. But as the economy somewhat improved and car sales began to rise in late 1935, the Goodyear tire company in Akron, Ohio, announced it was returning to a forty-hour workweek but would pay wages for only thirty hours of work. Rubber workers at plants owned by Goodyear (as well as those at Firestone and Goodrich tire manufacturers) staged a sit-down strike in January 1936. They remained in the factories at their workstations but refused to work until their demand for a thirty-hour workweek was met. By remaining at their workstations, the sit-down strikers stopped employers from replacing them with scab (replacement) laborers and also avoided confrontation on the street with people and police opposing a picket line (striking employees marching outside their place of business holding signs, pickets, explaining their complaints and demands). Finally, in March, Goodyear gave in to a thirty-hour workweek.

Confrontations between labor and industry continued to escalate through 1936 and 1937. In 1936 the United Auto Workers (UAW), a CIO member, became more aggressive in demanding recognition from employers. Despite the collapse of car sales during the Depression, General Motors (GM) had risen to the top of auto sales. GM controlled 43 percent of the market and still showed a profit. Because of its relatively strong financial condition, GM became a first target for the UAW, whose members sought increased wages and benefits. In the fall of 1936 strikes began occurring at some GM plants. The struggle peaked in November as sit-down strikes spread from Atlanta, Georgia, to Kansas City, Missouri, then to Cleveland, Ohio, and on to Detroit and Flint, Michigan. In January 1937 the strike in Flint erupted into a brawl between strikers and the police on the street outside the factory. The police fired tear gas, and strikers retaliated by throwing rocks and bottles. No one was killed, but a number of people were injured on both sides. Michigan governor Frank Murphy (1890–1949), who was supportive of labor, sent in the National Guard to keep order but not to break up the strike. GM finally recognized the UAW and its demands on February 11, 1937. The UAW conflict with GM proved once and for all the power of unionization. The membership of the UAW skyrocketed from eighty-eight thousand to four hundred thousand in the next several months after the GM strike.

After the UAW victory, strikes spread to other industries. In March 1937, 170 sit-down strikes involving over 167,000 workers occurred across the nation. Under the increasing threats of strikes and labor unrest, manufacturers, including U.S. Steel Corporation, began more readily entering into agreements with CIO unions. However, some companies still held out against unionization. Republic Steel, for example, refused to recognize its workers' union, represented by the CIO's Steel Workers' Organizing Committee. Finally, about seventy thousand employees walked off the job. At the Republic Steel mill in South Chicago on Memorial Day of 1937 events turned violent when the police blocked marchers from entering the main gate. As demonstrators threw rocks and other objects at police lines, the police opened fire on the workers and their families. Police pursued them across a field, shooting and beating them. Ten demonstrators died and ninety others (including three policemen) were injured. The charge of the police became known as the Memorial Day Massacre. It took until August 1941 for Republic Steel to agree to bargain with labor and another year before it signed a contract with United Steelworkers of America.

Fair Labor Standards Act

New Deal legislation in 1938 would again strengthen government support of the labor movement. After considerable debate and opposition from conservatives, Congress passed the Fair Labor Standards Act (FLSA) on June 25. This law brought back some elements of the National Industrial Recovery Act, which had been struck down as unconstitutional in 1935.

The FLSA reinstated several of the codes from the old law, including those that established maximum hours and minimum wages and prohibited child labor. It fixed a minimum wage of twenty-five cents an hour and a maximum workweek of forty-four hours. At the time, an estimated twelve million workers were earning less than twenty-five cents an hour. By 1940 wages would rise to forty cents an hour with a workweek of forty hours. Employers who wanted laborers to exceed the maximum allowable hours had to pay time and a half (one and a half times the employees' hourly wage) for each overtime hour. For the rest of the century the FLSA remained the main legislation protecting workers from long hours and low pay.

Last labor events

The AFL and the CIO continued their battle to gain the top leadership position among U.S. labor interests; each tried to out-recruit the other for new members. A major split in the nation's union movement occurred in 1938 when the AFL expelled all unions that had formed the CIO. With its new independence the CIO changed its name in November 1938 from the Committee for Industrial Organization to the Congress of Industrial Organizations. The new CIO continued to grow under the dynamic leadership of John L. Lewis (1880–1969).

John L. Lewis

John L. Lewis (1880–1969) was born in Iowa to a coal-mining family of Welsh descent. Lewis began working in the mines in 1901 and became an original member of the local chapter of the United Mine Workers of America (UMWA). The UMWA was a member of the American Federation of Labor (AFL). After various jobs, Lewis and his family settled in the coalfields of Illinois, where he became increasingly recognized for his union activity. In 1911 he was selected as a field representative for Samuel Gompers (1850–1924), the AFL president. This responsibility speeded Lewis's rise in the UMWA; he became the organization's president in 1920. At that time the union had about four hundred thousand members.

Although Lewis was a firm and determined leader, UMWA membership dropped steadily in the 1920s. Lengthy strikes, lack of state and federal support for unions, and a drop in the demand for coal hurt the union. Lewis was a conservative Republican who believed that government should not be involved in business matters, including labor issues. However, he also recognized an opportunity to further his cause through Roosevelt's New Deal legislation: With passage of the National Industrial Recovery Act in 1933, which provided the first legal protections for union activities, Lewis had almost instant success expanding union membership. As a result of the increased membership and political power, wages of many UMWA members climbed.

Lewis began to pressure the AFL to represent largely unskilled industrial workers in its craft unions (historically, the AFL had represented only highly skilled craftsmen such as electricians and plumbers). In November 1935 Lewis formed the Committee for Industrial Organization (CIO) within the AFL to support industrial unions. The CIO grew rapidly under Lewis's leadership, attracting workers from the automobile, steel, and rubber industries. Lewis was often personally involved in negotiations with industry on behalf of the CIO member unions.

In late 1937 the nation's economy worsened again, and bloody confrontations occurred between strikers and police. The rise in violence led many workers to withdraw from union participation. With the decline in membership, Lewis came under criticism from other CIO leaders for letting the union's influence decline. The critics also charged that Lewis had allowed radicals, including Communists, to become established within the CIO. Based on the increased violence, declining membership, and supposed radical ties, the AFL ousted the CIO from its organization in 1938. It then changed its name to the Congress of Industrial Organizations, and Lewis continued as one of the nation's most visible spokesmen for workers. However, conflicts with other CIO leaders increased as Lewis began supporting Republican candidates while most of labor supported Roosevelt and the Democrats. For example, in 1940 Lewis opposed Roosevelt's reelection. He left the CIO soon after the election and became increasingly distant from the organization. He continued as president of the UMWA, which had withdrawn from the CIO to operate independently. Lewis was a major force in American labor, serving a total of forty years as head of the UMWA.

Another setback for labor came in 1939, again from the Supreme Court. The Court outlawed sit-down strikes, the strategy that had served the industrial unions so well earlier in the Depression. Nonetheless, better days for workers and industry were ahead. By 1941, as the United States prepared to enter World War II (1939–45), industries increased production of war materials, and unemployment dropped to less than 10 percent of the workforce. Union membership grew to nine million. By 1945 unemployment was below 2 percent, and fifteen million workers were union members. World War II had, for the moment, brought an end to most industry and labor problems in the United States.

For More Information

bernstein, irving. turbulent years: a history of the american worker, 1933–1941. boston, ma: houghton mifflin, 1970.

bradley, michael r. on the job: safeguarding workers' rights. vero beach, fl: rourke corporation, 1992.

brand, donald r. corporatism and the rule of law: a study of the national recovery administration. ithaca, ny: cornell university press, 1988.

dubofsky, melvyn. hard work: the making of labor history. urbana, il: university of illinois press, 2000.

dubofsky, melvyn, and warren van tyne. john l. lewis: a biography. new york, ny: quadrangle books/new york times, 1977.

fine, sidney. sit-down: the general motors strike of 1936–1937. ann arbor, mi: university of michigan press, 1969.

galenson, walter. the cio challenge to the afl: a history of the american labor movement, 1935–1941. cambridge, ma: harvard university press, 1960.

gordon, colin. new deals: business, labor, and politics in america, 1920–1935. new york, ny: cambridge university press, 1994.

schwartz, alvin. the unions: what they are, how they came to be, how they affect each of us. new york, ny: viking press, 1972.

storrs, landon r. y. civilizing capitalism: the national consumers' league, women's activism, and labor standards in the new deal era. chapel hill, nc: university of north carolina press, 2000.

terkel, studs. hard times: an oral history of the great depression. new york, ny: pantheon books, 1986.

vittoz, stanley. new deal labor policy and the american industrial economy. chapel hill, nc: university of north carolina press, 1987.