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Authors: Hedrick Smith
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and the public at large.”
General Electric’s manager of employee benefits, Earl Willis, explicitly linked corporate success to worker security. “Maximizing employment security is a prime company goal,” Willis declared. “The employee who can plan his economic future with reasonable certainty is an employer’s most productive asset.”
In a bible for corporate managers in the early 1980s,
In Search of Excellence
, Thomas Peters and Robert Waterman, Jr., preached the virtues of keeping employees on the payroll, even during recessions, a far cry from the mass layoffs and hiring freezes of the 2008 recession and recovery. “Only when we look at excellent companies do we see … full employment policies in time of recession,” they wrote. “Caring runs in the veins of the managers of these institutions.”
The Labor Movement: Shared Power/Shared Prosperity
But the anchor of middle-class power during the long postwar period and its most consistent and effective advocate was the American labor movement. Union power played a central role in creating the world’s largest middle class by pushing Corporate America to share the economic gains from rising industrial productivity and efficiency with average Americans. Shared labor-management power delivered shared prosperity.
Organized labor’s impact extended far beyond bread-and-butter gains for its own members. The trade union movement fought for and won the eight-hour day, the five-day week, child labor laws, and labor safety laws. Not only did unions bargain with America’s biggest corporations for a better middle-class standard of living, but the AFL-CIO, the labor federation, vigorously supported consumer activists, environmentalists, and the drive to strengthen regulatory agencies. It backed political candidates—mostly Democrats, but some moderate and liberal Republicans, too—who voted in Congress for a more level economic playing field. What’s more, by establishing a social contract and economic benchmarks that many non-union employers felt compelled to match, labor’s tough bargaining with big business gained higher pay levels and better benefits for non-union workers as well as union members.
With strong governmental support during the New Deal period, labor had become a force to be reckoned with during the era of middle-class prosperity.Trade union strength had tripled in size, reaching 35 percent of the private sector workforce by the mid-1950s. By the late 1970s, unionization of public as well as private sector employees had tapered off to 27 percent of the total workforce. But that was still an army of twenty-one million, by far the largest organized body of middle-class Americans. Every big industry—autos, steel, construction, food, trucking, textiles, garment making—had big, muscular unions pressing for a better standard of living for average Americans.
GM and theTreaty of Detroit
As the nation’s premier corporation, General Motors became the prime target of big labor and the pace setter for the rest of U.S. industry. The famous 1950 “Treaty of Detroit” between GM and the United Auto Workers union established and codified the social contract of the long postwar era—the economic sharing between labor and management, workers and owners.
Five years earlier, coming out of wartime wage and price controls, GM and the autoworkers union had clashed in a titanic showdown, with 175,000 workers walking off the job at fifty GM assembly facilities. Walter Reuther, the smart, fiery leader of the United Auto Workers, was demanding a 30 percent pay raise plus health benefits. “Engine” Charlie Wilson, GM’s chief executive, scoffed at those terms and decided to wait out Reuther. The strike lasted 113 days. In the meantime, the United Steelworkers and the United Electrical Workers settled for considerably less in other industries. Reuther had to back down. But labor unrest continued at GM, and Reuther kept pressing General Motors to provide
General Electric’s manager of employee benefits, Earl Willis, explicitly linked corporate success to worker security. “Maximizing employment security is a prime company goal,” Willis declared. “The employee who can plan his economic future with reasonable certainty is an employer’s most productive asset.”
In a bible for corporate managers in the early 1980s,
In Search of Excellence
, Thomas Peters and Robert Waterman, Jr., preached the virtues of keeping employees on the payroll, even during recessions, a far cry from the mass layoffs and hiring freezes of the 2008 recession and recovery. “Only when we look at excellent companies do we see … full employment policies in time of recession,” they wrote. “Caring runs in the veins of the managers of these institutions.”
The Labor Movement: Shared Power/Shared Prosperity
But the anchor of middle-class power during the long postwar period and its most consistent and effective advocate was the American labor movement. Union power played a central role in creating the world’s largest middle class by pushing Corporate America to share the economic gains from rising industrial productivity and efficiency with average Americans. Shared labor-management power delivered shared prosperity.
Organized labor’s impact extended far beyond bread-and-butter gains for its own members. The trade union movement fought for and won the eight-hour day, the five-day week, child labor laws, and labor safety laws. Not only did unions bargain with America’s biggest corporations for a better middle-class standard of living, but the AFL-CIO, the labor federation, vigorously supported consumer activists, environmentalists, and the drive to strengthen regulatory agencies. It backed political candidates—mostly Democrats, but some moderate and liberal Republicans, too—who voted in Congress for a more level economic playing field. What’s more, by establishing a social contract and economic benchmarks that many non-union employers felt compelled to match, labor’s tough bargaining with big business gained higher pay levels and better benefits for non-union workers as well as union members.
With strong governmental support during the New Deal period, labor had become a force to be reckoned with during the era of middle-class prosperity.Trade union strength had tripled in size, reaching 35 percent of the private sector workforce by the mid-1950s. By the late 1970s, unionization of public as well as private sector employees had tapered off to 27 percent of the total workforce. But that was still an army of twenty-one million, by far the largest organized body of middle-class Americans. Every big industry—autos, steel, construction, food, trucking, textiles, garment making—had big, muscular unions pressing for a better standard of living for average Americans.
GM and theTreaty of Detroit
As the nation’s premier corporation, General Motors became the prime target of big labor and the pace setter for the rest of U.S. industry. The famous 1950 “Treaty of Detroit” between GM and the United Auto Workers union established and codified the social contract of the long postwar era—the economic sharing between labor and management, workers and owners.
Five years earlier, coming out of wartime wage and price controls, GM and the autoworkers union had clashed in a titanic showdown, with 175,000 workers walking off the job at fifty GM assembly facilities. Walter Reuther, the smart, fiery leader of the United Auto Workers, was demanding a 30 percent pay raise plus health benefits. “Engine” Charlie Wilson, GM’s chief executive, scoffed at those terms and decided to wait out Reuther. The strike lasted 113 days. In the meantime, the United Steelworkers and the United Electrical Workers settled for considerably less in other industries. Reuther had to back down. But labor unrest continued at GM, and Reuther kept pressing General Motors to provide
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