April 2026 Economic Theory Part VII- The Aftermath of Labor Law- David Kowalski

Disclaimer: These words are the author’s personal views and do not reflect the Labor Guild’s opinion.

Well, the Wagner Act also called the National Labor Relations Act became law in 1935 and it seemed that the workers finally gained enough of a majority in the Congress to change our situation. So, let’s look at where we are in 1935. Labor unions are growing at a phenomenal rate. The middle class is coming into being as America begins to work its way out of the Great Depression. American legislation forced upon Capital, a dose of the Radical economic model and it was beneficial to both parties. Now think about this. The economy is stagnant, so how can you stimulate it to grow? Well, GM and Ford are not going to do it from the supply side. They are not going to hire back workers and build cars unless there is a demand for their product and that goes for any business. The way Roosevelt did it was he created his programs portion of the National Industrial Recovery Act along with an investment of huge deficit spending, which put money in workers pockets for them and their families to spend. That is what created the demand for consumer spending and product demand. The idea is that if you borrow money to put people to work and put money in their pockets, the more they will spend, save, and get off government programs and into jobs that will pay taxes which pay back that deficit. However, the problem is, it is rare that we as a country can keep our spending deficit in line with our spending needs and our desires. Now, this is where you see a good example of what we fight about today. Conservatives want the deficit spent on defense, tax breaks for business and the more affluent to invest and create jobs (trickle down). Liberals see that as feeding the birds through the horse. If you shovel all of the food through the horse, what comes through the other end is not enough for the birds to thrive. Liberals think, you need to feed both the horse and the birds but not through the horse. The “birds”, in this case, is societies’ needs, and its necessities need to be fed directly.

Let’s shift gears and look at the progression of the laws as we move forward:

To ensure another economic depression was prevented, in his first 100 days in office FDR signed a series of bills to strengthen the banking system including the Glass- Steagall Act which created the FDIC and established regulations on stock and commodity trading. Glass -Steagall separated and established operational lanes for banking by creating three classifications, Investment, Commercial, and Consumer banking. Investment banks could underwrite and sell securities, but they could not accept bank deposits or make loans. It prohibited Commercial banks from selling stocks and securities to ensure they would not again recklessly speculate with the depositor’s money and of course nor could the bank pay interest at market rates. Consumer banking as we now know is for the general public. It worked well until it was repealed which led to junk bond recklessness as well as the 2008 recession.  

Now for the guaranteed rights of Labor. The Strike, Boycotts, Secondary Boycotts (pressure on second and third parties), Concerted activity and what I feel was the strongest weapon in Labors’ arsenal, The Sit Down Strike.

Striking workers were considered employees under the Act and had the right to jobs after the strike. However, in 1935, the same year this legislation passed, the Supreme Court ruled differently. A case involving striking workers at McKay Radio and Telegraph upheld replacing strikers, even though the law protected strikers as employees. The case, decided in 1938, was wordsmithed in a way that provided that employers were not compelled to give strikers back their jobs. A case that was tucked away and not used again until President Reagan fired the Air traffic controllers in 1980 and then again in Jay, Maine in 1993 to aid International Paper. Interestingly, it was not really reported on until 1941 and was not discussed in literature until 1960. Even though Labor had consolidated its power to produce the legislation, it could not stop a conservative Supreme Court. It seems this court case was dusted off for special occasions.

Boycotts- are still legal. However, Secondary Boycotts (pressure on second and third parties), along with “hot cargo” boycotts actions were all casualties of the Taft-Hartley Act. Even though it was vetoed by President Truman, then overridden by a Republican Congress.

Hot cargo- Unions commonly used “hot cargo” agreements—refusing to handle goods from non-unions or struck employers—mostly in the trucking and shipping industries during the 1930s to 1950s, which caused massive backup on the docks of our ports. This right was banned by the Labor Management Reporting and Disclosure Act in 1959.

Concerted activity- Remember that included the right to join a union without interference or coercion. That portion of the law has been whittled away to where it is practically unrecognizable. It is very, very, difficult to organize a union today with the amount of protected union busting going on.

The Sit-Down Strike- Was first implemented in this country in 1936 by the United Auto Workers leader as well as CIO activist Walter Ruether. The sit-down method was adopted from Europe and proved to be a useful weapon because capital was denied not only the employee but its property and its ability to produce. Thus, 1,000 workers sat in the plants holding out the other 7,000. Striking workers inside the plant were resourceful enough to design, invent and build weapons to hold off the militia. It’s a wonderful story and I encourage you to read about it. The beauty of this model was, scabs could not replace strikers, owners were restricted from their capital investment and without production, no profit. Industrialists didn’t care about the workers; they were more concerned about the machinery and did not want their capital investment destroyed. Our most precious weapon was also crushed by Taft-Hartley in 1947.  

Despite the “no-strike” pledge, made by most unions during WW II. Led by John L. Lewis and the United Mine Workers, over 400,000 miners struck in May 1943 for better pay and working conditions, defying President Roosevelt and causing the government to seize the mines. Which compelled the slogan “you can’t dig coal with bayonets. However, Unions for the most part, honored the pledge not to strike. Other than what I just mentioned, Labor peace was stable throughout the War years of the 1940’s which brought with it the idea of fringe benefits. It began when FDR imposed wage and price controls during the war. Freezing wages became an issue in retaining workers for major weapons producers like Kaiser of Kaiser Ship Builders. Kaiser offered FDR the idea that rather than raise wages he offers employees fringe benefits like medical and life insurance. FDR agreed, provided those benefits did not go above 5% of what their wages were set at. Now, think about that for a minute. Do you think Kaiser would have offered that if he had millions of workers to choose from if they were not at war? Probably not.

1950’s, brought with it, Senator Joseph McCarthy (“tail gunner Joe”) due to his time during the war as s a tail gun operator. McCarthy in a speech in Wheeling, W.V. On Feb. 9, 1950, he stated toward the end of his speech. “While I can’t take the time to name all the men in the State Dept. who have been named as members of the Communist Party and a member of a spy ring. I have here in my hand a list of 205 that were known to the Secretary of State, as being members of the Communist Party. Who nevertheless are still working and shaping policy in the State Dept.” The fact is it was not true. He never had a list, and he kept changing the number each time he spoke. Yet it was the bait that lured in the second “red scare” in history, which also began the marketing of propaganda to promote a phony phenomenon. This stunt exposed over 500 people of being communists that he hauled in to testify during his 15 months of hearings. The exposure of this magnitude helped to produce and pass legislation that made Union officials pledge allegiance to America and renounce Communism and eventually added to Union Constitution and By-Laws to forbid its member to be Communist.

So why did I tell you this? Remember when I told you, if it were not for the radical anarchists and communists, there would not have been a Labor Movement in this country? Well, even though this was a bad political stunt by McCarthy, it did forever eliminate any alliance that had a counter opinion of Capitalism. Even the Catholic Church who early on in the Labor Movement supported and encourage the Knights of Labor who were predominately anarchists. During this period, they published anti- communist comic books. I don’t think this portion was intended but all of the anti-union legislation, was a way of permanently containing Labor in a small corral. Thus, you can see how the Capitalist model was used in this country to gut Labor Rights. Remember when I said Capitalism depends on a strong legal system? And I told you that America adopted those laws from the English system? And, with it came skewed in favor of Capitalism when they included a strong influence of property rights law? This economic model is dependent on law to enforce contractual agreements and to interpret and enforce those laws with the power and legitimacy of the government. And here is the catch. It was the laws that they made, in their favor. Well, this is what I was talking about. All through Labor history it has fought for legislation and failed repeatedly, between legislature and the Supreme Court decisions. It seemed like there was nowhere to go to get relief. All backed up by the “legitimacy of the government and the law”. Yeah, but whose law, certainly not Labors, or Civil Rights, or Voting Rights law, which have all been gutted. It seems after all the fighting these groups have gone through, just as they finally think they accomplished their goals; the system begins taking it away.

Things would certainly have been different for Labor if the Democrats had won the 2024 Presidential election. Major Labor reform legislation was only a few votes away from passage with the Pro Act. It protected union organizing and gave some balance to the threat of corporations. However, it must be noted, as good as this legislation is, it does not come close to the strength and the rights that were enacted in the original National Labor Relations Act of 1935.

However, that was prevented with the Supreme Court’s decision in 2010. It gave big money the right to emboss the corporate seal of “paid in full” on our Constitution. In this case Marx and Engels were correct again. They bought it all, and Labor has been placed back in its corral. This dichotomy of economic theory of Conservative versus Liberal cannot be in balanced unless Capital is restricted. The Liberal model has never had the power to be able to stifle Capitalism as Capitalism has stifled Labor.

The days of social experiments are over, the elites know exactly what an increase in the prime interest rate will do to your lifestyle, rents, mortgages, car loans, disposable income. When workers finally see real wage increases after these past few years; what happened? Prices went up and inflation chewed through the value of those pay raises. Fuel, and everything transported by it and produced from it went up. Food and groceries, and try going out to dinner, my God, it’s crazy how expensive things have gotten in just the few years and even over the past few months! When you finally get that decent raise, it really wasn’t worth that much in the end. Most if not all of workers expenses have gone up enough to cut deep into those hard-fought wages. You don’t think the social scientist knows that? This is how we have been deprived of our full payment of wages over time.

Next time I will wrap up this series, thanks for hanging in.