Post 1930’s

In these past 18 months I have pretty much covered our story of how unions began, how we developed, and some of our many obstacles we encountered. The symbiotic relationship between Capital and Government to the 1930’s when our basic foundation of a playing field/ battlefield was brought into place.

Throughout the 1930’s unions continued to grow and with a build-up toward World War II the focus was about winning the war in Europe and the Pacific. Labor peace was for the most part stable. There were a few exceptions, John L. Lewis of the CIO had issues with Roosevelt that made headlines which came with it criticism of him being un-American.

During the War, the government had put in place Wage and Price Controls. Which meant government contractors could not reward workers with pay raises in order to retain them. In lieu of higher wages Congress passed authorization for companies to give fringe benefits to workers. For employers, the best part of this was it was exempt from taxes.

One of the benefits I think is important to share with you is healthcare. One of the benefits they offered was family medical insurance. Kaiser shipbuilders on the West Coast were one of the early providers of this and many other benefits. This is where employer healthcare benefits began and why we have the healthcare model we have today.

Now, employers provide healthcare for workers, we eventually developed Medicare for the elderly and Medicaid for the poor. Thus, in order to have healthcare in this country, you need to work for an employer who will offer it, and of course how good it is always in question; or you need to be old; or you need to be poor, really poor. Nothing in the middle.

Most health insurers were non-profit companies, and most employers paid the cost of medical treatment plus an administrative fee to the insurer for processing, also called cost-plus basis. For the most part this model was in place until 1993. Why? The advances in medicine, its technology and the demand for medical treatment were the major causes to raise medical costs, and in 1993 the government gave the approval to Health Maintenance Organizations (HMO’s) to try and figure out a way to keep medical costs affordable for the industry, providers and patients. Along with this came the approval of for-profit providers. Yes, our profit maximization friends which added to the problem. This is why we are in this mess today. We have figured out that the way to keep prices lower is to increase the risk pool (spread the cost out over a greater number of people) sick or healthy. Individual employers have to be lucky to get all healthy employees for their rates to drop. However, single families can’t get a lower rate and are subject to higher premiums and deductibles. There are alternatives but there is too much money to lose by the corporations who have invested billions.

Okay, now back to the politics, Franklin D. Roosevelt died in April of 1945 and Harry S. Truman immediately took over and authorized the use of atomic weapons in Japan in August of that year. By 1947 Congress had changed. Although Truman was a Democrat the Congress had turned Republican. By this time, once again corporations were getting stronger and were growing away from their symbiotic relationship with the government, so much so, that they wanted to begin writing their own rules and regulations. In order to do that they needed Madison Avenue public relation firms, the media, the National Chamber of Commerce, the National Association of Manufacturers, Communism and many other items of our nemeses. Thus began the narrative of those big bad unions, you know, those thugs that walk around in groups with baseball bats, that our ruining our economy. The equivalent of immigrants eating our pets. Of course, they did not mention how the money people caused 5 depressions (Panics) in the 1800’s nor how over speculation and the inability to regulate themselves caused the Great Depression. However, this strategy worked because the Communist did have some influence in the regulation of some unions. Remember, I told you if it were not for radical movements like the anarchist Wobblies (International Workers of the World), Socialist and Communist, there would be no Labor movement, and the industrialist wanted to get rid of it. With that the Taft-Hartley Act, also known as the Labor Management Reporting Act, forbids Communist to join labor unions and stripped us of many of the rights we had since the 1930’s and never recovered from. Like: The right to Strike, although legal – You might get your job back if there is a spot for you and you have not found other employment. The Sit-Down Strike, where workers not only stopped work but occupied the owner’s property to prevent replacement scabs, is illegal. Although boycotts are still legal, Secondary boycotts on and third parties once legal is not today. Although President Truman vetoed this Bill it was overridden and passed into law.

The horrible scars encountered after the war left America at the top of the food chain. Meaning, those countries that were left in rubble needed to be rebuilt. With no money or infrastructure, America invoked the Marshall Plan, which lent and gave money to these countries to rebuild. This lifeline allowed the rebuilding of a war-torn world as they purchased the goods and services from the only country left standing, the U.S. This process took about 20 years before you saw the inflex of foreign goods in our marketplace. At first it was small electronic like transistor radios and sound equipment from Japan and then I remember the cars from Europe came, like Volvo and Volk’s Wagon. Then Toyota, Datsun (Nissan) and right behind came Honda and by the end of the 1970’s the American automobile industry had real competition as the American car product began to take a hit on the quality of their products compared to the imports.

Thus, the competition began. But, until then America had very little competition in any industry. Corporations began to grow up and out. Some grew vertically like J.D. Rockefeller did when he owned the oil wells, the pipelines, the refineries and even the retail and distribution. Owning every aspect of his industry, he could produce and sell his product cheaper than any other competitor. This business style in economic terms is called the “Law of Comparative Advantage”. The closer you are to procuring your own raw material and to produce it yourself with no middlemen is to your advantage. So, you saw many corporations organizing in that way.

Corporations also grew vertically in what are called conglomerations, meaning: through mergers and acquisitions they group together diverse sectors of industries outside or their area of expertise. A good example of that is General Electric (GE) began by producing electricity, then military aircraft engines, household appliances, computers in the 60’s and 70’s, GE Credit which was the finance arm, medical equipment, etc. This business model still exists today under many different Holding Companies. Remember we talked about holding companies and how I said they were corporations on steroids? This is what I was talking about. They set out on a road to buy everything whether or not it was in their arena of expertise (they made it their area of expertise) and kept consolidating making it hard for competitors to enter their market and control that market.

Like I said before. Labor history doesn’t exist in a vacuum by itself but rather got caught up in this machinery as well. What do I mean by that? As much as Corporations want to be independent and make all the rules, throughout history they needed government to keep bailing them out. They put themselves in a position they cannot control and leave the country in a position where they will so severely injure the country we are compelled to collaborate with them. They pushed workers to the brink of revolution before they relented with Labor legislation in the 30’s which finally brought some equilibrium to the situation.

Why does this keep happening? Let me remind you. In the very first of my writings I told you, job one for any corporation is to achieve a profit. And job two is to maximize that profit. Remember I told you that the Guild (Union) was the elder sibling of the corporations, and that our mother’s name was societal need and necessity? Well, early on Corporations abandoned our mother’s name and adopted the name “profit maximization”. Which is why our human common needs are not being met even today. Livable wages, decent and fair working conditions, proper healthcare, people living in the streets, clean air and water, affordable housing, I could go on and on, but I think you are getting my drift. This has been the root of workers’ issues for centuries. Profit maximization gets in the way of, as the corporate world would say, these annoying things. Like I keep saying, there is nothing wrong with Capitalism that a strong dose of regulation can’t cure