World War II Labor Measures

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World War II Labor Measures

United States 1941-1945

Synopsis

The political economy of wartime is unlike any other economic cycle. Raw materials, money, production and shipping capacity, agricultural goods, management skills, and labor are consumed by the war, and the home front must be adequately supplied and protected from destructive inflation. Extensive government intervention is required to deploy resources in the national interest. World War II was an extraordinary series of events marked, more than anything else, by change. United States involvement varied in form and intensity during the war. President Franklin Delano Roosevelt's administration set up several wartime agencies to meet shifting military and civilian strategic needs. As employment rose from 44,482,000 in 1938 to a wartime peak of 65,370,000 in 1944, Roosevelt created the National War Labor Board (NWLB) to facilitate labor's war effort. The NWLB modified the impact of industrial disputes; it controlled wages, which, in turn, checked inflation and slowed the wasteful turnover of workers; it helped coordinate national war mobilization; and it created publicly acceptable outlets for industrial demands.

Timeline

1921: As the Allied Reparations Commission calls for payments of 132 billion gold marks, inflation in Germany begins to climb.
1925: Released from Landsberg Prison, Adolf Hitler is a national celebrity, widely regarded as an emerging statesman who offers genuine solutions to Germany's problems. This year, he publishes the first volume of Mein Kampf (My Struggle), which he dictated in prison to trusted confederate Rudolf Hess. The second and final volume of Hitler's opus, a mixture of autobiography, "history," and racial rant, will appear two years later.
1931: Financial crisis widens in the United States and Europe, which reel from bank failures and climbing unemployment levels. In London, armies of the unemployed riot.
1936: The election of a leftist Popular Front government in Spain in February precipitates an uprising by rightists under the leadership of Francisco Franco. Over the next three years, war will rage between the Loyalists and Franco's Nationalists. The Spanish Civil War will prove to be a lightning rod for the world's tensions, with the Nazis and fascists supporting the Nationalists, and the Soviets the Loyalists.
1941: The United States initiates the Manhattan Project to build an atomic bomb and signs the Lend-Lease Act, whereby it provides aid to Great Britain and, later, the Soviet Union.
1942: By executive order of the U.S. president, some 120,000 Japanese Americans are placed in West Coast internment camps.
1943: To offset the costs of war, the U.S. government introduces income tax withholding-which it claims to be a temporary measure.
1944: Creation of International Monetary Fund and World Bank at Bretton Woods Conference.
1945: At the Yalta Conference in February, Roosevelt, Churchill, and Stalin make plans for Germany after its by now inevitable surrender.
1950: United States begins developing the hydrogen bomb.
1955: Over the course of the year, a number of key items are added to the pantheon of American culture the 1955 Chevrolet, the first of many classic models; Tennessee Williams's Cat on a Hot Tin Roof; Marilyn Monroe's performance in The Seven-Year Itch; Disneyland; and Bill Haley and the Comets' "Rock Around the Clock."
1961: U.S. President Eisenhower steps down, warning of a "military-industrial complex" in his farewell speech, and 43-year-old John F. Kennedy becomes the youngest elected president in U.S. history. Three months later, he launches an unsuccessful invasion of Cuba at the Bay of Pigs.

Event and Its Context

World War II came relatively slowly to the United States and was met by attitudes framed during New Deal management of the Great Depression. Powerful antistate interests decried the growth of government regulation and intervention. Influential liberals had worked hard to modify business's influence on the national economy. War mobilization depended on both big business and big government but, even more, it depended on the national workforce. Roosevelt used all his political skill to create a working consensus between all three. A mixture of government subsidies, low-cost loans, tax breaks, commercial freedom, and guaranteed profits encouraged business, but massive mobilization, both for military and war production purposes, destabilized workers in the predominantly antilabor business milieu. Hoping to avert the danger of ongoing dispute, Roosevelt made two great adjustments to the wartime labor market. He created the National War Labor Board (NWLB) to mediate and arbitrate in disputes that interfered with the war effort, and he used wage controls to stabilize the workforce. These measures brought organized labor into a policy-making relationship with government and business.

The United States in Neutrality

Although President Roosevelt proclaimed a limited national emergency on 8 September 1939 (five days after Britain and France declared war on Germany) and an unlimited national emergency on 27 May 1941, it was not until the Japanese attacked Pearl Harbor that the United States embraced all-out war. Before the 7 December air raid, union leaders (among others) resisted active war, fearing it would erode the improved working conditions and union rights that had been hard-won and hard-kept through the 1930s. However, as the war progressed, their attitudes changed. Philip Murray had replaced John L. Lewis as head of the Congress of Industrial Organizations (CIO), and his experience on Pennsylvania's Regional Labor Board in World War I led him to seek an institutional role for labor in the war effort. William Green, president of the American Federation of Labor (AFL), agreed with him and, although they did not always see eye to eye, together they encouraged Roosevelt's often-stated commitment to preserve labor conditions.

Lend-lease agreements with the United Kingdom, the Soviet Union, and other Western allies intensified the problems of earlier industrial mobilization. The vast numbers of workers recruited into war-related industries were frequently mobile, previously unemployed, young, and inexperienced: a volatile mix. War industries such as aircraft production were also young, and the war's demand for more units and improved0designs pressured the inadequate facilities and unavailable or unsuitable labor. Erratic working conditions deteriorated under inexperienced leaders. Manufacturers seemed to be raking in easy profits, paid for by labor, and workers wanted a larger share. Their agitation was fuelled by the belief that war contracts would not continue beyond the immediate future and that when they were finished, mass unemployment, which still afflicted 15 percent of the workforce in 1940, would return. Unanticipated changes in War Department requirements exacerbated the situation. Large plants hoarded workers in the hopes of winning lucrative contracts or discarded them as war needs veered wildly from one commodity to another. Enterprises such as automotive firms achieved notoriety by making record sales of civilian goods while falling behind in defense production. Many people became convinced that war production was less urgent than the government claimed. It is not surprising that workers could not see the overall shortage of labor that lay just over the horizon. Even the War Department, dipping into the seemingly bottomless pool of unemployed workers, still denied the need for a concerted labor procurement program.

In June 1940 Roosevelt pledged that the United States would rearm itself and become the "arsenal of democracy," but labor disputes at significant war-supply plants showed that sectional interests could undermine his aims. Thus, starting in mid-1940, labor-management relations were identified as a significant political arena requiring state intervention. Seeking a compromise position that would not set disputes rolling throughout industry, the National Defense Advisory Commission promised in August 1940 that it would require defense contractors to comply with the full raft of state and local labor laws. Several influential contractors ignored these requirements, and strikes, disputes, and slowdowns marked the winter of 1940-1941, drawing accusations from government bodies and the public that strikers were sabotaging the war effort. The National Labor Relations Board (NLRB) and the Department of Labor Conciliation Service, the two federal bodies dedicated to controlling industrial unrest, could not control the mix of bad management and worker resentment in war production plants and mines.

Spring 1941 brought the war closer to the United States as German submarines began to haunt North Atlantic shipping lanes. Desperate to increase the rate of mobilization while defusing industrial discord and protecting labor rights, Roosevelt created the National Defense Mediation Board (NDMB; Executive Order 8716, 19 March 1941), a federal government, business, and labor combination, to mediate disputes that Secretary of Labor Frances Perkins believed threatened national defense. The board's strength was that it could hear evidence from all sides of industrial disputes, but it was weakened by the dual union situation and by the fact that union representatives tended to be officials rather than elected leaders. This undermined their authority even among their own members. In a situation so grave that Roosevelt declared a state of unlimited national emergency on 27 May 1941, the board's most significant weakness was that its deliberations could lead only to recommendations.

Establishment of NWLB

The Japanese attack on Pearl Harbor jolted the nation. America was in the war. A few days later, fearing that Congress might legislate unpalatable labor control, Roosevelt called a national conference of union, employer, and government representatives. There, the unions pledged "no strikes," the management pledged "no lock-outs," and all agreed that disputes should be settled by peaceful mediation backed up by a Mediation Board with teeth. Roosevelt converted the NDMB into the NWLB, comprising four representatives (chosen by the president) from each of the three sectors, and extended its mediation role to conciliation and arbitration in labor disputes that might interrupt "the effective prosecution of the war." The board, under Chairman Lloyd K. Garrison, sought to meet this aim by institutionalizing preexisting employer-union relationships. When a dispute appeared troublesome, the board, participating as a third-party, assisted in the initial workplace collective bargaining. If that failed and the U.S. Conciliation Service could not help, the board formally heard the case and arbitrated a settlement. The board's decisions were enforced not by the courts but by the president. The major sanction was public opinion, but later in the war, in extreme cases of noncompliance, the Labor Disputes Act of 25 June 1943 authorized the president to seize a recalcitrant employer's plant or sequester funds and cancel union preference deals to discipline a union. The NWLB, empowered to deal only with organized labor, encouraged union membership—which grew from 10.5 million in December 1941 to nearly 15 million by war's end—and supported the War Production Board in its demand that employers accept unions or be denied government contracts.

Initially, the board operated in Washington, D.C., receiving only advice from regional offices, but in January 1943 the 12 regional offices became Regional War Labor Boards, exercising considerable autonomy in resolving local disputes. In addition, the NWLB established several special tripartite industry bodies to deal on a national level with particular industries and sectional interests. Its extensive structure allowed the NWLB to settle nearly 20,000 wartime disputes affecting about 12 million workers and approve about 415,000 wage agreements.

The War Manpower Commission

Acquisition officers distributed contracts and situated defense works in areas where industrial workers were already concentrated. Thus by 1942 densely industrialized districts were suffering serious labor scarcity while some regions experienced continued local unemployment. Roosevelt's resolve to maintain a free labor market weakened. Deciding that available labor should be allocated according to centrally determined priorities rather than by the free competition of employers, the president created the War Manpower Commission (WMC; EO 9139) in April. Paul McNutt, the Federal Security Administrator, chaired the commission, which comprised representatives from the Departments of War, Agriculture, Labor, and Navy, the Federal Security Agency, the War Production Board, Selective Service System, and Civil Service Commission. Despite McNutt's mixed industrial reputation, his belief that a free labor market was fundamental to the capitalist system and American democracy encouraged management and both Green and Murray to support his appointment.

By the end of 1942, the commission had created several committees responsible for particular groups of workers and specialized workforce training. Notable among them was the Management-Labor Policy Committee (MLPC), an advisory body established in May 1942. Unlike the WMC, the MLPC included representatives of both labor and management. McNutt relied heavily on its recommendations when trying to increase mobilization without sparking further industrial dispute. Another significant WMC body was the Women's Advisory Committee, established in August 1942 under the chair of Margaret A. Hickey, to advise on all matters specific to women and children under 18 years old doing war work.

The commission was doomed to only partial success. Responsible for mediating labor-management relationships and supervising the military Selective Service System, it was enormously influential but, despite periodic reorganization, it remained powerless to set military recruitment rates or civilian employment priorities.

Wartime Wage Adjustments

Wage control was an important aspect of business-labor mediation. Although wage increases were frequently negotiated as resolutions to labor disputes, the NWLB attempted to control inflation by limiting wage rises. It established four principles. Wages could be raised only to meet the cost of living, to correct inequities and inequalities, to raise substandard rates, and to aid the war. Government intervention in wage rates in general, rather than in specific cases, offended workers at several levels, not least because they occurred when, at last, industrial conditions favored high wages. Management was willing to pay rather than risk industrial dispute and could shift the expense to the government under the cost-plus-expenses guarantees of their contracts.

General wage adjustments were instituted for two predominant reasons. First, having voluntarily agreed not to strike during the war, the unions were forced to turn to the NWLB for wage revision. Second, as production capacity expanded and war contractors found themselves desperate for labor, wage competition encouraged turnover. Piracy, or the practice of poaching workers from other plants by offering higher wages, became common, frequently disrupting production. Further, many pirated workers were hoarded (even when not engaged in essential work) with the hope that contracts would come. This uncoordinated recruitment aggravated problems associated with inadequate housing, transport, and even food and clothing supplies in the receiving areas. These conditions were particularly hard for workers to understand in an environment in which late conversion to war work produced visible pockets of localized unemployment even in 1942.

Many officials, equating labor peace with productivity, preferred to blame the overall labor shortfall on labor's behavior. Absenteeism and turnover rates were exaggerated in media reporting, and this, combined with the inflation surge of early 1942, made Congress even more anxious about wage increases. Roosevelt was increasingly pressured to freeze wages. He set up the Wage Adjustment Board in May 1942. Composed of representatives of federal contracting agencies and labor unions, it administered the wage stabilization agreement of 22 May 1942, which froze some government wage rates at July 1942 levels. Public and union members of the NWLB were sympathetic to wage demands but were also aware that wage rises added to inflationary pressure. The board tried to contain wage rates through the "Little Steel Formula," a wage stabilization agreement that arose out of attempts to revise pay scales at smaller steel-works. This formula, which combined preexisting norms with cost-of-living compensation, slowed inflationary wage creep but it could not control labor piracy, absenteeism, rapid turnover, or social troubles. Furthermore, unionists resented it because it kept wages well behind cost-of-living rises and some of its provisions were both hard to define and unevenly applied. By the Stabilization Act of 2 October 1942, Congress directed the president to stabilize the economy by freezing wages and prices at 15 September levels (plus inflation). This put wage adjustments under direct government control. Roosevelt responded with a limited extension of the NWLB's authority to stabilize wages and salaries.

Strikes and labor shortages greeted 1943, and Roosevelt's management of the tripartite production partnership faltered. Secretary of Labor Perkins did not believe that wages encouraged worker turnover, but significant labor mandarins such as McNutt and James Francis Byrnes argued that varying wage rates did indeed cause workers to change jobs. Roosevelt concurred and moved to "hold the line" by freezing wages and prices and authorizing McNutt to freeze labor movement. Beginning with Executive Order 9238 of 8 April 1943, the president made several largely unsuccessful attempts to ease worker agitation and end piracy by wage stabilization. The Wage Stabilization Division of the NWLB was to process all requests for wage readjustment, remove wage anomalies, and raise unacceptably low wages. By June 1943 the board had abandoned the Little Steel Formula in favor of the "bracket principle." This method, which recognized the prevailing occupational rates in specific labor market areas, had two main advantages: it automatically avoided gross wage anomalies, and its simplicity allowed for speedy processing of new and old disputes and requests. Wage stabilization remained so unpopular that some union leaders resigned from government committees.

In early May coal miners, whose conditions and wages were deplorable, began another highly publicized strike. National opinion polarized. On 27 May, Roosevelt returned mobilization control to the president by creating the Office of War Mobilization under Byrnes, his right-hand-man.

The president moved just too late. Overriding his energetic veto, Congress—with military support—easily passed the War Labor Disputes (Smith-Connally) Act on 25 June 1943. This act modified the NLRB, severely curtailing unions' right to strike and greatly increasing state powers of intervention. In the next two years, the army occupied at least 25 strike-bound plants.

Transfer to Peace

On 19 September 1945 the NWLB was transferred to the Department of Labor. It was terminated in December by the same Executive Order (9672) that created the National Wage Stabilization Board, which, for the next year, maintained the NWLB's role in the settling of wages and salaries and carried on a much-limited dispute arbitration role.

Conclusion

Assessment of the NWLB's achievements are mixed. Strike action diminished in 1942, but the reduction can be attributed to simple patriotism. In the months between Pearl Harbor and the turning of the Pacific War at battles such as Coral Sea and Midway, even the most persuasive isolationists were quieted, if not silenced. The United States was in palpable danger. Committed also to the war in North Africa and Europe, the entire nation was called to the war effort, and every aspect of life was touched by new or augmented government powers. Nowhere were those powers more evident than at work, where workers were initially restrained. However, disorganized mobilization, directed by commercial interests rather than nationally determined priorities, unsettled workers who felt entitled to demand a fair share of what they saw as a temporary bonanza. The fact that strikes increased after the sudden slow-down of 1942 indicates that a significant number of workers believed that Roosevelt's measures were insufficient to protect their interests. After the war, Garrison reported to the president that the board had settled 17,807 disputes involving 12,300,000 employees and had received 415,000 applications for wage adjustment involving 26,300,000 employees. This achievement clearly reduced the disruptive potential of industrial strife. It is important to note that, although 1943 saw a dramatic rise in the number of strikes, only a remarkably low 0.15 percent of available man hours were lost. Strike rates remained high until the end of the war, but strike duration was usually fleeting.

The NWLB's major achievement was that it institutionalized industrial disputes and dictated the rules by which they should be fought. It regulated labor dissent into state-managed pathways and created in the American mind a concept of what became known as "responsible unionism." Although union membership grew by about two-thirds during the war (combined membership of the AFL and CIO was about 15 million by August 1945), it was membership in a state-approved style of unionism. In addition, the NWLB ensured that wartime disputes are remembered as a criticism of labor rather than as a criticism of management or employers.

Key Players

Byrnes, James Francis (1882-1972): Born in Charleston, South Carolina, Byrnes was a journalist and lawyer. He served in all three branches of the federal government. In 1942 he resigned his position as associate justice of the Supreme Court to become director of the Office of Economic Stabilization, where he wielded more power than any other public official and earned the sobriquet "assistant president." As war organization expanded, Byrnes directed the Office of War Mobilization (1943-1944) and the Office of War Mobilization and Reconversion (1944-1945). His assiduous checking of war spending saved the country as much as $15 billion.

Garrison, Lloyd Kirkham (1897-1991): A Harvard law graduate who, turning to public service, was appointed first chairman of the old National Labor Relations Board in 1934 and helped start the National War Labor Board (NWLB) while serving as dean of the University of Wisconsin Law School. He is best remembered for his ground-breaking defense of civil rights and the environment, particularly the preservation of Storm King Mountain on the Hudson River.

Green, William (1870-1952): Born in Coshocton, Ohio, Green was a coal miner for 20 years then entered labor politics through leadership positions in the United Mine Workers of America (of which he was a founding member) and AFL, in which he succeeded Samuel Gompers as president in 1924. He served in the Ohio senate for 28 years and edited the American Federationist. His argument with Lewis over craft unionism versus industrial unionism led Lewis to split the AFL and found the CIO.

Hickey, Margaret Anne (1902-1994): A journalist and lawyer born in Kansas City, Missouri, Hickey became sympathetic to women's problems. Her community service and government advisory work during the depression introduced her to Perkins, who recommended her for appointment to the Women's Advisory Committee, set up to assist in bringing about five million women into the wartime workforce.

McNutt, Paul V. (1891-1955): Born in Franklin, Indiana, McNutt became law professor, governor of Indiana, and U.S. high commander of the Philippines before being appointed federal security administrator in 1939.

Murray, Philip (1886-1952): A Scottish immigrant to western Pennsylvania, Murray rose to leadership in mining and steel unions and served on Pennsylvania's Regional Labor Board in World War I. He replaced Lewis as head of the CIO in 1940.

Perkins, Frances (1882-1965): Born in Boston, Massachusetts, Perkins graduated from the University of Pennsylvania and Columbia University. A social reformer who was active in labor politics, she became the first female member of cabinet when Roosevelt appointed her secretary of labor in 1933.

Roosevelt, Franklin Delano (1882-1945): Born in Hyde Park, New York, Roosevelt graduated from Harvard University and Columbia Law School. Entering politics as a Democrat, Roosevelt became the 32nd president, serving a record four terms. Elected first in 1932, Roosevelt encouraged Congress to enact sweeping reform and relief measures that ameliorated the effects of the Great Depression. As a war president, Roosevelt used all his wily political skills to hold a huge and diverse nation in a loose war-winning consensus. He died before tasting the victory that was only a few weeks away.

See also: No-strike Pledge, World War II.

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