Economic Growth and Labor

Economic Growth and Labor

The government had imposed price controls and other measures to control inflation during World War II. These controls remained until the summer of 1946, after which prices rose dramatically. Some items doubled in price, while a general index of consumer goods indicated an average price increase of nearly 20 percent. Inflation also rose, so bank deposits and wartime bonds that workers had purchased were worth less than before, while paychecks bought less than they had during the war years. Congress passed a few measures to reestablish price controls on certain items and rents. Within a couple years, the forces of supply and demand eliminated most of the worst cases of price increases, yet most goods were still substantially more expensive than they had been just a few short years ago. The falling value of the dollar made US goods seem less expensive overseas, and the Marshall Plan helped foreign markets recover further enabling the purchase of American-made goods. Although the rapid price increases alarmed many Americans, the postwar period was still one of material progress.

However, in the immediate wake of the end of price controls, many workers were angered by dramatic price increases that they believed vastly exceeded wage increases. One-third of the labor force (excluding those in agriculture and domestic labor) were union members and nearly 5 million workers participated in strikes in 1945 and 1946. Entire industries such as mining saw the majority of their workers on strike. More than 700,000 steelworkers participated in the largest strike in US history, demanding wage increases that kept pace with rising steel prices. Truman feared that strikes of this magnitude could seriously disrupt the postwar economic progress and even threaten national security if permitted to continue. Truman addressed Congress asking for a measure permitting him to draft striking workers into the military that might have passed had steel workers and management not settled their strike.

Figure 9.10

Saturday afternoon street scene in Welch, McDowell County, West Virginia, August 24, 1946. The population and local economy of Welch was directly tied to coal mining and steel production, which boomed during the early twentieth century. Today the population of McDowell County has dropped to just over one-fifth of the nearly 100,000 residents that made this the largest coal-producing county in America during the 1950s.

Hostility toward the growth of labor unions and powerful leaders such as John L. Lewis of the United Mine Workers led to a growing movement to modify the terms of the 1935 Wagner Act. Congressmen Robert Taft and Fred Hartley drafted legislation that did more than modify the Wagner Act; it completely reversed the legislative advances made by labor unions in the first half of the twentieth century. The Taft-Hartley ActPassed by Congress over President Truman’s veto in June 1947, the Taft-Hartley Act restricted many of the powers of unions. Among the provisions are the elimination of rules mandating that workers join unions and requirements that labor leaders give advance notice before they can call a strike. banned closed shops and union shops, arrangements that required employees to either belong to a union prior to being hired or join the union as a condition of employment. The law also banned secondary boycotts where other union members refused to purchase the goods of a particular company. The law also required union leaders to sign affidavits disclaiming any affiliation with the Communist organizations—a measure union leaders protested as an attempt to unfairly connect labor unions with leftists and radicals. The law also limited the use of union funds in political campaigns and permitted states to pass “right-to-work” laws that limited the organizational methods used by unions. Perhaps most importantly, the law also granted presidential authority to postpone any strike that might affect national interests for up to eighty days.

Although President Truman had just fought a personal battle with Lewis and resented the power of many union leaders, he believed that the provision of Taft-Hartley was too severe. Despite the president’s veto, Taft-Hartley became law in 1947. The immediate effect on labor unions was not nearly as severe as labor leaders feared, although unions no longer enjoyed 100 percent membership through the enforcement of union and closed shops. Perhaps the most significant consequence of Taft-Hartley was the decline of smaller unions and the failure to organize new unions in the expanding service and technology fields, as well as the continued failure of unionization in the American South. Leading unions waged a campaign known as Operation DixieAn unsuccessful campaign by the Congress of Industrial Organizations (CIO) and other labor leaders to organize more unions in the American South following the end of World War II. The South was important to labor as more companies established factories in the region precisely due to the region’s political conservatism and hostility to labor unions. in the late 1940s aimed at organizing unions in the South. Business interests prevailed against the would-be organizers, largely by threatening to employ black workers if whites joined unions.

Figure 9.11

Leaders of national and local unions alike mobilized against the Taft-Hartley Act. These leaders produced hundreds of posters and flyers, each drawing attention to the potential consequences of the new law upon workers’ right to bargain collectively. Image CC-BY Kheel Center