Advances in Industrial and Labor Relations, Vol. 12

LIST OF CONTRIBUTORS Frank Borgers

Labor Relations and Research Center, University of Massachusetts – Amherst, USA

Kirsten Daniel

College of Business Administration, Loyola University – New Orleans, USA

Bruce E. Kaufman

Department of Economic and Beebe Institute, Georgia State University, Atlanta, USA

David Lewin

Anderson Graduate School of Management, University of California at Los Angeles (UCLA), USA

John Pencavel

Department of Economics, Stanford University, USA

Kathleen L. Pereles

College of Business, Rowan University, USA

Jonathan Rees

Department of History, University of Southern Colorado, USA

Saul A. Rubenstein

Institute of Management and Labor Relations, Rutgers University, USA

W. S. Siebert

Department of Commerce, University of Birmingham, U.K.

Roland Zullo

Institute of Labor and Industrial Relations, University of Michigan, USA

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INTRODUCTION David Lewin and Bruce E. Kaufman Volume 12 of Advances in Industrial and Labor Relations (AILR) contains eight papers that deal with contemporary and historical aspects of unionism and other forms of union representation, union-management relations, union political activity, labor market regulation, and interpretations of selected leading labor scholars’ writings about the evolution of welfare capitalism in the U.S. Four of these papers, by Daniel & Siebert, Borgers, Rubinstein, and Pereles, were winners of the 2002 AILR/Industrial Relations Research Association (IRRA) “best papers” competition.1 In the volume’s first paper, John Pencavel questions the long-standing disapproval of company unions voiced by labor scholars from various disciplines as well as Supreme Court justices. Pencavel focuses his attention on the relationships between company unionism and two measures of working conditions, namely, wages and work hours. Using merged data sources from the 1930s, Pencavel finds a significant positive association between company unionism and wages, but not between company unionism and work hours. He then offers three formal models of wages and company unionism to explain his findings, one of which emphasizes the employer’s interest in deterring independent trade unionism and two of which emphasize employer objectives of reducing turnover, fostering worker loyalty, and enhancing work performance. Pencavel concludes that these multiple perspectives on the historical positive association between company unionism and wages should lead to a more subtle view than “that a collective organization of workers is of value if and only if it operates and is financed entirely independently of the employer.” In this volume’s second paper, Kirsten Daniel and W. S. Siebert test the hypothesis that labor market regulation makes firms more cautious in their hiring

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decisions, thereby resulting in increased hiring standards. Daniel & Siebert measure labor market regulation by an employment protection index and by work force average tenure, which is a proxy for insider power. For their empirical work, these authors use a novel five country, four industry, 11 manufacturing plant sample from which they obtained detailed hiring and other personnel data over a 20-year period (from the mid-1970s to the mid-1990s). Overall, they find that labor market regulation does indeed increase employer hiring standards; however, while the employment protection index is associated with increasing age and experience requirements, insider power is associated with increasing educational requirements but decreasing age requirements. Independently, union density, which can also be considered an indicator of regulatory pressure, is shown by Daniel & Siebert to be associated with increasing experience and age requirements. Finally, this analysis finds a strong substitutability between education and experience, from which the authors conclude, “policies to increase education and training significantly improve job opportunities for unskilled workers in any case.” In this volume’s third paper, Frank Borgers provides a detailed analysis of collective bargaining between General Electric (GE) and the Coordinated Bargaining Committee (CBC) during the last third of the 20th century. The bulk of Borgers’ analysis deals with GE’s aggressive, multi-faceted approach to globalization, especially during the 1980s and 1990s when Jack Welch served as the company’s CEO, and with the CBC’s efforts to both participate in and contain GE’s global business initiatives at diversification, decentralization and rapid expansion of international supply chains. Borgers also examines the decline of unionism in three of the company’s historically highly unionized manufacturing divisions – GE Aircraft Engines, GE Power Systems, and GE Appliances. From these analyses, Borgers concludes that the CBC has largely failed to counteract GE’s aggressive globalization initiatives. Consequently, he recommends that the CBC borrow from GE by pursuing a networked, international campaign supporting expanded labor rights and overseas union organizing drives focusing, in particular, on GE Appliances. More broadly, however, and as Borgers also notes, the pursuit of networked social movement unionism will require a transformation that runs “strongly against the grain of historic and contemporary union practice in the U.S.” In this volume’s fourth paper, Saul Rubinstein presents findings from a survey and interview-based study of Cooperative Partnership Agreements (CPAs) that were adopted in 24 steel manufacturing plants during the early 1990s to reorganize traditional work systems and transform labor relations. Although the bulk of these agreements called for extensive business information sharing with the union, training in CPA implementation, and establishment of joint

Introduction

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strategy committees and leadership committees, local union leaders did not rate the overall results of the CPAs as positive. Decomposing the sample into equal groups of successful (or “high CPA”) and unsuccessful (or “low CPA”) plants, Rubinstein found that actual implementation of key CPA components was significantly greater in the former than in the latter. Subsequent multivariate analysis showed that mid-level department structures, training resources and management involvement were significantly associated with successful CPAs, while both quantitative and qualitative analyses showed managerial resistance to be the strongest barrier to successful CPAs. Rubinstein offers several specific recommendations for enhancing CPA success, and concludes that steel industry experiences with CPAs as well as predecessor participatory initiatives are “instructive for other unions and managers struggling with the challenges of . . . an increasingly competitive global economy.” In this volume’s fifth paper, Kathleen Pereles analyzes union commitment among three categories of temporarily employed (that is, adjunct or contingent) faculty of an urban community college located in the Northeastern region of the U.S. Based on prior conceptual and empirical research into union commitment, Pereles proposes that traditional (that is, permanent) faculty will have higher levels of union loyalty as well as responsibility to the union and willingness to work for the union than contingent faculty. Principal components analysis of the survey data collected by Pereles from this college’s faculty (n = 283) confirmed the conceptual distinctiveness, validity and reliability of these union commitment dimensions and, in addition, a new dimension, namely, alienation from the union. Empirically, however, Pereles finds no significant differences in commitment to the union between the traditional and contingent faculty she studied. Consequently, Pereles offers several explanations for these “non-significant” differences, affirms the validity and reliability of the Gordon et al. scale for measuring union commitment,2 and concludes that her research findings “have provided knowledge which unions can use to respond to the increasing use of contingent workers.” In this volume’s sixth paper, Roland Zullo assesses the effects of union political outreach on the perceptions and behavior of members of a Milwaukee, Wisconsin-based local union. Grounding his analysis in political psychology, Zullo uses detailed records of the Milwaukee County Labor Council (MCLC), a quasi-experimental manipulation of workplace mobilization across work units (that is, grocery stores), and a panel survey of local union members to test for the effects of union political outreach on union member political attitudes and behavior. All three outreach methods – telephone calls, direct mail and workplace-level education – were associated with increased union member recognition of the labor-endorsed candidate; only workplace level education was associated with

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increased union member preference for the labor-endorsed candidate; and only telephone calls were associated with increased union member voting. More broadly, according to Zullo, union members do not respond positively to direct mail contact, and workplace-level outreach is most likely to influence workers’ political behavior. A major implication of Zullo’s research is that effective union political action requires a decentralized approach and delegation of authority to the local level. As Zullo concludes, however, “numerous organizational issues deter the transition to a decentralized model.” In this volume’s seventh paper, Jonathan Rees critically analyzes the writings of “old” and “new” labor historians John Fitch and David Brody, in particular, these authors’ studies of unionism and labor-management relations in the U.S. steel industry during roughly the first quarter of the 20th century.3 The most striking contrast between these two authors, says Rees, lies in their treatment of management. The new labor historians, taking their inspiration from Brody, have argued that the “old” labor history was deficient because it unduly focused on unions, neglecting other important factors such as workers’ culture and class. Rees argues, however, that re-examination of the work of writers of the old labor history, such as Fitch, reveals that they in fact included a significant discussion of culture, class and the community social/political environment within which employer-employee relations take place. Further, says Rees, the new labor historians, such as Brody, incorporate culture and class into their analyses of the workers’ side but not the management side of labor history. Instead, they offer a (largely) uni-dimensional portrayal of management as motivated only by an economic concern with profit maximization. Because most labor historians are far closer to Brody than to Fitch in their analytical focus, Rees concludes by recommending a more generalized multi-cultural approach to labor history in which “both labor and management should be considered together in order to understand the development of American capitalism.” Early 20th century welfare capitalism is also the subject of this volume’s eighth and final paper, by AILR Co-Editor Bruce Kaufman. The bulk of this paper actually consists of selected course lectures presented in 1932 to Harvard Business School students by eminent industrial relations scholar Sumner Slichter. Kaufman only recently discovered these previously unknown and thus un-cited notes, and re-produces them here for the value they add to the historical record about welfare capitalism in the U.S. These particular lectures reflect Slichter’s views on and interpretations of personnel management and employee representation, two of the four key welfare capitalism-type practices that developed between the beginning of World War I and the onset of the Great Depression.4 While Slichter is critical of certain rationales for and certain methods of implementing these practices, readers will note that he is also positively disposed toward both sets

Introduction

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of practices generally and, in particular, toward the efforts of many employers to continue these practices even in the face of declining economic conditions. Therefore, and as Kaufman concludes from Slichter’s lecture notes, “The record of Welfare Capitalism thus has to be judged as mixed on its own terms, but clearly far superior to the [traditional] employment model it replaced.” The aforementioned papers deal with heretofore overlooked and underresearched aspects of industrial relations, offer diverse and often novel research designs, and provide new evidence on and answers to key questions about employee representation, labor market regulation, union political activity, labor-management adversarialism and cooperation, and welfare capitalism. It is a pleasure to be able to include these deeply analytical, high quality papers in Volume 12 of Advances in Industrial and Labor Relations.

NOTES 1. Shorter versions of these papers were presented at the national IRRA meeting, Atlanta, GA, January 5, 2002. 2. See Gordon, M. E., Philpot, J. W., Burt, R. E., Thompson, C. A., & Spiller, W. E. (1980). Commitment to the union: Development of a measure and an examination of its correlates. Journal of Applied Psychology, 65, 479–499. 3. See Fitch, J. A. (1989). The steel workers. Pittsburgh, PA: University of Pittsburgh Press (originally published 1910); Brody, D. (1989). Steelworkers in America: The non-union era. Champaign, IL: University of Illinois Press (originally published 1960). 4. The two other key practices, according to Kaufman, were human relations (that is, foremen training in handling employees) and employee welfare benefits. For some of Slichter’s published views on these practices, see Slichter, S. (1929). The current labor policies of American industries. Quarterly Journal of Economics, 43, 393–445.

COMPANY UNIONS, WAGES, AND WORK HOURS John Pencavel 1. INTRODUCTION The topic of company unions – employee associations sponsored and organized by management – has generated strong feelings. For many years, conventional labor unions have been vehemently opposed to worker representation through company unions.1 Conventional labor unions have viewed company unions as devices by management to forestall or thwart independent unionism (i.e. unions organized by workers).2 According to this interpretation, a company union would give the appearance of providing employees with representation and induce workers to temper their demands for genuine collective bargaining. Thus, at their Annual Convention of 1919, the American Federation of Labor described company unions as “. . . a delusion and a snare, set up by the companies for the express purpose of deluding the workers into the belief that they have some protection and thus have no need for trade union organization: therefore be it Resolved, That we disapprove and condemn all such company unions and advise our membership to have nothing to do with them . . .” (Quoted in Douglas, 1919, p. 103). Some labor historians share this view. Irving Bernstein (1960, p. 187), for instance, viewed “avoidance of trade unionism” as the central purpose of company unions and of other forms of welfare capitalism. A similar disapproving stance was adopted by the Supreme Court in 1937 when it interpreted the National Labor Relations Act as outlawing such unions. Today employee involvement programs operate in non-union companies, but by law they must

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avoid issues that are conventionally treated within the province of collective bargaining. There is little doubt that instances can be found to justify the view sketched in the previous paragraphs. After the First World War, when there was a growth in company unionism (or in shop committees as they were then called), Paul Douglas determined, “There can be but little doubt that the recent enthusiasm for shop committees on the part of employers has been due to their belief that here was a ready substitute for the union” (1921, p. 91). However, there are also cases in which employers sought both to improve the efficiency of their organizations and, at the same time, to allow employees to help shape their working environment. Union avoidance was one of several motives for the establishment of a company union. More recent treatments of the company union movement emphasize the diversity of experiences. For instance, the recent volume by Kaufman and Gottlieb Taras (2000) presents a much more complex perspective on company unions, one that identifies a variety of motives and contexts.3 Where current research is deficient is in not providing some quantitative estimate of the association between working conditions and company unionism – and, indeed, whether, in general, company unionism is associated with better working conditions. This paper provides some relevant information on this by examining two important indicators of working conditions – hourly earnings and work hours. It is often asserted that company unionism had no impact on wages.4 By merging data from two different sources on industries in the mid-1930s, I report the association between company unionism, on the one hand, and wages and work hours, on the other hand. A meaningful correlation is measured between wages and company unionism, but not between work hours and company unionism. This prompts the question of why an association exists between company unionism and wages. Three formal models of wages and company unionism are sketched and these help to provide further conjectures about the sort of variables that account for the incidence of company unionism. Apart from the importance of ensuring an accurate understanding of the past for its own sake, an interest in company unionism arises from current proposals to amend U.S. labor law to allow employers a greater role in shaping their own employee representative organizations. Some of these proposals are modest and suggest merely that the law not frustrate employee participation programs in non-union workplaces. This was advocated, for instance, by the Commission on the Future of Worker-Management Relations (the so-called Dunlop Commission) in 1994.5 More radical proposals call for comprehensive removal of the ban on company unions.6 Even though company unions today would not be simple replicas of those in the past, an informed assessment of contemporary proposals would benefit from a good understanding of company unionism in the past.

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Moreover, although unabashed company unions are supposed to be outlawed today in the United States, there exists a wide variety of employee involvement programs, work teams, quality circles, and workplace safety committees that employers have fashioned to increase their employees’ sense of dedication to the firm and workplace. Lipset and Meltz (2000) estimate from their telephone survey in mid-1996 that about one-fifth of non-union employees in the United States are working in companies with some sort of formal employee representation system. From their survey conducted in 1994, Freeman and Rogers (1999) report that 60% of workers say their firm had employee involvement committees that dealt with both short-term and long-term workplace issues. It is likely that some of these are flouting the law as 28% of participants reported discussions in these committees embraced matters relating to wages and benefits. What is missing from this survey research is an estimate of the magnitude of any link between wages and hours, on the one hand, and employer-initiated employee representation programs, on the other hand. There are some valuable case studies,7 but no general estimate of the degree to which, if at all, company unionism was associated with higher wages and lower work hours. The principal purpose of this paper is to provide such an estimate. Before offering evidence on company unionism and working conditions, the broad features of the evolution of company unionism in the United States are outlined.

2. EVOLUTION OF COMPANY UNIONS 2.1. To the End of the First World War Company unions were rare before the First World War. Perhaps the best known were the Cooperative Association at the Filene store in Boston and the “Rockefeller industrial representation plan” in the coal mines and steel works of the Colorado Fuel & Iron Company. These types of plans were responses to special circumstances (for instance, in the case of the Colorado Fuel & Iron Company, the violent coal miners’ strike in Colorado in 1913–1914) and it was not until the First World War that general economic and social conditions provided the context for a substantial increase in employee representation schemes. The War in Europe reduced the supply of labor in U.S. labor markets first because of the reduced immigration to the U.S. and, later, because of the introduction of the military draft. At the same time, the War promoted production activity which induced a sharply increased demand for labor. Labor’s bargaining power waxed. Conventional trade unionism grew, often accompanied by disruptive strikes. Worried that the War effort would be compromised by labor

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strife, the Federal government established various agencies composed principally of representatives from employers and the union movement.8 These agencies assumed the task of arbitrating disputes and they championed “works councils” or “shop committees” to provide workers with a mechanism within the workplace to express their concerns. Many of the settlements proposed by the government agencies specified the permanent establishment of such shop committees. The agencies oversaw the elections determining the employees’ representatives on the shop committees and they helped specify the set of agenda for the shop committees. Typically, the committees could not determine who was to be hired or fired, but many committees were granted authority to discuss wages and virtually all of them were given authority to examine working conditions and to deal with individual grievances over treatment.9 The disputes resolved by the government agencies typically “mandated” the establishment of shop committees, but many firms outside the reach of the Boards voluntarily launched such committees.10 These firms included some of the most conspicuous employers of the day such as Procter and Gamble, Standard Oil of Indiana, International Harvester, Goodyear Tire & Rubber Company, and Bethlehem Steel. The structure of the committees was similar to those authorized by the Boards. They were establishment-specific councils consisting of representatives of employees and representatives of management charged with resolving frictions within the workplace. Most employers “. . . discovered this type of workers’ representation more or less helpful in improving the morale and efficiency of their labor force” (BLS, 1937, p. 17). In some instances, the shop committees came under the direct influence of the existing unions. However, where unions were not already established, the shop committees tended to be welcomed both by employers and by the union organizers: employers often viewed the committees as a device to keep formal unionism at bay while union organizers hoped the committees were steps toward the organization of the workers into independent unionism.11

2.2. Company Unions in the 1920s The end of the War and the drastic shift in industrial production out of War-related output caused considerable reallocation of employment. Many of the shop committees established by the Labor Boards folded as they had been instituted in firms producing material for the War effort and many of these firms sharply reduced their production or completely closed. However, many other firms introduced shop committees so that, according to surveys undertaken by the National

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Industrial Conference Board, the number of committees rose from 196 in 1919 to 725 in 1922 and to 814 in 1924 (National Industrial Conference Board, 1925, p. 5). Unlike the War years, this was a time of shrinking unionism, not expanding unionism. To a large extent, independent unionism and company unionism were not engaged in public battles for the right to represent workers, but they formed noncompeting groups.12 Many independent unions sought industry-wide collective bargaining in competitive industries (such as apparels and coal mining) whereas company unions tended to arise in large firms operating in oligopolistic product markets. Many company unions surfaced in some of the leading firms of the time (Du Pont, Standard Oil of New Jersey, and Leeds & Northrup) that had little prior experience of independent union activity. The commentaries of the time indicate that the establishment of shop committees was viewed by employers less as a defensive tactic to ward off antagonistic unions, but as a mechanism to enhance workers’ morale and to promote efficiency in the workplace. After surveying “practically all Works Councils known to have been organized up to February 1922,” the National Industrial Conference Board reported: In nearly every case . . . the opinions of executives and workers have coincided regarding the effect of the installation of Works Councils on the relations existing in industrial plants between managements and their employees. Viewed from either angle experience has proved the organization to be an eminently satisfactory means of disposing of those difficulties which so often arise because of misunderstanding on the part of either party of the other’s point of view. Prior to the development of employee representation, the lack of any machinery for explaining contemplated changes which, through ignorance of their necessity, were often stubbornly fought by the employees, created and maintained a reciprocal attitude of antagonism, suspicion, and distrust, often developing into strikes. The fact also that the foremen’s decisions in all cases of employees’ grievances were final, admitting of no appeal to a higher authority, was productive of additional discontent. According to the reports of many company officials and employees, the unsatisfactory relations due to the foregoing conditions have been greatly improved by Works Councils (National Industrial Conference Board, 1922, p. 102).

The company unions at Bell Telephone provide an interesting case study. The first were established in June 1919 when strikes and the threat of strikes induced management to launch some countervailing moves. Management informed supervisors of a new policy to “encourage your employees to form associations which shall appoint representatives to discuss freely and frankly with the officials of the company questions affecting their wages and work.”13 The scheme was clearly an anti-union device evident by the fact that the first associations within the Bell company were established where union activity had already been manifested. Many of the meetings dealt with trivial subjects and were often dominated by the representatives of management. However, there were some virtues, too.

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JOHN PENCAVEL The associations also held genuine attractions for workers. In the absence of trade unions, they were the sole means by which workers could seek policy information from responsible management, discuss their working conditions on a regular basis, or compare their conditions with those of fellow employees from distant work locations . . .. They offered workers a means of collective expression, usually on minor matters, but sometimes on major ones. By using the associations in these various ways, Bell workers helped break down the obstacles to eventual unionization (Schacht, 1975, p. 22).

The employee representation plans in the 1920s were of many different types. One was called at the time the “Industrial Democracy” type in that the form of the U.S. governmental system was replicated within the firm so that there might be a Senate and a House of Representatives as well as a Cabinet. However, the two most common forms were the joint representation type whereby representatives of both employees and management sat on the committee (usually in equal proportions) and the employee committee type which represented the workers alone. The employee committee would discuss issues brought to it by employees and management and votes on the committee would be directed to management in the form of recommendations. Typically management officials would attend the meetings of the employee committee and provide information and listen to the discussion. The common feature of these employee representation schemes was the notion that more efficient production required the joint regulation of the workplace by employees and management and that the involvement of employees was best effected through a system of employee representation in committees or councils. The shop committees were one important element in a general portfolio of policies aimed at developing good will and cooperation among employees. “By the mid-1920s the company union had become a hallmark of advanced personnel management” (Nelson, 1982, p. 357). One aspect of the personnel management policies accompanying the establishment of a typical company union that was especially attractive to employees was the limitation placed on the discretionary authority of the foreman. In many plants, the foreman was granted considerable latitude in determining work allocations and rewards and there was little or no recourse to the worker who felt unfairly treated by the foreman’s decisions. Many company unions changed this situation by allowing an aggrieved employee an opportunity to appeal a foreman’s decision to the employee representative and to discuss it further at a joint council meeting. The company union was much more likely in large establishments than in firms employing a small number of workers. (Evidence on this is offered below.) Whereas the earlier years in the twentieth century were characterized by policies of “scientific management” that emphasized the mechanical aspects of work, the policies of the 1920s stressed “personnel management” to gain

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workers’ trust, loyalty, and cooperation. These policies included stock purchasing or profit-sharing schemes, pension and insurance plans, credit facilities, and home-buying and savings plans. Though they tended to see company unions as principally consultative bodies that did not materially compromise the authority of management, the leading employers’ associations of the day – the National Association of Manufacturers, the National Industrial Conference Board, the American Management Association – were not antagonistic toward such bodies and, on occasions, encouraged their members to adopt and maintain some sort of employee representation plan. As the decade of the 1920s closed, “. . . employee representation was strongly established” (National Industrial Conference Board, 1933, p. 14). It needs emphasizing that the degree of independent authority exercised by company unions varied considerably. Management at some companies controlled the agenda of the committee meetings or used the unions as a device to identify and weed out malcontents. Grievance procedures rarely permitted ultimate resort to an outside, independent, arbitrator. However, there were also “progressive” companies that took employee representation seriously and were willing to grant company unions considerable independence over grievances and over more general worker-related issues. Slichter (1929) reports a number of examples where shop committees had sufficient clout to rule in favor of employees in grievance cases: for example, at the Bethlehem Steel Corporation in the 1920s, out of 2,316 grievance cases handled by the shop committees, over two-thirds of them (namely, 1,682) were settled in favor of the employee.

2.3. The Contraction of the Early 1930s The onset of the Depression had a mixed impact on company unions. To some employers, company unions were something of a luxury in the context of the prevailing harsh business climate and they were abandoned. In other cases, though not abandoned, their activity or their subsidy from the firm was sharply reduced. But to yet other employers, the company union was a useful mechanism to facilitate the employment, hours, and wage reductions required of firms in Depression conditions. In these instances, company unions were often used to explain to the workers the new business conditions and to secure their cooperation in responding to the situation. By 1932, for every five workers in independent trade unions, another two workers were covered by company unionism. Unlike labor union membership, as a fraction of non-agricultural employment, the number of workers covered by company unions grew monotonically from the First World War to 1932. (See line 5 of Table 1.)

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Table 1. The Extent of Company Unions and Trade Unions, 1919–1932. 1919 1. Number of companies with company unions 2. Number of company unions 3. Thousands of workers covered by company unions 4. Thousands of trade union members 5. Workers covered by company unions as a percent of total nonagricultural employees

1922

1924

1926

1928

1932

145

385

421

432

399

313

196

725

814

913

869

767

403.8

690.0

1,240.7

1,369.1

1,547.8

1,263.2

4,125.2

4,027.4

3,536.1

3,502.4

3,479.8

3,144.3

1.6

2.7

4.4

4.6

5.2

5.3

Note: Lines 1, 2, and 3 are taken from National Industrial Conference Board (1933), Table 1, p. 16. Line 4 is taken from Leo Troy (1965), Table 1.

The National Industrial Recovery Act (NIRA) of June 1933 changed the environment for company unions drastically. After the wage reductions of 1931–1932, the mind set became one of devising procedures for preventing further falls in wages and collective bargaining constituted a principal procedure. Many employers saw company unions as a mechanism to comply with the new regulations or as a device to evade the new regulations.14 Analogous to the Labor Boards of the First World War, new government Boards were established to address the problems arising from the great increase in strike activity, to supervise representation elections, and to investigate complaints of arbitrary treatment of union organizers by management. Firms had to develop policies to respond to the new environment and address what they hoped was a temporary challenge to their authority. Company unions were a part of that ensemble of policies. Personnel departments and foreman training programs were other elements.15 The Federal Labor Boards supervised a number of elections where workers were given a choice among trade union representation, company union representation, and no representation at all. Between August 1933 and September 1935, of the one-quarter of a million votes cast, about two-thirds in these elections were in favor of trade unions, almost 30% were for company unions, and the remaining 3% were for no representation at all or for some unconventional arrangement.16 Clearly, when given the opportunity in a secret ballot to express their preferences, these employees usually opted for trade unionism as their form of representation. However, elections tended to be held when the unions themselves petitioned

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the Boards and when they expected to win them so the elections do not cover a random subset of the workforce. Even in these non-random situations, a sizeable minority of employees chose the company union as their form of representation. By 1935, the Twentieth Century Fund estimated that about two-and-a-half million workers were represented by company unions and the coverage of such unions was about 60% of the coverage achieved by independent trade unions at that time. (See Millis & Montgomery, 1945, p. 841.)

2.4. Company Unions under the NLRA In May 1935, the Supreme Court declared the NIRA unconstitutional. The response of the administration and Congress was the more sweeping National Labor Relations Act of 1935 which imposed clear constraints on company unions. They were not banned, but in Section 8 (2) of the Act it became an “unfair labor practice” for an employer “to dominate and interfere with the formation or administration of any labor organization (including company unions) or to contribute financial or other support to it.” Though the new law came into effect in 1935, many employers (often on the advice of their lawyers) disregarded its provisions until the constitutionality of the Act was upheld by the Supreme Court in April 1937. Bell Telephone’s posture toward its company unions was typical. After the 1935 Wagner Act, little was done at Bell about the form of its company unions until the Spring of 1937 when the Act was upheld. Then the company proceeded to abandon formal ties to (including financial support of) its associations, to urge the associations to recast themselves, and then to sign formal agreements with them. Out of these local company unions at Bell Telephone, the National Federation of Telephone Workers was formed in 1939. The workers at Bell were organized not through the efforts of outside unions, but through the conversion of the company unions into an association that was independent of the company. The new National Relations Board dealt with a number of company union cases and it was distinctly unsympathetic to them.17 The Board determined that, among others, the following activities involved management in excessive interference in a union and contravened Section 8 (2) of the Act: active solicitation by supervisory officials on behalf of an employee organization; the denigration by supervisors of an organization attempting to recruit members from the company union; the association of any employee benefits (such as insurance plans) with membership in the company union; and lending money to employees to enable them to pay the membership fee in a company union.

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In representation elections that involved the company union, the Board frequently upheld charges that the company violated Section 8 (2) of the Act and, as penalty, ordered the disestablishment of the company union. Company unions were much less often involved in representation elections after 1935 and especially after April 1937 when the constitutionality of the Act was upheld. When the company unions did compete in representation elections, their rate of success in the period from 1935 to 1941 was just below 10%, much lower than in the years 1933–1935. Those company unions that did survive were obliged to adopt an organizational structure that made them less creatures of the employer and more the agent of the employees. The new legal strictures against company unions caused the growth of so-called “independent unions” which sometimes were mere fronts for the old company unions. However, they had to adopt a form that made them compatible with Section 8 (2) of the Wagner Act.18

3. COMPANY UNIONS IN 1935 We have a good deal of information on company unions as they operated just prior to the NLRA from the survey conducted by the Bureau of Labor Statistics in April 1935. The BLS surveyed about 43,000 establishments. Almost two-thirds of the company unions at that time had been formed since the NIRA. The survey collected information about the incidence of company unionism as well as information about how the company unions operated.

3.1. The Activities of the Company Unions The typical company union in 1935 required no dues from its members. Because it was extremely rare for a company union to strike, there was no need for a strike fund. Where dues payments were required, usually membership in the company union was voluntary and, in these instances, some form of participatory insurance or loan benefits was available. Dues-paying company unions tended to be formed after the NIRA in June 1933. In roughly half of the company unions, membership was an automatic consequence of employment. Usually, employee representatives of the company union met each month to discuss issues brought to their attention. In most company unions, the representatives were compensated by the employer for their time while attending to company union activities. General membership meetings were specified in about half of the company unions surveyed. The issues discussed by the company unions with management were broadly similar to those discussed by independent trade unions with their management:

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individual grievances, wages, work hours, discharges, seniority systems, and health and safety issues. A minority of company unions surveyed had written agreements with their employer. The form of these agreements resembled those signed by independent trade unions. Nearly one-half of the workers were in company unions where arbitration was permitted in the event of a disagreement between management and employee representatives. Often both sides had to agree to such arbitration and it seemed as if the arbitration provision was rarely invoked. Almost one-quarter of the company unions had regular contacts with company unions in other plants of the same company. On the basis of their findings, the BLS survey grouped company unions into three general categories. About one-half of the company unions performed none of the functions that are generally thought of as constituting collective bargaining. They were best understood as “agencies for discussion.” Another group, about one-third of those studied, was undertaking a subset of the activities that independent trade unions assume. Typically, they addressed individual grievances and some issues relating to working conditions. Larger concerns relating to wages and hours were not subject to negotiation or bargaining. The BLS report determined that “about half of the company unions in this group had become effective avenues for the adjustment of individual grievances” (BLS, 1937, p. 205). The third group of company unions, representing about 15% of all those studied, assumed many of the activities commonly ascribed to collective bargaining. Although they were usually separated from other employers’ worker organizations and from a national organization, “they represented the interests of the workers with a vigor not entirely attributable to management encouragement” (BLS, 1937, p. 205).

3.2. The Incidence of Company Unions The BLS survey covered establishments in manufacturing, mining, public utilities, and some selected service and trade workplaces. The sample for manufacturing industries represented more than 26% of workers and was larger than in the other sectors. In determining the fraction of workers covered by company unions, the survey grouped workers into four categories: workers covered by no collective representation (i.e. neither trade unions nor company unions); workers covered by trade unions; workers covered by company unions; and workers covered by a mixture of trade and company unions. The incidence of workers in establishments where management-employee relations took the form of a mixture of trade unions and company unions was the smallest of the four categories: in April 1935, according to the BLS survey, 42.5% of the workers were employed

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Fig. 1. The Fraction of Workers in Establishments Dealing with Company Unions and Trade Unions by Major Industry, 1935.

in establishments that dealt with their employees without any trade union or company union, 26.1% were covered by a trade union contract, 19.9% of the workers were represented through company unions, and 7.4% of workers were in establishments where managements dealt with workers through a combination of company unions and of collectively-bargained contracts with trade unions. The association across two-digit manufacturing and public utilities industries (seventeen observations in all) between the fraction of workers in establishments dealing with company unions and the fraction of workers in establishments dealing with trade unions is illustrated in Fig. 1.19 A negative association is apparent: in those industries where independent trade unionism is strong, company unionism is weak. It suggests that independent trade unions and company unions tended to be substitutes in providing workers with collective representation. As examples, “wearing apparel” reported 55% of workers covered by independent trade unions and 5% covered by company unions (and merely one percent in a mixture of trade unions and company unions); toward the other extreme, “chemicals” reported 55% of workers covered by company unions and 13% covered by trade unions (and almost 6% dealing with a mixture of company unions and trade unions).

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19

3.3. Wages and Hours under Company Unionism The BLS study did not survey workers about their attitudes toward company unions nor did they examine the degree to which the company unions produced results different from those associated with independent unions. For instance, to what extent were the wages and work hours of workers represented by worker-organized trade unions different from those represented by company unions? This was not addressed in the BLS study and it is difficult to know now what the answer to this question would be. On wages, Senator Robert Wagner (1934) believed he knew the answer: “The company union has improved personal relations, groupwelfare activities, discipline, and the other matters which may be handled on a local basis. But it has failed miserably to standardize or improve wage levels . . ..” To Wagner, such wage standardization (a euphemism for the establishment of wage floors) was a key to macroeconomic recovery from the Depression.20 To ascertain whether Senator Wagner was correct in believing that company unions were not associated with “improved” wages, consider merging the April 1935 BLS data on the incidence of company unions across industries with data on average hourly earnings and average weekly hours worked collected by the National Industrial Conference Board (Beney, 1936). Starting in June 1920, the Conference Board surveyed firms monthly in twenty-five manufacturing industries and semi-annually in two public utility industries. The surveys covered production and non-supervisory workers only and these workers are divided into unskilled male labor (where “unskilled” means that no previous training was required to perform the work), skilled and semi-skilled male labor, and female labor which includes female wage earners of all skills. By 1935, the Conference Board was receiving reports directly from 1,886 manufacturing plants and, in addition, the coverage of the iron and steel industry and the automobile industry was almost complete due to the cooperation of the relevant industrial employer federations in those industries. We are able to match the BLS company union data with the wage and hours data from the Conference Board for 23 manufacturing and public utilities industries. For these 23 industries, Fig. 2 graphs the relationship between company unionism and a measure of establishment size, workers per establishment. It has been frequently asserted that company unions were much more likely to be established in large firms. This finds some support in these BLS data as shown in Fig. 2 although there are some conspicuous outliers.21 The industry recording the largest value for establishment size is the rubber industry and the fraction of workers represented by company unions in rubber was merely 0.131 so this is the most prominent outlier. However, this industry also has the largest value for the fraction of workers where workers were represented by a mixture of company

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Fig. 2. Company Unionism and Establishment Size, 1935.

unions and independent trade unions (namely, 0.656) and this provides some explanation for the deviation of the rubber industry from the general pattern. Indeed, if the fraction of workers covered by all sorts of collective representation – trade unions, company unions, and a mixture of both – is graphed against establishment size, the result is a much closer positive association – see Fig. 3. Collective representation of some sort is positively correlated with establishment size although that collective representation may take different forms. Figure 4 represents the scatter of observations on the fraction of workers covered by company unions and average hourly earnings of all workers for these 23 industries. (We shall be using in the regression below a slightly different earnings variable that controls for gender and skill.) There is a positive association between earnings and company unionism in the scatter in Fig. 4, but the correlation is unimpressive. The industry with the highest value for earnings is the newspaper industry with average hourly earnings in April 1935 of $0.862. Yet only 4.6% of its workers are represented by company unions. One reason for its high wages is probably attributable to the fact that it was heavily unionized with 63% of its workers

Company Unions, Wages, and Work Hours

21

Fig. 3. Collective Representation and Establishment Size, 1935.

covered by trade union contracts. This indicates that, in measuring the association between earnings and company unionism, we need to control for the incidence of trade unionism. Consider, therefore, the relation between, first, hourly wages and, second, weekly work hours and the extent of employee representation in these industries in April 1935.22 There are 23 manufacturing and utilities industries and the dependent variable involves stacking observations on male unskilled and male skilled workers so there are 46 observations on wages and on weekly hours. Consider the following stochastic equation: B ln(y si ) = ␣0 + ␣1 S i + ␤ U Ti + ␥ U C i + ␦ U i + ␧si ,

where the subscript i denotes one of 23 manufacturing and utilities industries and the subscript s indicates whether the observation describes skilled male or unskilled male workers. In one regression equation, y denotes average hourly earnings and, in the other equation, y denotes average weekly hours worked. S is a dichotomous variable indicating whether the left-hand side observation relates to skilled workers. There are three variables describing the extent of employee

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Fig. 4. Average Hourly Earnings and the Fraction of Workers Covered by Company Unions, 1935.

representation in the industry. UT measures the fraction of workers in the industry in establishments covered by trade union negotiated contracts, UC is the fraction of workers in establishments represented by company unions, and UB measures the fraction of workers in establishments where both trade unions and company unions operate. Omitted variables are incorporated in the equation’s stochastic term, ␧si . The purpose of estimating the above equation is to compute the partial correlation between wages and work hours on the one hand and company unionism on the other hand. In other words, the first order of business is to report the magnitude of the association between working conditions and company unionism and then to try to interpret it. The arguments in the next section suggest the relationship is not causal. Similar problems of interpretation arise in the association between wages and independent unionism: does independent unionism cause wages to be higher or does the association reflect a correlation that is driven by other considerations? The absence (owing to unavailability of data) from the equation above of other

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Table 2. Estimates of the Association between Company Unionism and Wages and Hours Worked, 1935. Dependent Variable

Estimated coefficients on . . . fraction of workers covered by trade union contracts (UT ) fraction of workers represented by company unions (UC ) fraction of workers in plants where both trade unions and company unions operate (UB ) skilled workers (S) R2

Log of Hourly Earnings

Log of Weekly Hours Worked

0.470 (0.149) 0.283 (0.113) 0.434 (0.126)

−0.154 (0.098) 0.017 (0.074) −0.035 (0.083)

0.298 (0.038)

0.021 (0.025)

0.66

0.10

Note: Estimated standard errors in parentheses.

variables known to be associated with wages and work hours means, of course, that the included variables may be embodying the effects of these other variables which are correlated with company and independent unionism. The least-squares estimates of this equation are contained in the first column of Table 2.23 These estimates suggest that, in the Spring of 1935, the wages of workers represented by independent trade unions were 47 log points above the wages of workers without any union representation at all. This is a very large relative wage difference although the estimated standard error indicates that a large range of values is consistent with this estimate. Moreover, this value is well within the estimates spanned by previous research on the relative wage impacts of unionism in the 1930s in which it has been argued that, by making nominal wage reductions more difficult to effect, unions opened up a large gap between union and nonunion wages.24 The estimated coefficient on UC , the fraction of workers in establishments represented by company unions, is 0.283 suggesting that the wages of workers represented by company unions was 28 log points above the wages of those workers without any unions (independent or company unions). Taken at face value, this would suggest that the relative wage effect of company unions was about 60% (that is, 0.283/0.470) of that of independent trade unions. However, it also suggests that the company unions are associated with higher wages, that they were part of something more than ineffectual discussion groups.25

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The estimated regression coefficients on the other variables conform to expectations. The estimated coefficient on UB (the fraction of workers in establishments where both trade unions and company unions operate) is 0.434 and this lies between the estimated coefficients on UT (the fraction of workers covered by trade union negotiated contracts) and on UC (the fraction of workers represented by company unions). There is a 30 log point skilled-unskilled wage differential (i.e. the estimated coefficient on S is 0.298). Sixty-six percent of the variation in the logarithm of hourly earnings is removed by this combination of variables. Is the case study literature consistent with this association between wages and company unionism? Brandes (1976, p. 130) cites cases where company unions supposedly engineered wage increases although, as always in these instances, the counterfactual – what would have happened in the absence of the company union – is impossible to ascertain. Brandes cites a case at Colorado Fuel and Iron where the company union asked for a cut in weekly hours rather than a large increase in pay. This case might suggest that company unions worked harder to reduce weekly hours. If so, there is nothing in the regression estimates contained in the second column of Table 2 to support the idea that they were successful in this endeavor. In this column, the dependent variable measures the logarithm of weekly hours worked of skilled and unskilled workers and no meaningful association is measured between weekly hours and company unionism in these data. Weekly hours worked are estimated to be about 15% lower in establishments where workers are represented by independent trade unions, but this estimate is not precisely measured.26 The presence of this “company union wage effect” in 1935 is consonant with Jacoby and Verma’s (1992) research into the wage differentials within the same company (TRW) among plants that were nonunion, plants that were represented by conventional unions, and plants organized by independent local unions, the successors to the company unions outlawed in 1937. Over the period from 1979 to 1983, they find that, other things equal, the independent local unions achieved the same sort of wage differential over nonunion plants as those effected by conventional unions that were affiliated to a national organization. They speculate about the reasons for this wage differential and their discussion takes up issues addressed more formally in the following section.

4. THE MEANING OF THE POSITIVE CORRELATION BETWEEN COMPANY UNIONISM AND WAGES As noted above, only about 15% of the company unions in the BLS survey actually engaged explicitly in wage bargaining. For this group, the wage premium associated with company unionism computed in the previous section may reflect

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the returns to this bargaining. However, this interpretation seems less likely for the remaining 85% of company unions in the survey. So let us consider some non-bargaining interpretations of the positive association between company unionism and wages. There are at least three possible interpretations of the positive association between company unionism and wages. They are not mutually exclusive, but to emphasize each element we treat these three interpretations seriatim.

4.1. Company Unions as Personnel Management The first interpretation emphasizes the role that both higher wages and employee representation plans played in developing a company-trained labor force and in reducing the turnover that imposed heavy costs on firms providing specific training. There was an extensive discussion after the First World War of the damaging consequences of high rates of turnover27 and employee representation plans were viewed as a device to increase workers’ attachments to their existing companies. Fairris (1995) provides a very good statement of this perspective. A more formal characterization of this role of company unionism is as follows.28 Let ␶ denote the turnover rate and c the per worker cost of turnover so that total turnover costs are c·␶·E where E denotes total employment. The firm’s governance costs (or costs of human relations policies) are G which depend on total employment, E, and on expenditures on employee representation plans, R.29 The turnover rate, ␶, depends negatively on the wage, w, and on R: ␶ = ␶(w, R) with ∂␶/∂w < 0, ∂␶/∂R < 0. Higher wages and greater employee representation do not merely reduce turnover; they may also increase work “effort.” By work “effort,” I mean not merely the intensity with which each individual employee works. “Effort” here stands for the many different ways in which workers extend cooperation and assistance to the firm’s activities. Employment contracts are notoriously incomplete30 and the effectiveness with which employees work depends, in large part, on whether management has secured the collaboration and support of employees. Work effort here relates to this wider sense of employees’ partnership with management. Let e denote effort per worker and h hours worked per worker. Then e = e(w, R) where ∂e/∂w > 0 and ∂e/∂R > 0. The firm’s profits are denoted as follows: (E, h, w, R) = X[e(w, R)hE] − whE − c␶(w, R)E − G(E, R),

(1)

where the price of output, X, serves as the numeraire. If the firm’s expenditures on representation plans and if wage rates are set at levels to maximize profits, then expenditure on employee representation plans, R, satisfies the following

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first-order condition: EhX 




∂e ∂R




− cE

∂␶ ∂R

 =

∂G , ∂R

(2)

where the left-hand side denotes the marginal return on a dollar spent on employee representation (part of that return takes the form of each worker applying more effort and another part of that return takes the form of reducing turnover) and the right-hand side denotes the marginal cost of a dollar spent on employee representation.31 There is an analogous equation for wages: 

∂␶ ∂e  − cE = hE. (3) EhX ∂w ∂w Again the left-hand side represents the marginal return to an increase in the wage in the form of greater work effort and reduced turnover. The right-hand side constitutes the larger payroll costs of a marginal higher wage. In this model, company unions and higher wages are both mechanisms to increase worker effort and reduce employee turnover. There is no causation running from one variable to the other: company unions no more cause higher wages than the reverse. The positive association between wages and company unionism suggests that they are complementary strategies to enhance worker cooperation and to reduce turnover. According to this model, variations in the incidence of company unions are to be found in the form of the production function (such as the responsiveness of output to increases in work effort) and differences in turnover costs, c, across firms. The value of c is likely to be greater for firms that have invested heavily in training their workers in specific skills and it suggests the hypothesis that company unionism was more prevalent in industries where firms provided extensive specific training for their workers. Note also that, in this model, per employee work hours, h, are set by the firm. In other words, work hours constitute another decision variable for the firm and are chosen jointly with R, expenditure on employee representation plans. Analogous to the association between wages and company unionism, work hours and company unionism are jointly determined variables in this model. The results in the previous section suggest that this correlation was weak or non-existent. 4.2. Company Unions as Union Avoidance This is the explanation for company unions that worker-organized labor unions favor: company unions were a tactic to thwart the organizing efforts of independent unions.32 Once again, company unions do not represent the only mechanism available to an employer to obstruct unionism. Indeed, it has long been recognized

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27

that, in response to a union-organizing threat, an employer may raise wages to reduce the wage gains to his workers from becoming unionized. Consider this possibility.33 Assume that an employer – currently non-union – determines the wage rate to pay and his expenditures on employee representation plans, R, to maximize expected profits, . The probability of the firm becoming organized by an independent union is given by p. Assume that a higher wage rate, w, and greater expenditures on employee representation plans reduce the probability of becoming a successful target of a union-organizing campaign: p = p(w, R) with ∂p/∂w < 0 and ∂p/∂R < 0. The assumption that ∂p/∂R < 0 might be contested. When workers effectively participated in running company unions, they were learning skills that could be directed subsequently to organizing independent unions and the development of such skills might facilitate the establishment of independent unions. Indeed, the formation of the Bell Telephone workers in 1939 into the National Federation of Telephone Workers provides an example of how the company union prepared the workers for the management of their independent union. Though there may be instances in which the opposite assumption might be maintained, I assume that, in general, greater expenditure on employee representation plans reduces the non-union firm’s probability of being organized by an independent union: ∂p/∂R < 0. Profits in the absence of being organized are n = [X(E) − wE − R]. If the firm subsequently becomes unionized by an independent union, the firm will pay the union wage of wu and profits will be u = [X(E) − w u E − R]. In this event, the firm will have spent R on employee representation and yet these expenditures will not have prevented independent unionism. The decision for the firm is to select w and R to maximize expected profits  = (1 − p) n + p u . The first-order conditions for w and R may be combined to show that the marginal rate of substitution of wages for human resource expenditures, R, in reducing p (the left-hand side of Eq. (4)) must equal the marginal cost of increasing w (the right-hand side of Eq. (4)):34 ∂p/∂w = (1 − p)E. ∂p/∂R

(4)

Once again, wages and company unions are complementary policies that, in this instance, are designed to avert worker-organized unionism. Variations in company unionism are to be sought in employers’ estimates of the probability of being unionized, p, and in the magnitude of the union wage, wu . When the threat of being unionized is high and when the wage consequences of unionization are considerable, company unionism is likely to be more common. Lewis (1963, p. 24) surmised that the use of wages to deter the threat of unionism was greater

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when the extent of unionism was growing rapidly (i.e. when p was rising) and this was in the decade from 1935 to 1945. The use of wages to deter the threat of unionism is likely to have been greater after 1937 when an alternative device to thwart independent unionism – the company union – was no longer available (or, at least, had to be largely covert). The great growth in company unions between 1933 and 1935 is correlated with the growth in worker-organized trade unionism and in the existence of a very large union-nonunion wage differential – both consistent with the notion of company unionism as a union avoidance strategy. When the non-union employer has weapons to deter independent unionism in addition to wages and company unionism – such as firing union activists or threatening to move out of the country – the use of wages or company unionism to avoid unionism is likely to decline. This is why, in the last twenty years or so, I surmise there has been little use of wages by non-union employers to deter independent unionism. Devices such as the dismissal of union organizers and the hiring of lawyers whose sole function is to prevent independent unionism obviates the need to use wages to discourage unionism. There may well be specific cases where this is not the case but, in general, because of the availability to non-union employers of other weapons to ward off independent unionism, the classical threat effect of unionism on non-union wages is likely to have been negligible since the early 1980s.

4.3. Company Unions as Employer Benevolence A third explanation for the appearance of company unionism is employer benevolence. Some employers felt a responsibility for the welfare of their workers and were sympathetic to mechanisms that enhanced their development as citizens. As Brandes (1976, p. 30) has written, “. . . among the goals of some welfare capitalists was pure altruism.”35 Such employers care about profits, but they care also about the condition of their workers for its own sake. If  denotes such a benevolent employer’s profits and if U denotes the welfare of each his workers, then this employer may be viewed as maximizing = (1 − ␪)  + ␪ UE where ␪ is the weight placed on the welfare of the workers (0 ≤ ␪ < 1). Express profits as  = X(E) − wE − R where R denotes expenditures on representation plans and express each worker’s utility as U = U(w, R) with utility increasing in each of its arguments. The worker is assumed to enjoy higher utility not only from a higher wage, a monetary benefit specific to each worker, but also from working in a plant that permits workers to have greater control over workplace activities as indicated by the level of R. The benevolent employer selects w, E, and R to maximize . Combining the first-order conditions for w and R yields an expression that relates

Company Unions, Wages, and Work Hours

29

the marginal rate of substitution between w and R in the worker’s utility function to the ratio of the marginal costs: (∂U/∂w)/(∂U/∂R) = E.36 The level of wages and expenditures on company unions are determined jointly to further the goal of enhancing the welfare of the workforce. According to this perspective, company unions were to be found where employers were more altruistic and in firms where the workers placed a relatively high value on mechanisms for employee representation. The “price” for such employer benevolence consists of the opportunity cost in profits forsaken. Firms operating in highly competitive industries were likely to have been so constrained by the imperatives of the market as not to be able to indulge in employee representation simply to benefit workers for its own sake. If so, this suggests company unionism was greater in those firms possessing sufficient market power to spend rents in the form of employee representation plans. J. R. Hicks once wrote that the best of all monopoly profits is a quiet life, but to a benevolent employer another expression of monopoly profits may be an employee representation plan. The fact that in the 1920s company unions appear to have been more common in large oligopolistic firms is compatible with this.

4.4. Summary Statement of Implications Each of these three reasons for management to establish and cultivate company unions may be present in a given context. So this allows for the following predications. Company unions will be more extensive
in organizations where skills are specific to the firm;
at times and in places37 where conventional unions have demonstrated their capacity to organize firms so that non-union firms have reason to be concerned with the potential union threat; and
in firms possessing product market monopoly or oligopoly power or in regulated industries.

5. CONCLUSION The dominant view embodied in the National Labor Relations (Wagner) Act is that the interests of workers and the interests of an employer are opposed to one another and, to guarantee that the interests of the workers are not subverted by the employer, the union’s independence must be protected by ensuring that the employer is not involved in the union’s activities. Thus, through various judicial

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decisions, it has been determined that an employer is prohibited from contributing resources to a union that it prefers and from providing a union with advantages that are not granted to rival unions. Hence, when faced with union organizing activity, employers see themselves presented with a choice between, on the one hand, no labor union at all and, on the other hand, an organization (a conventional union) that usually approaches bargaining as a zero sum game (in which the union’s interests and the employer’s interests are exactly opposed to one another). Confronted with this choice, most employers are willing to devote considerable resources to prevent the unionization of their workers with the consequence that today most workers are without any sort of representation. To change this framework, some observers have proposed amending Section 8 (a) (2) of the NLRA to permit employers a much greater role in supporting and financing unions. For example, Kaufman (1997, pp. 166–167) has argued that “. . . the ban on company unions was not a wise policy decision at the time [the 1930s], nor does it serve the public interest or even the interests of organized labor at the current time. The strictures against non-union employee representation plans contained in the Wagner Act should thus be relaxed, albeit only if accompanied by strengthened protections against employer coercion and discrimination in workers’ choice of a representational agent.”38 Taras (1998) has observed that Canadian labor law places far fewer restrictions on company unionism and conventional unionism in Canada is in a much more vigorous state than that in the United States. Other industrialized countries tend also to be much less suspicious of employee representation programs that are initiated by management. If the employer were not forbidden from an active role in the union, so it may be argued, other types of worker representative organizations would appear. Some of these new types of labor organizations may have some characteristics that resemble company unions which is why an understanding of company unions earlier in this century is relevant to the current debate. Although it would be implausible for the new company unions to be simply the recreation of the old, an understanding of the activities of company unions of the 1930s may be relevant to contemporary reform proposals. This paper has shown that, in the mid-1930s, company unions and premium wages tended to go together. No association has been measured between work hours and the incidence of company unions. The wage-company union association could be the product of bargaining between the company union and the employer. However, the instances of company unions involving themselves in wage policies are unusual.39 Perhaps the bargaining was less explicit. After all, company unions could function as a lobbying group for workers and as a mouthpiece for employee discontent that could be bought off only through higher wages. These things are possible. However, in the interwar period when the company unions tended to be

Company Unions, Wages, and Work Hours

31

heavily dependent not on the autonomous power that they brought to the employment relationship but on the self-interest and goodwill of the employer for their continual operation, it is more likely that the wage-company unionism association does not reflect bargaining between management and the union (as would be the case with an independent union), but one of unilateral decision-making by the employer. The correlation between high wages and company unions is subject to at least three different interpretations and models corresponding to these three types have been sketched. In these three models, the correlation between wages and company unionism does not imply that company unions cause wages to be higher. In the first two models above, the employer maximizes profits; in the third model, the employer takes explicit account of the welfare of the workers. In all three models, the employer’s expenditure on the company union is a decision variable taken jointly with the wages paid to the workers. Although there has been a tendency for the company union to be portrayed in one light – often very unfavorable – the historical record supports at least three different perspectives. In some cases, the company union served the principal purpose of deterring the organization of a firm’s work force by an independent trade union. But, in other instances, the primary role of the company union was “to reduce labor turnover and foster worker loyalty” (Fairris, 1995, p. 524). According to this notion, higher wages and company unionism were complementary policies that firms adopted to enhance work performance. In still other instances, traces of employer benevolence may have been at work. All three perspectives allow for a positive association between wages and company unionism. Recognizing these perspectives and noting the connection between wages and company unionism should contribute to a more discriminating view of company unionism. This view avoids the “all-or-nothing” perspective that maintains that a collective organization of workers is of value if and only if it operates and is financed entirely independently of the employer. A more subtle view acknowledges benefits from worker organizations that are more heavily dependent on the employer’s goodwill and participation. Once a spectrum of worker organizations is envisaged – with completely independent unions at one end of that range and employer-dominated organizations at the other – together with a changing assortment of benefits to the organization as one moves along that range, it becomes less clear why statutory economic policy draws a line so close to one end of that spectrum.

NOTES 1. Firm-sponsored worker representation mechanisms have been given various titles at different times: shop committees and works councils were common names in the First

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World War and shortly after; later in the 1920s, employee representation plans became the frequent designation; in the 1930s, company unions became standard. I use these names interchangeably, but because the statistical analysis below uses data from the 1930s, I use the term company unions most often. 2. In this paper, I use the term “independent unions” to describe unions organized and managed by workers without the involvement of management. Other authors use the term “independent unionism” to describe local unions that are unaffiliated with any national union. On the latter, see Jacoby (2000). 3. Other examples in this vein are provided by Fairris (1995), Jacoby (1997), and Nelson (1989). Also see the discussion in Millis and Montgomery (1945) who write, “. . . whatever their origin, most company unions have not been merely obstructionist organizations or an insurance against trade unionism. For they have usually had as an objective positive or constructive functions of one kind or another” (p. 873). 4. For instance, in Fairris’s (1995) excellent analysis of company unions, he asserts without supplying any evidence that “company unions . . . generally had little impact on wages or hours at all” (p. 512). 5. Even this modest recommendation brought forth a strong objection from one member of the Commission, Mr. Douglas Fraser, former President of the United Auto Workers. He saw the Commission’s recommendation as a weakening of the law against company unions “which are inherently illegitimate . . .” See U.S. Commission (1994, p. 13). 6. For a thorough examination of the existing U.S. policy and of alternative possible policies, see Kaufman (1999). 7. See, for instance, Schacht (1975), Schatz (1983), and Selekman (1924). 8. The primary Government body was the National War Labor Board. Others included the Shipbuilding Labor Adjustment Board, the President’s Mediation Commission, the United States Fuel Administration, and the United States Railroad Administration. All these agencies championed shop committees to give expression to workers’ concerns. 9. The lumber workers of the Pacific North-west crafted an organization that had no parallel in other U.S. industries. The Loyal Legion of Loggers and Lumbermen not only formed workers’ committees in each mill and logging camp, but also sent representatives to regional councils that engaged in negotiations with representatives of employers. This hierarchical structure involving regional negotiations with employers resembled the Whitley Councils in Britain that were widely discussed in the United States at this time. 10. The rulings of the government agencies did not have the force of law and, in this sense, were not mandatory. However, the discretionary power of government gave their rulings considerable force. For instance, the management of Smith & Wesson Company refused to apply an award of the National War Labor Board so the War Department requisitioned the plant. 11. As noted by the quote in the opening paragraph of this paper, this posture of trade unions towards works councils soon changed. 12. “Before 1933, most unions and company unions occupied separate industrial spheres, rarely competing or even addressing the same issues” (Nelson, 2000, p. 61). 13. This is quoted in Schacht (1975, p. 18). 14. Section 7(a) of the Act specified that employees “. . . should have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint or coercion of employers . . . in the designation of such

Company Unions, Wages, and Work Hours

33

representatives or in self-organization or in other concerted activities for the purpose of collective bargaining . . .” The law prohibited firms from requiring workers to join a company union, but it did not prohibit them from advocating membership. 15. See the discussion in Jacoby (1985, Chap. 7). 16. There were another 150 thousand votes cast in such elections in the automobile industry, but in these cases the affiliation of the individuals standing for election were not designated. 17. Between 1935 and mid-1943, of the cases brought to the Board charging violation of Section 8 (2) of the Act, the Board found in support of these violations in over 90% of the instances. 18. See Shostak (1962), Jacoby (2000), and Nelson (1997). 19. This scatter of observations omits four industries: services, mining, wholesale trade, and retail trade. In services and trade, individual contracts were dominant and neither trade nor company unionism was important. In mining, 87% of workers were covered by trade union contracts. The data in Fig. 1 encompass over 80% of the workers covered by the survey and relate to the industries used in the regression analysis below. 20. Senator Wagner subscribed to a widespread view that the Depression was caused in large part by production growing faster than household incomes during the 1920s. The subsequent surfeit of unsold products induced firms to cut prices and costs (especially wages), but these wage reductions served only to aggravate the problem of under-consumption. A halt was needed in the successive rounds of wage cuts and, even more, policy needed to effect a redistribution of incomes away from profits and toward labor incomes. Senator Wagner believed company unions were not effective in establishing the sort of wage floors and wage increases that worker-organized labor unions did and, therefore, company unions did not have desirable macroeconomic consequences. On Wagner’s macroeconomic views, see Kaufman (2000, pp. 51–55). 21. The data on establishment size are derived from the BLS survey by dividing the values of: (1) the number of workers covered by the replies to the survey by; (2) the total number of establishments covered by the replies. 22. The information on earnings and hours by manufacturing industry are taken from Tables 5 through 30 of Beney (1936). 23. Weighted least-squares estimates were very similar to those reported. 24. See, for instance, Lewis (1963) who reported a union-non-union relative wage effect (in natural logarithms) of 0.38 for 1930–1934 and of 0.20 for 1935–1939 (Table 64, p. 222). In a re-examination of Lewis’ research, Pencavel and Hartsog (1984) reported estimates for 1930–1934 of 0.496 and for 1935–1939 of 0.223 (column (1) of Table 6). 25. The variable “employees per establishment” was added to this regression equation (in quadratic form) and an association with wages was measured. (The estimated coefficient on the linear term of this plant size variable was negative and the coefficient on the quadratic term was positive so wages fall over some ranges of plant size before ultimately rising.) This plant size variable is derived from the BLS survey, not the Conference Board wage survey. The estimates on the estimated coefficients on trade unions and company unions were altered very little by adding this plant size variable. 26. Once again, the coefficient on UB (the fraction of workers in establishments where both trade unions and company unions operate) lies between the estimated coefficients on UT and on UC . However, none of these coefficients is measured with precision. 27. See especially Slichter (1919) and Brissenden and Frankel (1920).

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JOHN PENCAVEL

28. The model below extends an earlier characterization of a firm’s labor turnover and wage policies. See Pencavel (1972). It is increases in the firm’s wage relative to comparison or reference wages that affects turnover and work effort. In this analysis, wages in other firms are treated as given. The characterization here of company unionism as, indirectly, an input into the firm’s production function is also the representation used by Kaufman and Levine (2000). 29. It seems plausible that G rises each with R and E, but at a decreasing rate: ∂G/∂R > 0, ∂ 2 G/∂R 2 < 0, ∂G/∂E > 0, ∂ 2 G/∂E 2 < 0. Of course, the first-order conditions (Eqs (2) and (3) assume interior solutions to the maximum problem. For corner solutions (such as no expenditures on representation plans), the equalities would be replaced with inequalities. 30. See, for instance, the argument in Chapter 1 of Pencavel (1991). 31. Second-order conditions for a maximum are satisfied if ∂ 2 ␶/∂w 2 > 0, ∂ 2 ␶/∂R 2 > 0, ∂ 2 e/∂w 2 < 0, and ∂ 2 e/∂R 2 < 0. One might think of defining R and w as complementary in generating effort if ∂ 2 e/∂R. . .∂w > 0 and as substitutes if ∂ 2 e/∂R. . .∂w < 0. Some (e.g. Taras, 1998) have suggested that worker representation is only effective in generating a cooperative work ethic if wages are high enough to remove them as an issue. In this model, this would suggest that R and w are complementary in producing work effort. 32. Jacoby and Verma (1992) attribute at least part of the wage differential achieved by independent local unions in TRW to the company’s desire to avoid dealing with conventional unions. 33. The model that follows draws on Rosen (1969). 34. Again assuming interior solutions, the first-order condition for wages is (1 − p)E = (u − n )(∂p/∂w) and that for R is (u − n )(∂p/∂R) = 1. Combining these two yields Eq. (4) in the text. 35. “More than any other item in the program of welfare capitalism, employee representation was couched in idealistic terms. When a strike broke out at the Consolidated Coal Company in Pennsylvania in 1922, the younger Rockefeller [John D. Rockefeller, Jr.], a major stockholder, publicly denounced the operators for denying “their employees all voice and share in determining their working conditions and any adequate machinery for the uncovering and adjustment of grievances. The day has passed when such a position can justly be maintained . . . in a country like ours . . . Employees in every industrial unit [have] a fundamental right, namely, the right to representation in the determination of those matters which affect their own interests.” Rockefeller’s letter, widely praised, reflected the thinking of enlightened employers” (Brody, 1980, pp. 55–56). 36. The first-order condition for employment is w − X  = U ␪/(1 − ␪) > 0. In other words, wages exceed the value of marginal product of employment in proportion to the weight given in to the typical worker’s utility function. 37. It is perhaps noteworthy that the company labor unions established by Thompson Products (subsequently, TRW) in the 1940s and 1950s were located principally in the Northeast and Midwest where conventional union organizing drives were a continual hazard. See Jacoby (1989). 38. The response of Mr. Lynn Williams (of the United Steelworkers of America) to Kaufman’s arguments and proposals repeats traditional union opposition to company unionism. Williams writes (1997, pp. 182–183), “. . . managements’ major preoccupation in their company union activities was with the union question. Their principal purposes were to avoid, not encourage, real unions and to restrain the labor movement . . . [B]anning company unions was entirely appropriate [in the 1930s]

Company Unions, Wages, and Work Hours

35

since it was the insidious, employer-driven spiral to the bottom which needed to be contained.” 39. Jacoby (1997, pp. 23–24) notes that in the 1920s company unions at International Harvester and at Goodyear pressed for wage increases. As noted earlier, in the 1930s, company unions were a useful mechanism to have workers consent to pay reductions.

ACKNOWLEDGMENTS I have benefited considerably from suggestions on an earlier draft from Bruce Kaufman. I am grateful to an anonymous referee for very helpful comments and to Joanna Campbell for research assistance.

REFERENCES Beney, M. A. (1936). Wages, hours, and employment in the United States 1914–1936. National Industrial Conference Board Studies, No. 229. New York. Bernstein, I. (1960). The lean years: A history of the American worker, 1920–1933. Boston: Houghton Mifflin. Brandes, S. D. (1976). American welfare capitalism, 1880–1940. Chicago: University of Chicago Press. Brissenden, P. F., & Frankel, E. (1920). Mobility of labor in American industry. Monthly Labor Review, 10(June), 36–56. Brody, D. (1980). Workers in industrial America: Essays on the twentieth century struggle. New York: Oxford University Press. Douglas, P. H. (1921). Shop committees: Substitute for, or supplement to, trades-unions? Journal of Political Economy, 29(2), 89–107. Fairris, D. (1995). From exit to voice in shopfloor governance: The case of company unions. Business History Review, 69(4), 494–529. Freeman, R. B., & Rogers, J. (1999). What workers want. Ithaca, NY: Cornell University Press and Russell Sage Foundation. Jacoby, S. M. (1985). Employing bureaucracy: Managers, unions, and the transformation of work in American industry, 1900–1945. New York: Columbia University Press. Jacoby, S. M. (1989). Reckoning with company unions: The case of Thompson Products, 1934–1964. Industrial and Labor Relations Review, 43(1), 19–40. Jacoby, S. M. (1997). Modern manors: Welfare capitalism since the new deal. Princeton: Princeton University Press. Jacoby, S. M. (2000). A road not taken: Independent local unions in the United States since 1935. In: B. E. Kaufman & D. Gottlieb Taras (Eds), Non-union Employee Representation: History, Contemporary Practice, and Policy (pp. 76–95). New York: M. E. Sharpe. Jacoby, S. M., & Verma, A. (1992). Enterprise unions in the United States. Industrial Relations, 31(1), 137–158. Kaufman, B. E. (1997). Company unions: Sham organizations or victims of the new deal? Proceedings of the Forty-Ninth Annual Meeting, Industrial Relations Research Association (pp. 166–184).

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Kaufman, B. E. (1999). Does the NLRA constrain employee involvement and participation programs in non-union companies? A reassessment. Yale Law and Policy Review, 17(1), 729–811. Kaufman, B. E. (2000). Accomplishments and shortcomings of non-union employee representation in the pre-Wagner Act years: A reassessment. In: B. E. Kaufman & D. Gottlieb Taras (Eds), Non-union Employee Representation: History, Contemporary Practice, and Policy (pp. 21–60). New York: M. E. Sharpe. Kaufman, B. E., & Gottlieb Taras, D. (Eds) (2000). Non-union employee representation: History, contemporary practice, and policy. New York: M. E. Sharpe. Kaufman, B. E., & Levine, D. I. (2000). An economic analysis of employee representation. In: B. E. Kaufman & D. Gottlieb Taras (Eds), Non-union Employee Representation: History, Contemporary Practice, and Policy (pp. 149–175). New York: M. E. Sharpe. Lewis, H. G. (1963). Unionism and relative wages in the United States: An empirical inquiry. Chicago: University of Chicago Press. Lipset, S. M., & Meltz, N. M. (2000). Estimates of non-union employee representation in the United States and Canada: How different are the two countries? In: B. E. Kaufman & D. Gottlieb Taras (Eds), Non-union Employee Representation: History, Contemporary Practice, and Policy (pp. 223–230). New York: M. E. Sharpe. Millis, H. A., & Montgomery, R. E. (1945). The economics of labor: Volume III Organized labor. New York: McGraw-Hill. National Industrial Conference Board (1922). Experience with works councils in the United States. Research Report No. 50 (May). New York. National Industrial Conference Board (1925). The growth of works councils in the United States: A statistical summary. Special Report No. 32. New York. National Industrial Conference Board (1933). Collective bargaining through employee representation. New York. Nelson, D. (1982). The company union movement, 1900–1937: A re-examination. Business History Review, 56(3), 335–357. Nelson, D. (1989). Managers and non-union workers in the rubber industry: Union avoidance strategies in the 1930s. Industrial and Labor Relations Review, 43(1), 41–52. Nelson, D. (1997). Company unions after 1937. Proceedings of the Forty-Ninth Annual Meeting, Industrial Relations Research Association (pp. 159–165). Nelson, D. (2000). The AFL and the challenge of company unionism, 1915–1937. In: B. E. Kaufman & D. Gottlieb Taras (Eds), Nonunion Employee Representation: History, Contemporary Practice, and Policy (pp. 61–75). New York: M. E. Sharpe. Pencavel, J. (1972). Wages, specific training, and labor turnover in U.S. manufacturing industries. International Economic Review, 13(1), 53–64. Pencavel, J. (1991). Labor markets under trade unionism: Employment, wages, and hours. Cambridge, MA: Blackwell. Pencavel, J., & Hartsog, C. E. (1984). A reconsideration of the effects of unionism on relative wages and employment in the United States, 1920–1980. Journal of Labor Economics, 2(2), 193–232. Rosen, S. (1969). Trade union power, threat effects, and the extent of organization. Review of Economic Studies, 36(2), 185–196. Schacht, J. N. (1975). Toward industrial unionism: Bell telephone workers and company unions, 1919–1937. Labor History, 16(1), 5–36. Schatz, R. W. (1983). The electrical workers: A history of labor at general electric and Westinghouse, 1923–1960. Urbana: University of Illinois Press. Selekman, B. M. (1924). Employees’ representation in steel works. New York: Russell Sage Foundation.

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Shostak, A. B. (1962). America’s forgotten labor organization. Industrial Relations Section, Research Report Series No. 103. Princeton University. Slichter, S. H. (1919). The turnover of factory labor. New York: D. Appleton & Co. Slichter, S. H. (1929). The current labor policies of American industries. Quarterly Journal of Economics, 43(2), 393–435. Taras, D. G. (1998). Non-union representation: Complement or threat to unions? Proceedings of the Fiftieth Annual Meeting, Volume 1, Industrial Relations Research Association (pp. 281–290). Troy, L. (1965). Trade union membership, 1897–1962. National Bureau of Economic Research, Occasional Paper 92, New York. U.S. Commission on the Future of Worker-Management Relations, Report and Recommendations, U.S. Department of Labor (December 1994). U.S. Department of Labor, Bureau of Labor Statistics (1937). Characteristics of company unions 1935. Bulletin No. 634. United States Government Printing Office, Washington, DC (June). Wagner, R. F. (1934). Company unions: A vast industrial issue. The New York Times (March 11). Reprinted in U.S. National Labor Relations Board, Legislative History of the National Labor Relations Act 1935 Volume 1, U.S. Government Printing Office, Washington, DC (1949, pp. 22–26). Williams, L. (1997). Discussion [of historical perspectives on company unions]. Proceedings of the Forty-Ninth Annual Meeting, Industrial Relations Research Association (pp. 181–184).

APPENDIX The table below matches the 23 manufacturing and public utilities industries in the data from the National Industrial Conference Board with those from the BLS information on company unionism. The asterisk denotes a weighted (by employment) average of the industries listed. National Industrial Conference Board

Bureau of Labor Statistics

1. Agricultural implements 2. Automobiles 3. Boots and shoes 4. Chemicals 5. Cotton (North) 6. Electrical manufacturing

Agricultural implements Automobiles Boots and shoes Chemicals ∗ Cotton goods + cotton small wares Electrical machinery, apparatus, & supplies Foundry & machine shop products Furniture ∗ Hosiery + knit goods Iron & steel & their products

7. Foundries & machine shops 8. Furniture 9. Hosiery & knit goods 10. Iron & steel manufacturing

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Appendix (Continued ) 11. Leather tanning & finishing 12. Lumber & millwork 13. Meat packing 14. Paint & varnish 15. Paper & pulp 16. Paper products 17. Printing, book & job 18. Printing, news & magazine 19. Rubber 20. Silk 21. Wool 22. Production & distribution of gas 23. Production & distribution of electricity

Leather ∗ Millwork + sawmills Slaughtering & meat packing Paints & varnishes Paper & pulp Boxes, paper Printing, book & job Printing, newspapers & periodicals Rubber products Silk & rayon goods Woolen & worsted goods Manufactured gas Electric light & power

LABOR MARKET REGULATION AND PRODUCTION WORKER HIRING STANDARDS: INTERNATIONAL COMPARISONS Kirsten Daniel and W. S. Siebert ABSTRACT The study analyses production worker hiring standards based on time series personnel records drawn from matched plants in the U.S., U.K., Italy, the Netherlands and Belgium. Our hypothesis is that labor market regulation pushes upwards hiring standards for production workers. Labor market regulation is measured both by an employment protection index, and by workforce average tenure as a proxy for insider power. We find that the average tenure variable gives more robust results than the index. Its effect is to increase education standards, but to reduce starting age standards. The expected positive effect of employment protection on hiring standards is found in simple regressions, but is not generally supported by the multivariate analysis once other influences are held constant. However, union density is found to increase hiring standards, and might take over the effect of employment protection as an indicator of overall regulatory pressure. We also find a strong substitutability between recruits’ prior experience and education. This substitutability indicates the power of education to widen job opportunities for inexperienced workers.

Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 39–71 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 0742-6186/PII: S0742618603120033

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1. INTRODUCTION The 1980s and 1990s have seen a progressive rise in unemployment and a decline in employment-population ratios in Europe. Unemployment trends have not been so adverse in the U.S., which has led to a substantial discussion about the adverse effects of labor market regulation (e.g. OECD, 1994, 1999). Whereas unemployment in the U.S. seems to fluctuate around some stable natural rate, unemployment does not seem to recover well after an adverse shock in Europe (see for example Blanchard & Summers, 1987, on hysteresis in unemployment). A popular explanation is that interference in the free workings of the labor market keeps real wage costs above market clearing levels. In particular, minimum wages, employment security legislation, strong unions, high taxes and high unemployment insurance benefits are blamed (e.g. Siebert, 1997, p. 39). The argument has been extended to account for the particularly adverse position of unskilled workers in Europe (e.g. Mortensen & Pissarides, 1999). To the extent that mandating employment standards and legislating employment protection increase labor cost, these regulations have a negative impact on the demand for unskilled labor in particular. First, increases in labor cost are likely to be relatively more for unskilled workers, since any administrative costs are a larger proportion of unskilled workers’ wages. Second, a decrease in demand for unskilled labor relative to skilled would require the unskilled workers’ wages and working conditions to fall relative to skilled. Unskilled workers’ wages will be close to income support floors or minimum wages and hence will be less able to fall to offset enhanced working conditions brought about by labor market regulations. Firms are then likely to become more cautious in their hiring decisions, and the more so the more these hiring decisions are irreversible due to employment protection legislation. The research examines personnel record data on characteristics of production worker recruits, in particular their education, starting age and prior experience. The question here is, whether the less restrictive labor laws in some countries (e.g. the U.S.) allow more experimentation with unskilled worker groups – the less educated and the young for example – giving these workers more chance to be absorbed into the core of permanent employees. Our hypothesis is that firms become more cautious in their hiring decisions due to labor market regulation, and so impose higher hiring standards, e.g. higher education or more prior work experience or a higher starting age. Our methodology is based on international comparisons of matched plants producing the same or similar products. Four multinationals are analyzed with matched plants in the U.S., the U.K., Italy, the Netherlands and Belgium. Matching the plants ensures that issues of product differences and product

Labor Market Regulation and Production Worker Hiring Standards

41

quality do not complicate the analysis. Since the product is held constant while the countries differ in their legal provisions and jurisprudence in the area of employment protection, one can test for the effect of employment protection on hiring standards. The analysis has a time dimension, considering past hiring standards in the plants for up to twenty-three years. The time dimension increases the number of data points, with data from 11 manufacturing plants over the mid-1970s to mid-1990s. The aim is to provide data on what firms have actually done in the recruitment process when confronted with changes in employment protection. Measuring regulation is obviously difficult. In particular, firing costs are hard to quantify. In line with Autor (1999), we argue that due to judge-made law the U.S. is not as unregulated as it is often made out to be. So far, a time varying cardinal measure quantifying firing costs that takes account of legal provisions as well as possible litigation costs in the absence of legal provisions – as in the case of the U.S. – is unavailable. Therefore, we construct two regulation measures. One is an employment protection index based on the OECD (1999) method, but incorporating both changes in legislation and in relevant court practices. The other is based on average worker tenure. The argument here is that longer tenure signifies more insider power (Emerson, 1988). In addition, we bring in a measure of trade union density, since this too is linked to regulatory pressure. The plan of the paper is as follows. In the next section, we discuss the determinants of company hiring standards. Section 3 discusses our index of employment protection together with other relevant variables. Section 4 describes our data-set and the nature of the study plants. Section 5 presents our main results and their implications for the evolution of hiring standards.

2. THE DETERMINANTS OF HIRING STANDARDS We are interested in measuring recruitment choices, and explaining variations among plants. In practical terms, we quantify the “type” of worker who does the jobs in the plant by using various skill characteristics such as education, starting age and prior experience. Personnel records provide information on these characteristics. The starting point we use for explaining a plant’s hiring standards is a “conventional” economic model (see also Morton & Siebert, 2000). In this model, the skill level of recruits is explained in terms of the plant’s product, the wage and non-wage (including tax) costs of skilled relative to unskilled workers, labor market regulation including trade unionism, the economic environment, and idiosyncratic factors such as a plant’s history. Let us take these up in turn.

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Product and Wages Starting with the product, product engineering considerations will determine the productivity of high skilled relative to low skilled recruits, and the complementarity between workers of different skills. We aim to eliminate engineering considerations with our strategy of comparing plants producing the same product. The wage element then comes in. Standard economic theory predicts that a particular mix of high and low skill workers will be chosen so as to bring the productivity of high relative to low skill workers into line with their relative wages. The relative wage of unskilled workers might be lower for our U.K. and U.S. plants than in their continental European counterparts – perhaps because of weakened unions and lower unemployment benefit and minimum wage “floors” for unskilled earnings. Lower relative wages for unskilled workers would be a factor predisposing U.K. and U.S. plants towards a less skilled worker mix, that is, less educated, less experienced recruits and perhaps more diversity (more dispersed distributions) generally. While we do not have a relative wage variable, the panel nature of our data allows for plant fixed effects, so relatively lower unskilled wages will be allowed for. However, we do have information on individual recruit’s starting pay, which we include to take account of differences in job characteristics for the relevant positions filled. Taxes A further factor affecting the skill mix will be payroll taxes since these affect labor costs. The standard argument is that, since labor supply is inelastic, high taxes will be shifted back onto the worker, causing a downward movement in wages with little effect on employment. However, if trade unions can limit this downward movement in wages (Nickell, 1997; Scarpetta, 1996), labor costs increase and employers have to search for methods to increase labor productivity. One method to increase labor productivity is to raise hiring standards. Hence we expect higher taxes to be associated with higher standards, and incorporate a tax variable in the analysis. Labor Regulation We are mainly concerned here with employment protection legislation. This legislation can affect a plant’s skill mix by directly constraining the retention decision. As noted in the introduction, the U.K. and U.S. have less strict employment protection legislation than most European Union states. It is difficult to measure the pressure of this legislation, as we discuss in the next section. Nevertheless, in principle we would expect stricter legislation to tilt the recruitment choice against unskilled labor.

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43

Trade union power should also be considered under this heading. In particular, unions promote labor market regulation (Siebert, 1999, p. 22). In this regard, it is union power at the national, rather than the plant level, which is important. Unions may also enforce labor market regulations within the plant, strengthen insider power and push up wages and working conditions, thereby increasing the overall payment bundle. Standard economic theory predicts that the firm will hire workers so as to equate the worker’s value of marginal productivity with the overall payment bundle. Hence, firms are likely to increase hiring standards in order to increase labor productivity in line with the payment bundle. The Environment Unemployment, global trends requiring more skilled labor, and special factors such as raising the school-leaving age enter here. Starting with unemployment, from a supply side point-of-view high unemployment rates should favor higher hiring standards, since the supply of good people is abundant then (see Reder, 1955). From the demand-side point of view the rationale might go in the opposite direction. Firms will be more likely to expand capacity, invest in new – and most likely more technologically advanced – machinery when business prospects are good, and that is the time when the need for more qualified people arises. Following this demand-side argument it will be the good times with overall low unemployment rates, when firms recruit more skilled workers. But good times from the firm’s point of view might deviate from the overall state of the economy. In other words, fluctuations in overall economic activity as represented by the unemployment rate, need not take account of specific business conditions within a firm. To allow for this, we also include employment deviations from trend at the plant level, as well as the overall unemployment rate. We also incorporate a time trend variable to capture underlying forces leading towards recruitment of more skilled labor. Such an underlying trend could result from technological progress or increased third world competition. Both these factors will favor skilled workers. Idiosyncratic Factors A factor here is a plant’s history. For example, plants might have a tradition in their recruitment behavior, such as hiring members of the same family (as we found in our Italian distilling plant). To take account of idiosyncratic factors we allow for plant fixed effects. In addition, plants in different countries will be subject to different shocks, in particular changes in school-leaving age laws. We account for this change with a suitable school-leaving age dummy.

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3. MEASURING EMPLOYMENT PROTECTION The analysis includes data for plants operating in three continental European countries – Italy, Belgium and the Netherlands – the U.K. and three U.S. States – Missouri, California and Maryland. This range of countries differs widely in their legal provisions, institutional settings and jurisprudence in the area of employment protection. While it is widely accepted that employment reductions are more costly in continental European countries than in the U.K. and the U.S., these firing costs are hard to quantify (Bertola et al., 1999, p. 3). Firing costs are influenced by rules governing unfair dismissal, layoffs for economic reasons, severance payments, minimum notice period, administrative authorization for dismissals, prior discussion with representatives of unions or labor market administrations as well as possible litigation cost in the absence of legal provisions – as in the case of the U.S. So far, a cardinal measure quantifying firing costs taking account of this wide set of rules is unavailable. Therefore, we develop an index for employment protection of permanent employment for the purpose of this analysis (see also Daniel, 2001, 103 ff.). Most research assessing the impact of employment protection on aggregate labor market outcomes utilizes qualitative rankings of employment protection stringency to circumvent measurement difficulties. Bertola (1990), Grubb and Wells (1993) constructed rankings for industrial countries, and the OECD (1993, 1999) constructed indices of the strictness of employment protection based on a wider set of provisions governing regular as well as temporary employment based on the Grubb and Wells method. The OECD (1999) index of employment protection legislation rates countries on strictness of dismissal protection laws for permanent workers and regulation of temporary workers. In contrast to their earlier index (OECD, 1993) the ratings are intended to measure the intensity of restrictions, i.e. they are cardinal measures, rather than ordinal. One reservation about these indices is that they cannot take account of the way the law is enforced (see Bertola et al., 1999). A further limitation of these measures is that they each cover just one point – or two points in the case of the latest OECD (1999) index – in time. When some aspects of employment protection, which are available over time, are positively correlated with other aspects of employment protection, the use of such partial indicators could remedy this problem (see Bertola et al., 1999, p. 3, on measurement problems). For example, Lazear (1990) quantified firing costs as the amount of severance and notice period measured in monthly wages owed to a dismissed worker after ten years of service. While available over time, Lazear’s measure is unable to capture changes in regulation and practices over the time period of our analysis.

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45

Since these measures of employment protection are unlikely to accurately reflect the magnitude of expected dismissal cost, Heckman and Pages (2000) construct a measure of expected firing cost for Latin America, the Caribbean and a subset of OECD countries. While the approach promises a more accurate measure of expected firing costs by summarizing the entire tenure-severance pay profile, assigning dismissal probabilities is problematic. Their measure computes the expected discounted cost at the time a worker is hired of dismissing him/her in the future due to unfavorable economic conditions. Heckmann and Pages assign a common set of dismissal probabilities based on observed turnover rates in the U.S., i.e. every year the probability of dismissal equals 8%. Since turnover rates itself are affected by job security the U.S. serves as a benchmark country with the least legal provisions in their sample. However, despite the absence of legal provisions in the field of employment protection, the U.S. might not be as unregulated as it is made out to be, with firing costs being determined by potential costly termination litigation (Autor, 1999, p. 1). As can be seen in Table 1, according to the OECD (1994, 1999) rating of employment protection legislation for regular employment the U.S. is the least restricted followed by the U.K. The Netherlands and Italy are at the other end with the most restrictions with Belgium being in the middle. Between the late 1980s and late 1990s the OECD measure does not indicate any change in strictness of employment protection in these countries. However, over the period since 1975, the U.K., Belgium and Italy experienced some relaxation of employment protection in contrast to the U.S. According to our index (see Table 2) the U.S. tightened employment protection at the same time as the European countries were loosening it. Table 1. OECD (1999) Employment Protection Index. Regular Employment

Italy Netherlands Belgium U.K. U.S.

Temporary Employment

Late 1980s

Late 1990s

Late 1980s

Late 1990s

2.8 3.1 1.5 0.8 0.2

2.8 3.1 1.5 0.8 0.2

5.4 2.4 4.6 0.3 0.3

3.8 1.2 2.8 0.3 0.3

Notes: The index on employment protection for regular employment incorporates scores for regular procedural inconveniences, notice and severance pay for no-fault individual dismissal and difficulty of dismissal. The index for strictness of regulation regarding temporary employment incorporates scores for regulation of fixed-term contracts and temporary work agencies. The indices can range from 0 to 6, with higher values representing stricter regulation. Source: OECD (1999, Tables 2.2 and 2.3).

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Table 2. Employment Protection in the Study Countries Mid-1970s to Mid-1990s. Employment Protection Index 1975

1995

2.8

2.3

Temporary employment

5.4

3.8

Netherlands Regular employment Temporary employment

3.1 2.4

3.1 1.2

Belgium Regular employment

1.4

1.3

4.6

2.8

1.0

0.8

Temporary employment

0.3

0.3

U.S. Missouri Regular employment

0.2

1.1

0.3

0.3

0.2

1.1

0.3

0.3

0.2

1.1

0.3

0.3

Italy Regular employment

Temporary employment

U.K. Regular employment

Temporary employment California Regular employment

Temporary employment Maryland Regular employment

Temporary employment

Employment Protection: Major Changes Mid-1970s to Mid-1990s

1984: Introduction of the “contratto formazione,” effectively increasing the trial period for permanent employees up to 24 months 1987: Rules governing the use of fixed-term contracts were relaxed

1990: Rules governing temporary work agencies were relaxed

1985: Compensation for unjust dismissal was significantly reduced Early 1990s: Rules governing the use of fixed-term contracts were gradually relaxed

1985: Period of service to claim unfair dismissal increased to two years

1983: Benchmark judgment introducing the implied contractual right to continued employment

1976: Benchmark judgment introducing the implied contractual right to continued employment

1985: Benchmark judgment introducing the implied contractual right to continued employment

Notes: The index on employment protection for regular employment incorporates scores for regular procedural inconveniences, notice and severance pay for no-fault individual dismissal and difficulty of dismissal. The index for strictness of regulation regarding temporary employment incorporates scores for regulation of fixed-term contracts and temporary work agencies. The indices can range from 0 to 6, with higher values representing stricter regulation. Sources: Regulation of regular employment: for Belgium Hepple (1985, p. 500); for Italy Brodolini (1997, p. 115); for the U.S. Autor (1999, Legal Appendix); authors’ computations. Regulation of temporary employment: OECD (1999, Table 2.1 and 2.3).

Labor Market Regulation and Production Worker Hiring Standards

47

In terms of regulation of temporary employment, the U.S. and the U.K. are and have been the least restricted. Italy is and has been the most restricted followed by Belgium and the Netherlands (see Table 1). All three continental European countries experienced some relaxation in the rules governing temporary employment in the late 1980s and early 1990s. To take account of overall employment flexibility, we incorporate a separate index for regulation of temporary employment in the analysis based on the OECD scores for the late 1980s and late 1990s. Due to the lack of availability of a time varying cardinal measure of employment protection for regular employment suitable for all countries involved in the analysis, we construct an employment protection index based on the OECD (1999) method.1 Table 2 gives an overview of relevant changes in rules and court practices governing employment protection and legislation regarding the use of temporary contracts for the period of analysis. In Italy the introduction of the “contratto formazione,” a training contract running for up to 24 months, not only involves tax incentives for the employer, but also effectively reduces the trial period for unfair dismissal from 1–2 weeks for blue-collar workers to 24 months. In practice, these contracts are used as a trial period for permanent employment, i.e. all new permanent hires are initially hired on a training contract and up to 99% of these hires are made permanent after the training contract has expired. Since this relaxation in employment protection manifests itself in the way employers are responding to the introduction of the training contract, rather than in legislation itself, it is not captured by the OECD index. According to Autor (1999), 45 U.S. states, among them the three states in which the study plants are located, experienced a tightening of employment protection with the introduction of exceptions from the employment-at-will doctrine through benchmark court judgments. The implied contractual right to continued employment, introduced in 41 states, is the most encompassing exception and “may de facto classify a company’s entire workforce as terminable only for cause” (Autor, 1999, p. 6). This exception effectively limits employers’ discretion to terminate workers and opens them to costly litigation, thereby tightening employment protection in a way that is not captured by the OECD index, which is based on legislation only. Hence, the U.S.’ particular approach to provide employment protection follows the general notion of “American exceptionalism.” While employment protection is more likely to be statutory elsewhere and enforced by government, the U.S. moved away from the employment-at-will doctrine through private enforcement rather than legislation. We can also expect job tenure to be related to employment protection legislation, since such legislation results in fewer dismissals and lower levels of hiring, and therefore fewer workers with short tenure (Emerson, 1988). In fact, both Italy

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KIRSTEN DANIEL AND W. S. SIEBERT

and Belgium have high job tenure (higher even than Japan, the land of lifetime employment). To this extent the tenure variable links well with the employment protection index. The high Belgian and Italian tenure figures imply high levels of insider power, which in turn suggest a strict regulatory framework. For the purpose of our study, we develop an average tenure time-series variable by taking the average tenure of each plant’s workforce in each year. This variable has advantages over the regulatory index in being plant-specific, and also having a natural cardinal metric. Table 3 gives an overview of the average tenure and employment protection indices together with unionization and tax variables. As can be seen, average tenure has increased in all plants over time – just as much, if not more, in the U.S. plants. The implication is that insider power has increased in these large-company plants. However, our employment protection index for regular work shows a different pattern, with a loosening in Europe but a tightening in the U.S. over the period. There is a conflict here, which surfaces in our regression estimates. As for union density and total taxes, these are higher in the European countries compared to the U.S. However, while taxes have remained high in Europe, there has been a convergence in the U.S. and Europe regarding union density, with a decline being registered in all countries. Across the countries and states included in the study, the employment protection index correlates significantly positively with the tax wedge (0.42, p < 0.01) and with union density (0.19, p < 0.05). These correlations suggest that the employment protection index is picking up regulatory pressure, which is linked to union power and the tax wedge. It is worth noting, as well, that the employment protection index also correlates significantly positively with overall unemployment (0.13, p < 0.05), suggesting that the countries with higher overall regulatory pressure tend to experience higher unemployment rates (either as cause or effect). The average tenure variable also correlates significantly positively with overall unemployment (0.29, p < 0.01), but not with union density and the tax wedge. One has to keep in mind that the employment protection index and average tenure are not measuring the same thing. Average tenure will be influenced by employment protection among other things. For example, since average tenure tends to increase with age, the general trend of aging of the population in the industrialized world might be partly responsible for the general upward trend in average tenure across countries. In addition, labor markets with strong insider power and long average tenure of the workforce can emerge without employment protection as the main driving force. For example, long average tenure can be a sign for firm-specific training investment and efficiency wage considerations playing a dominant role, rather than labor market regulation. In fact, the correlation between average tenure and employment protection is significant but not very strong (0.25, p < 0.01).

Labor Market Regulation and Production Worker Hiring Standards

49

Table 3. Key Country Variables: Changes mid-1970s to Mid-1990s. Employment Protection for Regular Employmentb

Regulation of Temporary Regular

Italy 75–79 90–94

13.55 +2.23

2.8 −0.5

5.40 −1.60

48.7 −9.9

26.9 +14.4

Netherlands 75–79 90–94

8.74 +5.05

3.08 0

2.40 −0.96

36.8 −10.5

43.4 +3.0

Belgium 75–79 90–94

4.52 +3.13

1.43 −0.8

4.6 −1.08

52.8 −0.4

43.7 +1.7

U.K. 75–79 90–94

7.45 +5.65

0.95 −0.17

0.30 0

52.8 −16.6

34.2 +0.7

– –

0.20 +0.88

0.30 0

20.8 −7.2

15.2 +0.3

California 75–79 90–94

4.52 +6.97

0.73 +0.35

0.30 0

23.8 −0.6

18.4 −2.1

Maryland 75–79 90–94

5.87 +8.06

0.20 +0.88

0.30 0

21.0 −6.2

21.2 −1.9

U.S. Missouri 75–79 90–94

Union Densityc

Tax Wedged

Average Tenure of the Workforce

Notes: The tax wedge is defined as total taxes divided by GDP. a Authors’ Computations (see Appendix). b OECD (1999, Table 2.3). c Ferner and Hyman (1992, Table 16.2), Van Ruysseveldt and Visser (1996, Table A19), Waddington et al. (1997), Conference Board (unpublished U.S. tabulations). d Europe: OECD National Accounts Statistics, Vol. 2, several issues, Tables 1 and 6, U.S.: Internal Revenue Service, Bureau of Economic Analysis.

4. THE DATA The sample includes data from four sets of plants, which produce the same or similar products, operating in continental Europe, the U.K. and the U.S. (apart

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KIRSTEN DANIEL AND W. S. SIEBERT

from the pharmaceuticals multinational, where the U.S. match is missing). The plants are subsidiaries of major multinational manufacturing companies, which were chosen on a random basis. The industries involved are ice cream manufacturing (Italy, the U.K., Missouri), distilling (Italy, the U.K., California), food processing producing margarine (Netherlands, the U.K., Maryland), and pharmaceuticals producing penicillin (Belgium & the U.K.). The food processing plants are the closest “match.” They are of similar size, produce an identical product, and use identical equipment. The distilling plants display the greatest differences having been only under common ownership since the late 1980s. Despite some variation in the product range among matched plants, the technology used in the production process, as well as the product, is generally very similar.2 The U.S. ice cream plant is the exception here, with a less capital-intensive production compared to its European counterparts. Interestingly, not only continental European but also U.S. plants experience higher labor cost than their U.K. counterparts (see Table 5). Plant data were collected directly from personnel records of recruits hired between 1975 and 1997 in the study plants. We focus on permanent males, since they represent the group for which most systematic data are available over the past two decades. The 11 plant, five country, two decade study involves approximately 2700 individual male recruits who are taken onto permanent contracts within their first year in the study plant. We compiled information on individual recruits into yearly averages, so forming approximately 130 to 180 plant-time data points, depending on missing observations. The limitation of our approach, although there are about twenty years worth of data for each plant, is that our research is essentially based on case studies. As with all case studies, there is a risk that they are unrepresentative, so that one has to be careful in drawing general conclusions. Nevertheless, our plants can reasonably be taken as representative of practices among large multinational companies. In addition, the use of matched plants increases the power of the case studies, since it allows us to standardize for the product, the technology used and the market environment. The common ownership of the plants means that we can also control for common corporate policies. Such control allows us to identify differences between countries more clearly.

5. RESULTS The analysis considers company hiring standards in the form of recruits’ age – and hence experience3 – and education. To identify the determinants of hiring standards, the analysis starts by giving background to the recruitment process,

Labor Market Regulation and Production Worker Hiring Standards

51

and then moves to a regression analysis with a full set of variables theoretically relevant for the recruitment process (see also Daniel, 2001).

The Recruitment Process Tables 4 and 5 give statistics on the recruitment process in our plants. Table 4 uses average values over the whole period. Table 5 then shows trends, comparing the position in the 1975–1979 period with that in the 1990s.4 Let us consider these tables in turn. Table 4 shows simple measures of dispersion as well as averages for our starting age and previous experience variables. A wide dispersion of starting ages, for example, implies that both young and old are given a chance, as well as the prime age workers. As can be seen, average starting ages do not vary much among the plants, but dispersion does – as measured by the proportion of recruits under 25. This proportion varies between 19.2% (U.S. food processing) and 77.5% (Italian distillers). Similarly the proportion of inexperienced recruits – with less than one year’s previous experience – varies considerably, from 2.3 to 20.2%. Some correlations between variables across the 11 plants are of interest. As we have mentioned, recruits’ age and previous experience are well correlated, as might be expected, r = 0.93. Average age and the proportion of young recruits are also tightly correlated, negatively, r = −0.97. We show the link in Fig. 1. The link is interesting because it shows that plants with a high average starting age also have a smaller proportion of under-25s. A high average age could be compatible with a high proportion of under-25s so long as this was coupled with many over-55s (a wider age dispersion), but apparently this is not the case. Figure 1 shows a tight relationship stretching across diverse countries. We do not

Fig. 1. Starting Age and the Proportion of Young Recruits are Negatively Linked.

52

Table 4. Variables Related to the Hiring Process: Mean Values 1975–1995.a,b,f Ice Cream

Distillers

Food Processing

ITa

U.K.

U.S.b

ITc

U.K.

U.S.

Average hires per Total Permanent males

45 25

61 11

41 8

13 6

74 24

25 5

Starting age of new hires Average (years) % ≤25 years

30.4 32.6

28.1 52.3

27.1 50.4

23.7 77.5

30.2 41.3

– –

10.7 20.2

8.4 18.9

7.7 5.0

10.6

11.9

12.2

9.8

NL

Pharmaceuticals

U.K.

U.S.

BL

U.K.

11 7

28 16

26 7

16 4

43 26

33.6 27.0

25.3 61.9

27.7 51.6

34.8 19.2

34.8 26.4

31.9 30.8

14.0 10.3

14.7 15.4

9.0 6.6

11.9 10.3

15.2 4.8

18.9 2.3

15.9 8.8

11.4

12.1

10.8

11.2

12.4

10.9

11.0

–

12.10

yeard

Education of new hires (years) Hourly entry pay,

1995e

Average tenure of the a The

(U.S. dollar)

workforcef

9.07 –

7.76 12.1

6.58

–

4.8

15.8

9.0

9.3

4.89 10.5

5.08 11.8

10.50

5.56

10.8

7.9

4.83 10.2

period for ice cream manufacture Italy is 1985–1995. Averages for characteristics of new hires are drawn from the stock of employees in 1999. period for U.S. ice cream manufacture is 1980–1995. c Averages for education of new hires are drawn from the stock of employees in 1998. d Average hires per year are drawn from the sample. e Figures are converted to U.S. dollars using 1995 purchasing power parity. f The period for Netherlands and U.S. food processing is 1975–1994. b The

KIRSTEN DANIEL AND W. S. SIEBERT

Previous experience of new hires Average (years) % ≤1 year

Labor Costs per Production Worker, U.S. Dollar PPP, Mid-1990s

Recruits: % with < 1 Year Previous Experience Average 1975–1995

1975–1979

Change from Period 1975–1979 to 1990–1994

Recruits’ Education (Years) Average 1975–1979

Change from Period 1975–1979 to 1990–1994

Ice Cream Ita U.K. U.S.b

35,000 32,100 36,400

– 20.2 18.9

– 20.6 26.7

– +1.2 −9.6

11.9 11.3 12.3

−1.6 +0.7 −0.2

Distillers IT U.K. U.S.

44,100 29,500 47,300

5.0 10.3 15.4

0.0 8.0 24.0

+8.6 +10.6 −24.0

7.5 10.9 11.9

+2.8 +1.9 +0.3

Food Processing NLc U.K. U.S.

53,100 39,000 40,900

6.6 10.3 4.8

7.4 4.6 19.1

+1.7 +13.8 −15.0

10.5 11.1 11.2

+0.8 +0.5 +1.9

Pharmaceuticals BLd U.K.

67,900 29,700

2.3 8.8

0.0 4.5

+2.1 +2.0

9.6 10.4

+1.5 +0.9

Labor Market Regulation and Production Worker Hiring Standards

Table 5. Comparison of Labor Cost with Recruits’ Previous Experience and Education.

a The

period for Italian ice cream manufacture is 1985/1989 to 1990/1994. Averages are drawn from all permanent workers including females. period for U.S. ice cream manufacture is 1980/1984 to 1990/1994. c The period for Netherlands food processing is 1975/1979 to 1986/1990. d The period for Belgian pharmaceuticals is 1975/1979 to 1990/1992. Averages are drawn from all permanent workers including females. b The

53

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KIRSTEN DANIEL AND W. S. SIEBERT

Fig. 2. Starting Pay and Changes in Starting Ages are Negatively Linked.

have time-series data on the proportion of under-25s hired, but can accept that average starting age is a good proxy. Other interesting correlations are with pay. As regards correlation with pay, starting pay correlates reasonably well with recruits’ education, r = 0.58, again as might be expected (but not with starting age). Nevertheless, labor costs (given in Table 5) correlate negatively with the proportion of inexperienced hires, r = −0.54. The implication here is that plants with high labor costs cannot afford to take a chance on inexperienced recruits. The percentage inexperienced variable also correlates well with a plant’s starting pay, r = −0.87. The scatter diagram is given in Fig. 2. The implication is that high paying plants do not recruit inexperienced workers, which is what we would expect. As regards changes to 1990–1994 in recruits’ education, Table 5 shows that the trend has been firmly upward. The average increase, taken across all the plants,

Fig. 3. Recruits’ Education and Experience are Substitutes.

Labor Market Regulation and Production Worker Hiring Standards

55

is almost one year’s extra education. The change in education variable correlates negatively with changes in recruits’ starting age, r = −0.55. The scatter diagram is given in Fig. 3. Plants, which move to hire more educated workers, thus appear also to accept younger, less experienced workers. In other words, education and experience are substitutes, as we would expect. While the scatter in Fig. 3 is not very tight, we will see this relationship becoming stronger in the multivariate analysis.

Regression Analysis We now move to analysis of all plant-time data points. The dependent variables (recruits’ starting age, or education) are formed by averaging information from individuals (permanent males) recruited to work in each plant in each year. Since these numbers are sometimes quite small, as can be seen from the first line of Table 4, we use Weighted Least Squares with weights based on the numbers underlying each plant average. Thus data points based on few recruits receive less weight. Our strategy is first to estimate an unrestricted equation, allowing all coefficients to differ for all plants. This equation is equivalent to estimating eleven separate equations, one for each plant. We then test whether it is permissible, statistically, to restrict some or all coefficients to be equal across plants – though we always allow for different plant intercepts. The model in its general form is thus:


Q it = ai + bi t + c i X it−1 (1) where Qit is recruits’ average education or starting age in the i-th plant and t-th year, and i runs from 1 to 11, and t runs from 1975 to 1994 (for most plants); ai is the constant term for the i-th plant; t is a time trend; Xit −1 is a vector of other variables, generally lagged by a year. A restricted form of the equation is:
Q it = a i + bt + cX it (2) This equation has only the constant term differing among plants. In general we find that Eq. (2) is not a significantly worse fit than (1), and so F-tests allow us to accept the hypothesis of equality of coefficients. Simple regressions are shown in Table 6. These regressions include, in addition to the plant constants, employment protection measures, and the time trend. In addition, for the education variable we have a mandatory school-leaving age dummy (lagged four years to allow for a delayed impact on recruitment in our

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KIRSTEN DANIEL AND W. S. SIEBERT

Table 6. Simple Regressions. Variable (Mean) Regulation measures Average tenure (10.5)

Starting Age (29.7) −0.31 (−1.44)

Employment protectiont−1 (1.2) Temp regulationt−1 (1.3) Time

0.32∗∗∗ (3.18)

4.53∗∗∗ (3.60) 0.43 (0.35) 0.13∗∗ (2.41)

School leaving aget−4 (15.6) Education (11.3) Adjusted R2 F-test for equality of coefficients among plantsa Observations

Education (11.3)

0.03 (0.65) −0.22 (−0.72) −0.23 (−0.84) 0.06∗∗∗ (2.86)

0.06∗∗∗ (4.78)

0.24∗ (1.72)

0.23 (1.56)

−1.51∗∗∗ (−3.62)

−1.33∗∗∗ (−3.92)

0.35

0.40

0.52

0.44

2.58 (1.58)

NA

1.23 (1.62)

NA

165

187

165

187

Notes: t-values are given in parentheses. ∗ , ∗∗ and ∗∗∗ denote significance of the t-tests at the 10, 5 and 1% level respectively. a 5% critical values for the F-test are given in parentheses. “NA” denotes that the unrestricted equation could not be fitted.

plants). For the starting age variable we also include education as a regressor, to measure substitution between education and starting age. The F-tests allow us to accept common coefficients across plants for the education variable (F = 1.23). However, for the starting age variable the F-value is over the borderline for imposing common coefficients (F = 2.58), but we nevertheless report the constrained equation for simplicity. The main results for these equations are, firstly, that the regulation measures are sensitive to specification. The employment protection index is significantly positive for starting age, but not for education. On the other hand, the index for regulation of temporary employment and the average tenure variable are not significant in either case. Secondly, the time trend is positive for both variables, suggesting a steady rise in production worker hiring standards in all the countries. Thirdly, the school-leaving age dummy plays the expected positive, though marginally significant, role in raising hiring standards. Finally, there is evidence of substitution between education and starting age. Such substitution is shown

Labor Market Regulation and Production Worker Hiring Standards

57

Table 7. Full Regressions. Variable (Mean)

Starting Age (29.5)

Regulation measures Average tenure (11.2) Employment (1.2)

−0.57∗∗ (−2.07)

protectiont−1

0.11∗∗ (2.02) −0.40

0.49

Temp regulationt−1 (1.2) Time

Education (11.5)

0.60∗∗∗ (3.27)

(0.16) 0.49 (0.28) 0.44∗∗∗ (2.53)

0.07∗ (1.91) 0.37∗∗ (2.18)

School leaving aget−4 (15.7) Education (11.5)

−1.25∗∗∗ (−2.63)

−1.25∗∗∗ (−3.07)

Unemploymentt−1 (8.4)

−0.39∗ (−1.68)

−0.54∗∗∗ (−2.55)

Union densityt−1 (38.0)

0.24 (1.43)

Tax wedget−1 (33.5)

(−0.61) 0.23 (0.56) 0.06 (1.46) 0.39∗∗ (2.07)

−0.06 (−1.48)

−0.01 (−0.17)

0.29∗ (1.66)

0.03 (0.91)

−0.00 (−0.05)

−0.06 (−0.23)

0.08 (0.28)

0.06 (1.21)

0.01 (0.12)

Employment deviation (0.04)

−0.03 (−0.25)

0.05 (0.52)

0.01 (0.60)

0.00 (0.18)

Starting pay (1.2)

−0.93 (−0.56)

−0.18 (−0.11)

−0.19 (−0.60)

−0.30 (−0.82)

Adjusted R2 F-test for equality of coefficients among plantsa Observations

0.48 0.79 (1.58) 129

0.44 NA

0.47 1.24 (1.57)

143

129

0.38 NA 143

Notes: See Table 6.

in the starting age equation by the negative coefficient on the education variable, −1.33 or −1.51 according to specification. The full results are given in Table 7.5 Here we again report only one equation for all the plants – again allowing different plant constants – because the F-values (where computable) are low enough to accept the hypothesis of common coefficients. As can be seen, once other influences are held constant, the significance of employment protection, as found in the simple age regression, disappears. This

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KIRSTEN DANIEL AND W. S. SIEBERT

indicates that the role of employment protection in increasing age, and hence experience requirements, has now been taken over by other variables, in particular union density. Therefore, union density might indicate regulatory pressure, taking over the effect of employment protection.6 Union density is found to increase hiring standards, in favor of older and hence more experienced workers. This result is in line with Scarpetta (1996) who found union density to significantly increase the youth unemployment rate. Thus, strong unionism may make it more difficult for younger workers to be hired into the firm by causing permanent workers (insiders) to be more carefully selected. As mentioned above, strong unions are likely to play a role in promoting and enforcing labor regulation. In fact, the union density variable is significantly correlated with our employment protection index as well as the overall tax wedge (r = 0.68, p < 0.01), indicating the positive relationship between overall regulatory pressure and union density.7 In the full specifications, the average tenure variable enters significantly. However, this variable behaves in opposite directions for starting age and education. For starting age, we see a negative coefficient on average tenure. An increase in average tenure thus reduces starting age, making it easier for young workers to get hired, which is not consistent with “insiders” exercising their power by restricting entry. In the education equation, however, average tenure has the expected positive sign. An increase in insider power (indicated by an increase in average tenure) appears thus to raise education standards, and so makes it more difficult for less educated workers to be recruited. Overall, since education is substitutable for age (the coefficient on education in the starting age equation remains negative, −1.25), an increase in average tenure apparently strongly reduces starting age requirements, while raising education requirements. On this evidence, insider power acts for educated workers and young workers, but against the uneducated and the old. As for the other variables, the time trend continues to be strong for starting age, though less so for education. Thus there are forces, apart from those explicitly identified in the equation, which raise hiring standards. We identify these forces with factors such as skill-using technical progress, since they act on plants in all countries. Surprisingly, unemployment is found to be associated with a decrease in starting age (though not education). This result goes against the notion that more skilled workers will be recruited in times of high unemployment when the supply of good people is abundant. According to our results, skilled worker vacancies, which require more experience, increase in boom periods when unemployment rates are low. Hence our results point to a demand-side explanation: that it is in good times

Labor Market Regulation and Production Worker Hiring Standards

59

when firms expand capacity and invest in new machinery that the need for more experienced workers arises.

Implications It is interesting to see what the implications of our estimates are for the explanation of hiring standards. We perform this exercise in Table 8 analyzing the effects of the variables identified in the full regressions as significantly influencing hiring standards. The first line of panel A shows that between the mid-1970s and mid-1990s, taking the time trend alone, recruits’ starting age would have increased by six years for the average production worker across all plants. On a different specification (panel B), the increase would have been nine years. For education, the increase would have been one year, other things being equal (panel C). However, we identified other forces that have had a counterbalancing effect on the general upward trend in hiring standards. Taking the plants overall, the actual increase of average recruits’ starting age over this fifteen year period is 0.39 years, and the increase in education is 0.68 years. The positive effect of employment protection on recruitment standards as found in simple regressions is not supported by the multivariate analysis once other influences are held constant. However, it could be argued that union density as an indicator of regulatory pressure takes over the role of employment protection in increasing age requirements. The results suggest that the decline in union density of over 9 percentage points between the late 1970s and the early 1990s across all countries incorporated in this study, has actually helped less experienced workers by reducing age – and hence experience – requirements by over two and half years (see panel A). Results on the effect of average tenure of the workforce if interpreted as a measure of insider power, indicate that insider power favors the recruitment of more educated people, which is in accordance with our hypothesis. However, it also favors the employment of younger workers, which is against our hypothesis. Certainly it can be said that insider power worsens the position of older, less educated workers. Taken by itself, the overall increase in average tenure of the workforce between the late 1970s and early 1990s across all plants has led to the recruitment of workers who are on average three years younger and have over half a year more education (see panel B and panel C). The overall increase in education reduced age requirements by about a year, counterbalancing the upward trend in overall experience requirements (see panel A and panel B). As mentioned above, we found a strong substitutability between

60

Table 8. Coefficient (1)

Effect, (1) × (2)

Change in Variable (2) Cont. Europe

U.K.

U.S.

Cont. Europe

U.K.

U.S.

Overall

A. Summary Analysis of Changes in Recruit’s Starting Age: 1975/1979–1990/1994a Time +0.44 15 years 15 years 15 years Education −1.25 +1.13 +0.64 +0.84 Unemploymentt − 1 −0.54 +2.43 +3.04 −0.76 Union densityt − 1 +0.29 −7.06 −15.05 −5.75 Predicted change Actual change

15 years +0.68 +1.57 −9.29

+6.60 −1.41 −1.31 −2.05 +1.83 +1.67

+6.60 −0.80 −1.64 −4.36 −0.20 −0.41

+6.60 −1.05 +0.41 −1.67 +4.29 +2.51

+6.60 −0.85 −0.85 −2.69 +2.21 +0.39

B. Summary Analysis of Changes in Recruit’s Starting Age: 1975/1979–1990/1994b Time +0.60 15 years 15 years 15 years Education −1.25 +1.13 +0.64 +0.84 Unemploymentt − 1 −0.39 +2.43 +3.04 −0.76 Average tenure −0.57 +3.50 +5.60 +7.50 Predicted change Actual change

15 years +0.68 +1.57 +5.30

+9.00 −1.41 −0.95 −1.99 +4.65 +1.67

+9.00 −0.80 −1.19 −3.19 +3.82 −0.41

+9.00 −1.05 +0.30 −4.27 +3.98 +2.51

+9.00 −0.85 −0.61 −3.02 +4.52 +0.39

15 years +1.20 +5.30

+1.05 +0.62 +0.38 +2.05 +1.12

+1.05 +0.37 +0.62 +2.04 +0.64

+1.05 0 +0.82 +1.87 +0.84

+1.05 +0.44 +0.58 +2.07 +0.68

C. Summary Analysis of Changes in Recruit’s Education: 1975/1979–1990/1994 Time +0.07 15 years 15 years 15 years School leaving aget − 4 +0.37 +1.67 +1.00 0 Average tenure +0.11 +3.50 +5.60 +7.50 Predicted change Actual change a Changes b Changes

in unemploymentt − 1 and union densityt − 1 variables cover the period 1976/1979–1990/1994. in the unemploymentt − 1 variable cover the period 1976/1979–1990/1994.

KIRSTEN DANIEL AND W. S. SIEBERT

Overall

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education and experience, with one additional year of education making up for about three and a half years less experience. As can be seen in panel C, the overall increase in education can only partly be blamed on increases in the mandatory school leaving age in the European countries. Overall increases in unemployment rates in Europe further reduced experience requirements between one and one and a half years (see panel A and panel B). On the other hand, the overall reduction in unemployment rates in the U.S. led to an increase in experience requirements of less than half a year. Overall, the multivariate analysis suggests that the time trend had the strongest impact, increasing average recruits’ starting age (and hence experience) as well as average recruits’ education over the period between the mid-1970s and mid1990s. The strong time trend actually leads to an over-prediction of the change in hiring standards, especially since it is multiplied by fifteen years. The reason for this over-prediction could well be omitted variables like for example the influence of skill-biased technological change. We do not have a time series capturing the intensity of this global influence, hence caution is warranted in interpreting the time trend coefficient. As for experience requirements, this strong upward trend was counterbalanced by increased average education of new recruits, higher unemployment rates throughout Europe, an overall decline in union density and an overall increase in average tenure of the workforce. As for average education of new recruits, the general upward trend has further been increased by increases in the mandatory school leaving age throughout Europe and the overall increase in average tenure of the workforce (see panel C).

6. CONCLUSIONS The purpose of this research is to gain a greater understanding of the processes, which confront people with relatively low levels of education and experience when they are looking for jobs. Our results should be regarded as exploratory, as they are based on only 11 plants – though over twenty years. They are indicative more of a method: looking at firms’ hiring patterns. The main policy issue is whether labor market regulation improves or damages the prospects of less educated and experienced workers. Because the U.K. and the U.S. labor markets have traditionally been less regulated than markets in the continental European countries, this study takes the opportunity to consider the effect of different regulatory regimes against a common background by looking at matched plants. First, we find that our plants have, in a statistical sense, similar-strength relationships with respect to the determinants of hiring standards. The fact that

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the U.S. and U.K. have an easier regulatory environment with lighter taxes might show up, in particular, as a smaller upward time trend in starting age and education in plants in these countries. But it does not. The time trend result probably reflects the power of technical change and global competition. These forces affect manufacturing in all countries. Secondly, our variables indicating regulatory pressure are sensitive to specification. The analysis indicates that labor market regulation in general does increase hiring standards. However, our two measures of labor market regulation – the employment protection index and average tenure of the workforce interpreted as a proxy for insider power – display conflicting results. Our employment protection index tends to increase age (and experience) requirements – with union density, which can be interpreted as an indicator of regulatory pressure, taking over this effect in the multivariate analysis increasing age requirements. Thus, strong unionism makes it more difficult for younger less experienced workers to be hired into the firm. On the other hand, insider power as measured by average tenure of the workforce increases educational requirements, but reduces age requirements. One has to keep in mind that average tenure of the workforce and the employment protection index are measuring different things and are both imperfect proxies for labor market regulation. Average tenure can be increased by employment protection, but is also influenced by other factors, in particular firm specific training. Average tenure of the workforce is found to lead to the recruitment of younger more educated workers, who are presumably more likely to have the cognitive ability and willingness to receive more training, which is important in longer-term employment relationships. Therefore, insider power – as measured by average tenure of the workforce – worsens the position of older, less educated workers. We also find a strong substitutability between education and experience. This finding is plausible, since younger workers have less on-the-job training, for which they can substitute education. The implication is that education is becoming important even for access to production worker jobs in the developed world. The substitutability between education and experience, given the conflicting results on the impact of employment protection and insider power, suggests that policies to increase education and training significantly improve job opportunities for unskilled workers in any case. While the implications of specific labor market regulation such as employment protection are difficult to separate from a range of influences, the implications for education and training policies are clear, pointing to the power of education to increase job opportunities for production workers.

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To further analyze the implications of labor market regulation for hiring standards more data on the plant level are needed. In particular, given the importance of insider power as measured by average workforce tenure on hiring standards, more research is needed to further explore the determinants of tenure at the plant level.

NOTES 1. For details see Appendix, Tables A1–A4. 2. See Daniel (2001, Chap. 4), for a detailed description of the study plants. 3. There is a close correlation between the age of male recruits and their previous work experience. Since the time series on recruits’ age produces less missing observations and separate statistical analysis for age and experience produce similar results, we use the time series on recruit’s age as a proxy for previous work experience as dependent variable in the multivariate analysis. 4. The choice of the time period is basically a matter of data availability, i.e. the majority of study plants could provide personnel records covering the period 1975–1995. Since some years produce missing observations in terms of hiring characteristics, i.e. an individual plant might have no permanent hires in a particular year, Table 5 gives a general overview of trends in hiring standards by comparing five-year averages at the beginning with five-year averages at the end of the study period. 5. Note that the adjusted R2 is lower in the full regressions. The reason for the lower R2 is the number of insignificant variables, which are included for illustrative purpose. 6. Overall, multicollinearity might well be responsible for t-values becoming insignificant once other influences are held constant. This is supported by high F-values comparing the full regression with a regression leaving out the employment protection index, the tax wedge, entry pay and employment deviation. In other words, despite being separately insignificant, these variables are jointly significant. 7. However, correlation does not prove causation. According to our interpretation, it is union density positively influencing employment protection, but both in turn increase recruitment standards. Hence, employment protection is interpreted as an endogenous variable. Path analysis might be able to shed light on which causal path is most consistent with the pattern of correlations found in the data. However, path analysis would ultimately not confirm causation of variables, since it too deals with correlations.

REFERENCES Autor, D. H. (1999). Outsourcing at will: Unjust dismissal doctrine and the growth of temporary help employment. Unpublished Paper, Harvard University. Bertola, G., Boeri, T., & Cazes, S. (1999). Employment protection and labor market adjustment in OECD countries: Evolving institutions and variable enforcement. Employment and Training Papers, 48. Geneva: International Labor Office.

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Blanchard, O. J., & Summers, L. H. (1987). Hysteresis in unemployment. European Economic Review, 31, 288–295. Brodolini, F. G. (1997). Labor market studies: Italy. Luxembourg: Office for Official Publications of the European Communities. Daniel, K. (2001). Labor market regulation and employment of unskilled workers: International comparisons. Ph.D. Dissertation, The University of Birmingham. Dertouzos, J. N., Holland, E., & Ebener, P. (1988). The legal and economic consequences of wrongful termination. Rand Corporation Document R-3602-ICJ. Emerson, M. (1988). Regulation or deregulation of the labor market. European Economic Review, 32, 775–817. Ferner, A., & Hyman, R. (1992). Industrial relations in the new Europe. Oxford: Basil Blackwell. Grubb, D., & Wells, W. (1993). Employment regulation and patterns of work in EC countries. OECD Economic Studies, 21 (Winter). Heckman, J., & Pages, C. (2000). The cost of job security regulation: Evidence from Latin American labor markets. NBER Working Paper No. W7773. Cambridge, MA: National Bureau of Economic Research. Hepple, B. (1985). Security of employment. In: R. Blanpain (Ed.), Comparative Labor Law and Industrial Relations (2nd ed.). New York: Kluwer Law and Taxation Publishers. Mortensen, D. T., & Pissarides, C. A. (1999). Unemployment responses to “skill-biased” technology shocks: The role of labor market policy. The Economic Journal, 109, 242–265. Morton, J., & Siebert, W. S. (2000). Worker recruitment and retention: Plant comparisons in European multinationals. Unpublished Paper, Department of Commerce, The University of Birmingham. Nickell, S. (1997). Unemployment and labor market rigidities: Europe versus North America. Journal of Economic Perspectives, 11, 54–74. Organisation for Economic Co-operation and Development (1993). OECD Employment Outlook 1993. Paris: OECD. Organisation for Economic Co-operation and Development (1994). Jobs Study. Paris: OECD. Organisation for Economic Co-operation and Development (1999). OECD Employment Outlook 1999. Paris: OECD. Organisation for Economic Co-operation and Development (various issues). Main Economic Indicators. Paris: OECD. Organisation for Economic Co-operation and Development (various issues). National Accounts Statistics, 2. Paris: OECD. Reder, M. W. (1955). The theory of occupational wage differentials. American Economic Review, 45, 834–840. Scarpetta, S. (1996). Assessing the role of labor market policies and institutional settings on unemployment: A cross-country study. OECD Economic Studies, 26, 53–113. Siebert, H. (1997). Labor market rigidities: At the root of unemployment in Europe. Journal of Economic Perspectives, 11, 37–54. Siebert, W. S. (1999). Company recruitment policies: Implications for unskilled workers, work and opportunity series 7. York: Joseph Rowntree Foundation. UNESCO (various issues). Statistical yearbooks. Paris: United Nations Education, Scientific and Cultural Organisation. U.S. Bureau of Economic Analysis. Regional Accounts Data, http://www.bea.doc.gov U.S. Bureau of Labor Statistics. Local Area Unemployment Statistics, http://www.bls.gov U.S. Bureau of the Census (various issues). Statistical abstract of the United States: The National Data Book. Washington, DC.

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Van Ruysseveldt, J., & Visser, J. (1996). Industrial relations in Europe: Traditions and transitions. London: Sage. Waddington, J., Hoffmann, R., & Lind, J. (1997). European trade unionism in transition? A review of the issues. Transfer, 3(November), 464–497.

APPENDIX A Variable Definitions and Sources Characteristics of New Recruits The dependent variables starting age, years of prior experience and years of education are generally yearly averages of permanent males hired in that year. Only characteristics of new hires are included to avoid double counting. For Belgian pharmaceuticals and U.S. distillers permanent female new hires are included in the averages, since using male observations only produces no or too little observations for several years. Averages for Italian ice cream manufacture also include females, since in this case gender information was not available. Since the numbers of permanent male employees varies significantly from year to year, the numbers of yearly observations underlying these averages are used as weights in the Weighted Least Squares regression. Starting Pay Starting pay is defined as average basic (i.e. it does not include any shift premiums to ensure comparability) hourly starting pay of all new hires expressed in individual country’s currencies in 1975 values incorporating a scaling factor. Starting pay in plants in Italy is divided by 1000, starting pay in Belgium is divided by 100 and in the Netherlands by 10 to ensure similar mean values across countries. Tenure Average tenure is calculated from the stock of permanent employees as of the 30th of June each year. In most cases the stock contains the entire permanent workforce. In the case of U.K. pharmaceuticals and U.S. ice cream manufacture it is calculated from a sample of the permanent workforce. For U.S. ice cream manufacture the time series on average tenure starts in 1990 and for tenure below two years in 1985, since the plant only opened in 1980. Information on tenure is not available for the Italian ice cream manufacture. Employment In most cases time series on the size of the production workforce is drawn from internal plant statistics on average headcount or reports for some employee

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representative body. Where no reports are prepared for works councils or union representatives, information on the size of the production workforce is often not available over time, as is the case for all distillers’ plants and U.K. ice cream manufacture. In these cases we have collected information on the entire workforce including all employees who have already left the company, and calculated yearly employment from the data-set taking the average for the stock of employees at the beginning, middle and end of the year. For the employment deviation variable, employment is subtracted from trend employment, which is constructed as a three-year moving centered average, and expressed as percentage of deviation from trend. Employment Protection for Regular Employment The construction of the employment protection index is based on the OECD (1999) index for individual dismissal of workers with regular contracts, applying OECD weights. Table A1 presents the time series for the employment protection index. This index includes scores for procedural inconveniences (procedures and delay to start notice) notice and severance pay for no-fault individual dismissal and difficulty of dismissal (definition of unfair dismissal, trial period, compensation and reinstatement), each counting for a third (see Table A2). Scores for the individual components are mainly taken from the OECD and apply throughout the whole time period, apart for scores for trial period and compensation for unfair dismissal, which both affect the score for difficulty of dismissal (see Table A3 for the assignment of numerical scores). U.S. We calibrated the U.S. using the Rand study on termination litigation in California (Dertouzos et al., 1988). The study is the most comprehensive and covers the time of the litigation explosion (1980–1986) in the first state that introduced the implied contractual right to continued employment exception to the employment-at-will doctrine. The outcome of these early terminations should represent the extent of the threat to the employer with the least bias, i.e. before employers take evasive maneuvers limiting the risk of termination litigation. Italy. We interpret the effect of the introduction of the “contratto formazione” in Italy in 1984 as effectively raising the trial period for qualifying for unjust dismissal from 0.8 months to 24, since that is how this contract is used in practice, as trial period for permanent employment. Netherlands. No change. Belgium. Although legal compensation for unjust dismissal has been and still is six months, twelve months have been normal (individually negotiated supplements

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Table A1. Employment Protection for Permanent Employees. Year

IT

NL

BL

U.K.

U.S. Missouri

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

2.80 2.80 2.80 2.80 2.80 2.80 2.80 2.80 2.80 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30 2.30

3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08 3.08

1.43 1.43 1.43 1.43 1.43 1.43 1.43 1.43 1.43 1.43 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35

0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78

0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08

California 0.2 0.2 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08

Maryland 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08

Source: OECD (1999), Hepple (1985, p. 500), Brodolini (1997, p. 115), Autor (1999, Legal Appendix), authors’ computations.

taken into account) in Belgium, but the government has limited this possibility in 1985 (Hepple, 1985, p. 500). Therefore, we apply twelve months compensation before 1985 and eight months (six months compensation plus advance notice) from 1985 onwards as compensation for unjust dismissal in Belgium. U.K. Trial period changes from twelve to twenty four months in 1985. Regulation of Temporary Employment For the index on regulation of temporary employment we take the OECD scores for the late 1980s and the late 1990s (OECD, 1999, Table 2.3), since changes in regulation in the countries involved all took place in the early 1990s and are therefore captured by the change in the two OECD indices. Table A4 presents the time series for the index on regulation of temporary employment.

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Table A2. Employment Protection Indicators and Weighting Scheme. Level 3

Level 2

Level 1

Procedural inconveniences (1/3)

Procedures (1/2) Delay to start a notice (1/2)

Notice and severance pay for no-fault individual dismissals (1/3)

Notice period after 9 months (1/7) 4 years (1/7) 20 years (1/7) Severance pay after 9 months (4/21) 4 years (4/21) 20 years (4/21)

Difficulty of dismissal (1/3)

Definition of unfair dismissal (1/4) Trial period (1/4) Compensation (1/4) Reinstatement (1/4)

Employment protection index

Notes: Level 1 corresponds to disaggregated data, while levels 2 and 3 represent successively more aggregated indicators. The values in parentheses indicate the aggregation weights that are used in creating the next higher-level indicator. Level 1 indicators are converted into equivalently scaled cardinal measures as specified in OECD (1999, Table 2.B.1). Source: OECD (1999, Table 2.B.2).

Tax Wedge The tax wedge is defined as the total tax burden divided by GDP. Europe. The tax burden was calculated from the Accounts for General Government as published in the OECD National Accounts Statistics, Vol. 2 (several issues), Table 6, Income and Outlay Account. Included are Item 7: Indirect Taxes, Item 8: Direct Taxes and Item 12: Social Security Contributions. GDP at current prices is taken from the same source, Table 1: Item 15. U.S. state and local government total taxes are taken from revenue statistics for local and state government by state, as published in the Statistical Abstract of the United States (several issues, table numbers vary across issues), and added together with total federal income tax liability as provided directly by the Internal Revenue Service. The latter item does not contain estate and gift taxes as well as excise taxes on the federal level, which varied between 5 and 6% between 1980 and 1996 (Statistical Abstract of the United States, 1998, Table 551). We add 5.5% on the total federal income tax liability to approximate overall federal taxes.

0 Procedures

Scale 0–3

Delay to start notice Notice period after: 9 months 4 years 20 years

Days

Severance pay after: 9 months 4 years 20 years

1

2

<10

<18

3

4

5

6

<35

<45

≥45

<2 <3.5 >11

≥2 ≥3.5 <11

<3 <4 ≤18

≥3 ≥4 >18

Scale (0–3) × 2 0–2

Months

0 0 <1

Months

0 0 0

≤0.4 ≤0.75 ≤2.75

≤0.8 ≤1.25 ≤5

≤0.5 ≤0.5 ≤3

≤1 ≤1 ≤6

<26 ≤1.2 <2 ≤7

<1.6 <2.5 ≤9

≤1.75 ≤2 ≤10

≤2.5 ≤3 ≤12

Scale (0–3) × 2

Definition of unfair dismissal

Scale 0–3

Trial period

Months

≥24

>12

>9

>5

Compensation

Months

≤3

≤8

≤12

≤18

Reinstatement

Scale 0–3

>2.5 ≤24

>1.5 ≤30

<1.5 >30

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Table A3. Assignment of Numerical Scores to First-Level Employment Protection Indicators.

Scale (0–3) × 2

Source: OECD (1999, Table 2.B.1).

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Table A4. Regulation of Temporary Employment. Year

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

IT

5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8

NL

2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 1.2 1.2 1.2 1.2 1.2 1.2 1.2

BL

4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 3.7 3.7 2.8 2.8 2.8 2.8 2.8

U.K.

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

U.S. Missouri

California

Maryland

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Source: OECD (1999, Tables 2.1 and 2.3).

Gross State Product is taken from the Regional Accounts Data, as published on the World Wide Web by the Bureau of Economic Analysis, U.S. Department of Commerce. Union Density Union density is defined as trade union members as percentage of all wage and salary earners, and compiled from various sources (see Table 1). Unemployment OECD standardized unemployment rates are used for the European countries as calculated by the Statistical Office of the European Communities and published in OECD Main Economic Indicators (several issues). Unemployment rates for the

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U.S. states are taken from the Local Area Unemployment Statistics of the U.S. Bureau of Labor Statistics. School Leaving Age School leaving age is defined as the mandatory school leaving age and is taken from UNESCO Statistical Yearbooks (various issues).

CAPITAL MOBILITY AND THE SOCIAL ACCORD: A CRITICAL EXAMINATION OF THE GE COORDINATED BARGAINING COMMITTEE Frank Borgers INTRODUCTION JoAnn Wypijewski, reflecting on the experience of workers laid off from General Electric’s (GE) Bloomington, Indiana refrigerator plant, as GE announced profits of $12.7 billion, and the relocation of half the production to Celaya, Mexico, asks: What will it take to match fire with fire at GE, not just in Bloomington but everywhere? Twenty years ago, Jack Welch openly articulated a strategy for taking the company to where it is today. The GE unions never developed a parallel strategy, and 100,000 lost jobs later, most of them still haven’t shed their faith in what the AFL-CIO likes to call “high-road capitalism.” During the 2000 national contract talks, Robert Thayer, the Machinists’ representative to the CBC, was trying to convince the company to agree not to interfere in future unionization drives, arguing that a “contract is a partnership, not a hindrance.” To which the company coolly asserted, “GE has never been neutral and doesn’t intend to be neutral” (Wypijewski, 2001, p. 22).

GE has become an icon of global capital mobility and union avoidance. However, GE’s current capacities can be traced back to a long term, explicit strategy of corporate reorganization initiated in the 1940s. At that time GE was a vertically integrated manufacturing conglomerate, based in a series of huge, northern U.S. plants, organized at extremely high density by the left and militant UE. In the Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 73–114 © 2003 Published by Elsevier Science Ltd. ISSN: 0742-6186/PII: S0742618603120045

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sixty years since, GE has transformed itself into a networked and globalized conglomerate, whose manufacturing capacity has been relocated endlessly, first into smaller U.S. greenfield sites and then increasingly overseas, decimating U.S. union density, and replacing UE with a patchwork of AFL-CIO affiliates that have embraced a far more conservative and limited vision of unionism. U.S. labor has been unable to halt this transformation. This paper uses the Coordinated Bargaining Committee (CBC), formed by GE unions in the mid-sixties to coordinate their bargaining with GE, as a lens to critically examine labor’s response to GE’s transformation. This paper argues that the CBC’s inability to significantly raise the costs of, let alone halt, GE’s rampant global capital mobility is largely attributable to a failure of strategy. This failure can, in turn, be traced to the limitations of the post war labor-management accord and U.S. labor’s continued confinement within the narrow parameters of business unionism. Examining the CBC’s response to GE’s transformation therefore reveals the broader political-economic and institutional challenges of global capital mobility facing U.S. labor. The paper briefly outlines the origins and early victory of the CBC, the post-1970 evolution of bargaining at GE, and concludes with a critical examination of the limitations of the CBC and some suggestions for alternate directions.

BOULWARISM AND THE CBC The corporate reorganization of GE and its strategic use of capital mobility, which have evolved into today’s globalized form, can be traced back to UE’s nationwide strike of GE in 1946. This strike was seen as a self-acknowledged debacle by GE management and produced three interrelated shifts in corporate strategy:

The Development of Boulwarism as a Bargaining Technique Named after Lemuel Boulware, Vice President of Relations Services after 1946, Boulwarism relied on a three pronged bargaining approach that departed radically from both GE and standard NLRA practices. In the words of GE: First, General Electric strives to determine, and to put into place voluntarily all that is warranted in the way of wage and benefit adjustments for all employees. Second, General Electric tries to give individual attention to employees’ desires and problems in the day-to-day relationship between each employee and his supervisor. Third, the company tries to back up its performance by communicating fully to employees, throughout the year, on all matters which affect their relationship with the company (GE).

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Fig. 1. Geographic Dispersal of GE Factories, 1892–1961. Source: Downing, 1967, p. 166.

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From labor’s perspective, the crucial difference between Boulwarism and regular NLRA bargaining was that it completely bypassed traditional union bargaining structures. GE engaged in extensive direct communication with members, around union representatives, over terms and conditions with the goal of “enabling employees to appraise the soundness and fairness of management actions in its negotiations with union representatives” (GE, 1967, p. 1). GE’s negotiators considered their first offer as their final offer and thereby bypassed the “ask and bid” process of traditional bargaining. While GE was, according to its spokespeople, willing to rearrange its package, it would not alter the size of its package, except in the face of “new” and “relevant” information (GE). Finally, GE’s opening bid was offered, almost simultaneously, to all of its unions, thus sending the strong message that, regardless of union, GE workers would confront substantially the same management defined “firm and fair” offer (Cohen, 1973).

Wholesale Corporate Reorganization GE started relocating productive capacity away from the large, heavily unionized northeastern plants into smaller, non-union, greenfield facilities (Schatz, 1983). GE also expanded into new, non-union, and increasingly white collar sectors. By the mid-sixties, less than half of GE’s employees belonged to unions and its highgrowth divisions were completely non-union.

Exploitation of Cold War Divisions within the Labor Movement While various CIO affiliates had started raiding UE-GE shops in the mid-1940s, raiding escalated dramatically after the UE was expelled from the CIO in 1949 for alleged Communist domination (Schatz, 1983). The IUE, formed by anti-Communist former UE leadership to undermine the UE’s position at GE, and backed by the CIO, launched an all-out offensive that was aided and abetted by GE’s simultaneous attack on UE (United Electrical Workers, 2000). By 1954 IUE had replaced UE as the primary union at GE, and UE’s membership had been more than halved. By the mid-sixties GE had bargaining relationships with over 180 GE locals, covered by 14 different internationals, and all but three of GE’s labor contracts (IUE, UE, and the Pattern Makers’ League of North America) were local (Cohen, 1973; Schatz, 1983). In short, by the mid-sixties, the structure of unionism at GE had been transformed into multiple, mostly local contracts, bargained in an uncoordinated

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manner, and where cross plant solidarity was riven by long-standing and intense political and organizational rivalry and division. Boulwarism’s exploitation of the disjuncture between GE’s singular, unified position on the one hand, and its unions’ divided and uncoordinated position on the other, created a deeply-lopsided bargaining relationship (Cohen, 1973; Filipelli & McColloch, 1995; Matles & Higgins, 1995; Northrup, 1964; Schatz, 1983). The CBC was explicitly formed to counter Boulwarism and its exploitation of inter-union divisions which led to the lead IUE-GE contracts between 1948 and 1966 being concluded “on substantially the terms of the company’s first offers” (Cullen, 1965, p. 24). The real breaking point occurred during the 1960 bargaining round. The company-wide strike called by the IUE was broken after three weeks, with the union signing a contract strictly on the company’s pre-strike terms, in what the New York Times regarded as “the worst setback any union has received in a nationwide strike since World War II” (Cohen, 1973, p. 94). The strike made clear to GE unions that their string of bargaining failures “were at least as much of their own making as that of GE’s labor policy” (Kuhn, 1971). GE’s unions, led by IUE, determined to mount a concerted legal and organizational challenge to Boulwarism (Northrup, 1964). The CBC at GE was formed in 1965–1966 under the auspices of the AFL-CIO, with strategy developed by the Industrial Union Department, and with the executive committee chaired by AFL-CIO President, George Meany himself. The AFL-CIO’s high level involvement was prompted by deep concern about the impact of another Boulwaristic defeat on the whole labor movement. The rest of the committee was comprised of the union presidents of six of the AFL-CIO GE unions: the IUE, the Machinists (IAM), the Autoworkers (UAW), the International Brotherhood of Electrical Workers (IBEW), the Allied Industrial Workers (AIW), and the American Federation of Technical Engineers (AFTE). The second largest union at GE – the unaffiliated and left UE – was excluded from the CBC until 1969 (Cohen, 1973). The executive committee’s role was to coordinate between the internationals so as to create a set of national contracts and avoid local bargaining. A Steering Committee was formed to perform the administrative functions. Members of the Steering Committee were each appointed as chairmen of one of five subcommittees whose role was to prepare detailed, common bargaining proposals and develop strategy for the upcoming negotiations.1 The CBC also developed an elaborate communication system based on teletypes. Seventeen regional coordinators were appointed to work on a full-time basis and were linked to coordinating headquarters in Washington and to key national negotiation centers in New York (for GE) and Pittsburgh (for Westinghouse).

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FRANK BORGERS Thus, all bargaining developments, company statements and local union actions were transmitted daily by the coordinators to Washington, then condensed and disseminated back to the locals through their regional coordinators. Through this elaborate medium every bargaining committee going into negotiations with GE knew what had happened at every other GE negotiations table the day before (Cohen, 1973, p. 121).

The CBC attempted to counter GE’s tremendous PR and back-to-work capacities by developing a countervailing communication and mobilization capacity. The two mechanisms developed were: (1) Unity – a joint monthly publication, whose purpose was to “denounce GE’s ‘Boulwarism’ and to criticize or argue with the companies’ positions” as well as “spread the idea of the new coordinated bargaining approach”; and (2) local and regional inter-union unity meetings with the rank-andfile to “explain and advance the agreed joint collective bargaining program . . . and to obtain full support at the grass-roots level” (Cohen, 1973, p. 123). The CBC was first used during the 1966 bargaining round, where despite legal and procedural objections by GE, the CBC deployed its “mixed bargaining committee.”2 The IUE negotiating team was comprised of representatives of all the CBC unions. Each representative would wear a lapel button identifying his respective union. The IUE argued that all of the individuals present had been chosen to render advice and help in the discussions confined to IUE matters, and were actually non-voting members of the IUE negotiating committee. The IUE further emphasized its legal right to choose its own representatives to the bargaining table (Cohen, 1973). While in 1966 the CBC came to the brink of declaring a national strike, it retreated in the face of President Lyndon B. Johnson’s threatened TaftHartley injunction. Believing that an 80-day injunction would have destroyed any semblance of unity across the CBC, the unions capitulated and accepted GE’s last offer (Cohen, 1973). The CBC met with far greater success in the next bargaining round in 1969. Three factors were decisive: (1) CBC coordination was extended to non-AFL-CIO GE unions, and most crucially, the UE. UE appeared at their bargaining table with representatives from the IUE, UAW and Teamsters, with these unions often making up half the UE negotiating team. While UE was never granted a position on the IUE-CBC committee, its coordination with the CBC meant that “although GE still technically negotiated with some “100-odd” unions, it found itself dealing actually with one big union, that is, the CBC” (Cohen, 1973, p. 258). Business Week, pointing to labor’s united front, spoke of the impending bargaining round as “Boulwarism vs. Boulwarism” (Business Week, 1969, p. 48). (2) The CBC launched an extremely aggressive and militant mobilization, whose urgency was well captured by Meany: “This is more than another big strike. It

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is a strike that involves the future of collective bargaining, not only in GE, not only in the electrical industry, but everywhere in America” (AFL-CIO, 1969a, p. 1). The AFL-CIO backed its rhetoric by organizing a nationwide boycott of all GE products, a national fund-raising campaign for strike support, and the organization of strike support rallies in 23 major cities across the country (AFL-CIO, 1969b). (3) In ironic political contrast to Democratic President Johnson’s threatened anti-strike injunction three years earlier, Republican President Nixon adopted a “hands-off” policy in the dispute (Cohen, 1973). Following a three month national strike, GE settled its national contracts on terms very different from its opening offer. Business Week, noted that “not in two decades has GE altered initial proposals to its unions as much as it has this time” (Business Week, 1970, pp. 28–29). Cohen saw GE’s defeat as a “debacle” on the scale of UE’s 1946 strike victory, and predicted a comparable reorientation of corporate strategy. (I)nasmuch as the 1946 work stoppage “shocked” the Company and caused it to develop a new labor and union policy, the 1969–1970 round with the coordinated bargaining alliance should necessitate an equal self-reappraisal and change. Some union officials contended in private that such a reappraisal had already been made by GE and that they anticipated some fundamental changes in future union-management relations there (Cohen, 1973, p. 273).

At the level of institutional bargaining Cohen’s optimistic conclusion rings true. The 1969–1970 bargaining round had, as Business Week pointed out, pitted corporate vs. labor Boulwarism and the unions had decisively won the battle. The CBC and its non-AFL-CIO allies had moved GE significantly beyond its initial offer, and the CBC unions were able to maintain and even expand these economic gains in post-1970 bargaining. Most significantly, the CBC had broken GE’s ability to sow dissent and division across GE’s dispersed and decentralized plant level bargaining structure and labor appeared to have buried the divisive specter of Boulwarism. The CBC had built a well resourced organizational mechanism capable of centralizing and coordinating union demands across this large and complex corporate network. The CBC had made a concerted effort to maintain peak unity and local discipline, and had mobilized the rank-and-file and broader labor movement by framing the conflict within a broad rhetoric that cast the strike as a conflict over the fundamental right to bargain in good faith. In the process, the CBC broke new and challenging legal and organizational ground, revealing a radically different form of NLRA bargaining that held great promise for union coordination in other industries. However, the prediction that labor’s victory would lead to “fundamental changes” in GE labor policies was, at least from a broader perspective, seriously

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misplaced. Boulwarism had been only one face of GE’s response to its defeat by UE in 1946. The other face of this response was GE’s wholesale corporate reorganization, and more specifically, the decentralization and deunionization of GE’s productive capacity. While the CBC was able to exert significant economic pressure on GE’s electrical divisions, the larger company had slipped below fifty percent density, and entire key divisions were completely union free. Consequently, despite the CBC’s increasing unity at the bargaining table, the structural foundations of its leverage were already badly eroded. In terms of the deeper balance of power between GE and its unions, it becomes much harder to conclude that the CBC won a unanimous and permanent victory. Indeed, when the trajectory of post-1970 labor-management relations at GE are examined, the limitations of the CBC’s victory and indeed its self-conception become increasingly apparent.

CORPORATE REORGANIZATION AND LABOR RELATIONS AT GE POST 1970 In the wake of its 1970 victory, the CBC faced the economic downturn of the 1970s, followed by the full scale recession and rightward political shift of the 1980s, and the ascension of Jack Welch to Chairman of GE in 1981. The electrical industry, bolstered by the continued strength of defense contracts fed by the Vietnam war, actually survived the 1970–1971 recession relatively intact. However, the 1974–1975 recession, the abrupt halt in the war economy, and the rise in “foreign competition,” hit the electrical industry hard, with a rapid rise in plant shutdowns and layoffs. UE was particularly impacted, losing some dozen shops just in 1974, and seeing membership decline at the GE Ashland plant from 2,200 in 1965 to 700 in 1975, losing some 1,600 positions at GE Erie, and the threat of closure at the GE Allentown plant (Filipelli & McColloch, 1995). It is important to note that, while GE became an expert at raising the specter of foreign competition, such claims were belied by GE’s market position and financial leverage which made it a market leader, forcing entire industries to follow its downward squeezing of labor through capital mobility and work intensification.3 These efforts were raised to an even higher level with the promotion of Jack Welch to CEO of GE in 1981. The business press greeted Jack Welch’s ascendancy with adulation. Welch’s chairmanship was seen as a signal that GE would intensify diversification and investment into high growth non-union niches (Hayes, 1980a, b). Welch had a well deserved reputation as an aggressive manager, with one former colleague describing him as a “one-man engineering operation . . . .

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If things weren’t moving fast enough for him, he moved them” (Hayes, 1980b, p. 1). Despite these ominous signs, the IUE-CBC leadership welcomed GE’s new chair. IUE President David Fitzmaurice claimed Welch, “wants to get along with unions.” Business analysts provided a more sophisticated, but troubling analysis. According to Business Week, Welch’s purpose was to create “a sense of ownership” in workers that would “enhance their willingness to be productive – for instance, by changing work rules either formally or informally . . . GE intends to automate rapidly and shift more jobs overseas. All of this will be easier if workers feel they are treated fairly” (Business Week, 1982, p. 29, emphasis added). Welch’s arrival did indeed signal dramatic change at GE. Within two years the new Chairman had dismantled GE’s respected central planning department, and had transferred strategic responsibility and operational freedom to GE’s divisional heads. His “only” mandate to the new operational power-brokers was that each division had to become first or second in its respective industry, or get out. This restructuring led to a massive corporate shedding of productive capital as profitable, but “under-performing” capacity was sold off or sub-contracted. By 1985 Welch had reduced GE’s pay-roll from 440,000 employees to 340,000, and by 1998, even after huge growth and multiple acquisitions, GE’s head-count stood at 293,000 employees. As the Journal of Business Strategy pointed out, “(n)o-one can say he didn’t earn the nickname ‘Neutron Jack’ ” (Goett, 1999). The heightened intensity of global capital restructuring under Welch unleashed an assault on GE’s older and most heavily unionized U.S. facilities. In 1980, the Niles, Ohio plant was shut down, with the work moved to Brazil, and half the jobs at the Decatur, Indiana facility were transferred to Juarez, Mexico. In 1981 GE closed its Ontario, California plant, laying off a thousand workers, mostly women. The destruction of UE was not confined to GE’s older plants. In June 1984 GE announced the closing of its 450 worker facility in Charleston, South Carolina. The plant had opened in 1969 and had been organized at great cost to UE in 1975. UE developed a conversion plan for the plant, proposing 11 alternate products and a marketing strategy. However, as Business Week, pointed out, the plan faced “the daunting task of influencing companies determined to maintain management prerogatives” (Business Week, 1984b, p. 70). In what would become a predictable pattern, GE outright rejected the plan, shut down the plant a year later, and shipped the work to its new non-union plant in Taiwan. Likewise, in 1987, despite a vigorous anti-shutdown campaign by UE, the Decatur plant was fully shuttered and the remaining work was moved to Juarez, Mexico (Filipelli & McColloch, 1995). The wholesale oversees shift of productive capacity continued through the late 1980s and 1990s. A sampling of the more prominent plant closures and downsizing in the 1980s and 1990s includes the following.

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In 1987, GE announced a massive round of layoffs in Massachusetts at plants in Pittsfield, Lynn and Everett, and a complete shutdown of the Medford facility. The job loss would total about 3,500 workers (PR Newswire, 1987).
In 1993, GE announced it would transfer 525 jobs from its Erie, Pennsylvania Motors plant, represented by UE, to sister GE plants in Alabama and Ontario (Journal of Commerce, 1993).
From 1987 to 1994, GE reduced its heavily unionized aircraft engine workforce in Evendale, Ohio, from about 19,000 workers, to about 8,000 (Hartford Courant, 1994). Then, in 1994, 353 aircraft engine workers represented by the United Auto Workers, received layoff notices. Five years later, despite substantial work-rule concessions, GE announced further layoffs at the engine plant. While GE predictably blamed macro-economic factors, UAW officials accused GE of simply shipping the work to two Mexican Maquilas (Associated Press, 1999).
In 1998, IUE calculated that almost 3,000 jobs were at risk within IUE alone, due to announced layoffs and plant closings by GE (IUE News, March–April 1998).
In 1999, GE threatened to move all or part of the work at its 3,100 worker Bloomington, Indiana and its 1,500 Louisville, Kentucky refrigerator plants to Mexico. GE ultimately decided to target the Bloomington plant and over the next two years transferred some 1400 jobs to its new refrigerator facility in Celaya, Mexico (Carey, 2001; Schoch, 1999). The 1999–2000 events at GE’s refrigerator plant in Bloomington, Indiana illustrate GE’s deployment of its tremendous whip-sawing power against workers, locals, and communities. After making its lay-off announcements, GE was contractually compelled to bargain with the IBEW local at the plant for 45 days. However, these negotiations consisted of GE’s requesting that the local come up with $65–$95 million in savings. The absurdity of this request can be measured against the size of the plant’s payroll, which stood at $142 million, or against the fact that GE was asking the local to agree to annual pay reductions of about $21,000 to $30,600 per worker (Koenig, 1999). The “problem” was defined by GE as the huge wage discrepancy between Indiana and Celaya. “With benefits, hourly workers there (in Bloomington) make about $28 per hour, compared with about $2 in Mexico. Annual operating costs in Bloomington are about $80 million more than they would be in Mexico” (Schoch, 1999). GE also reminded the Bloomington community that the IBEW local was competing against the IUE Local at the Louisville Kentucky refrigerator plant for the retention of existing jobs and the potential of $100 million in new investment. GE spokesperson Terry Dunn pointed out that no decision had been made in either city. GE could move some, all or none of the production to Mexico. Dunn said:

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‘We need partners to help close the competitive cost gap so we can win the investment for Bloomington. We think we can, but we need some help,’ he said, referring to government and union officials, and local suppliers . . . ‘Louisville union leaders have been much more aggressive, putting together a job preservation committee months ago to develop cost-saving proposals with GE. The Bloomington local has not made a similar effort,’ Dunn contended. ‘The local in Louisville clearly saw that Rome was burning, and they’ve been working for months to put out the fire. Rome still is burning in Bloomington, and we see no fire hoses’ (Schoch, 1999).

Ultimately, after months of fruitless “negotiations,” and savings proposals by the local and the community, GE announced that these hadn’t met GE’s needs and that they would have to lay-off 1,400 workers over the next two years (Carey, 2000). Welch also used GE’s tremendous power as a buyer to exert leverage on the rings of suppliers it had created through outsourcing. Business Week, referring to Welch’s mantra “squeeze the lemon” (i.e. wring out costs) noted that in 1999 “the lemon-squeezing at GE has been as never before.” Business Week had uncovered an internal report from GE Aircraft Engines (GEAE), describing one of GEAE’s suppliers meetings where suppliers had been told they needed to cut costs up to 14%. GEAE indicated that the only way to achieve these new cost-reduction targets was for suppliers to relocate their manufacturing facilities to Mexico. According to the report, “GE set the tone early and succinctly: ‘Migrate or be out of business; not a matter of if, just when. This is not a seminar just to provide information. We expect you to move and move quickly” (Bernstein, 1999, p. 74). Welch simultaneously intensified GE’s already formidable and market leading productivity and efficiency drives. Building on the “successes” of work intensification in the 1970s, Welch embarked on an ambitious campaign to drive productivity of GE’s remaining manufacturing capacity even higher in the 1980s and 1990s. Welch’s first initiative was the “Work-Out” program, launched in 1989. Work-Out built on top of GE’s “quality circles” of the late 1970s, but injected them with the intensity and top-to-bottom application that would mark every Welch innovation. The next evolution was the adoption of Six Sigma in 1995. Six Sigma was essentially a variant of Total Quality Management (TQM), whose goal was to reduce manufacturing and service operation defects. According to Welch, GE had invested over a billion dollars in Six Sigma by the end of 1998 but had reaped over one and three-quarters of a billion dollars in savings. Six Sigma differed from TQM implementation elsewhere in that Welch had the capacity to implement the program throughout GE’s corporate structure, and to integrate it within his broader reorganization strategy known as “Boundarylessness” (Goett, 1999). Six Sigma, like “partnership” programs throughout the US, was sold to GE’s unions and workers with promises of greater job security, improved working conditions, greater shop-floor autonomy, variety and control, and even the

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elimination of formal supervision. While the resultant work rule concessions were often highly unpopular within locals, they were imposed by GE using the stick and carrot of capital mobility. Locals that resisted were warned of layoffs and plant closings and locals that were wavering were promised new investment. In 1984, IUE Local 201, representing workers at GE’s huge aircraft engine facility in Lynn, Massachusetts, was confronted with this dilemma. GE proposed the construction of a new $52 million flexible machining center in Lynn that would be a state of the art “factory of the future.” The plant was predicted to employ some 140 skilled workers once completed and would “make Lynn a showplace for American ingenuity and productivity and will enable (GE) to maintain our leadership position in the industry” (Business Wire, 1984). As part of the deal, GE also agreed to maintain the current number of jobs in plants in the Lynn area for at least a year, and held out the promise to spend $450 million to add capacity and modernize other area plants over the next six years. The catch was that the Local would have to agree to fundamental work-rule changes at the new facility, including: a shift to seven 12-hour shifts every 14 days, with four hours of overtime pay each shift; consolidation of job classifications from the more typical 25 categories into three, with workers doing tasks that previously were spread across as many as 12 job classifications; and, for the first time in any IUE contract with GE, the union would have to let GE unilaterally set production goals (Business Wire, 1984). GE made the costs of local union resistance to work-rule changes quite clear. GE vice president James Krebs, pointed out that “(i)f people didn’t want it here, we would build it elsewhere . . . this wasn’t a threat, that was just the way things stood . . . If they were hostile to high-tech, if they were looking for problems, it wouldn’t be worth it. We were up front about that.” Not surprisingly, members accepted the agreement by a majority of nearly three to one. IUE 201’s Business Manager was emphatic that members had not seen this as “caving in to a take-it-or-leave-it ultimatum by the company.” However, the Local’s President acknowledged that without the concessions “(t)hey absolutely, positively would not have built that plant here” (Behr, 1984, D1). The decision created intense internal division within the local. The steward’s council rejected the agreement 63–30, and the Local’s Vice-President declared, “The final settlement stinks. It is clearly a deskilling of the work force.” The Vice President also indicated that the leadership at UE Local 506 at GE’s Erie locomotive factory was “upset.” While UE officials refused to go on record, a business agent for Machinists Local 912, at GE’s aircraft engine plant in Evendale, Ohio argued that “(i)t’s blackmail: ‘We’ll build a plant here if you’ll give us what we want’ ” (Business Week, 1984a, p. 43). Sixteen years later, it seems clear that the Local’s contractual concessions did not achieve their goal of job security. Less than three years after signing off on the new work rules, GE announced a massive round of layoffs throughout Massachusetts,

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including at the Lynn plant. Local 201’s membership has declined from 8,000 members in 1984 to around 2,700 members today. Local leaders might respond that work-rule concessions did slow the loss of membership. If they had said no in 1984, GE would have invested its new capital elsewhere and probably targeted Lynn even more aggressively in future downsizing. While no doubt true, the larger truth is that Local 201, like all the other GE locals and communities have been powerless to resist GE’s concessionary demands. Stretched out and isolated along GE’s network, locals and communities have repeatedly been faced with the “choice” of concession vs. loss of capital investment. The larger problem is that the CBC never developed a concerted and coordinated position on corporate reorganization, capital mobility, or work reorganization, leaving locals to fend for themselves against GE.

CBC BARGAINING POST 1970 In contrast to the tumultuous economic and corporate environment confronting the GE CBC post 1970, a review of the subsequent bargaining rounds reveals a pattern of astonishing placidity. Bargaining has proceeded in a ritualistic, predictable manner, with an almost surreal disconnect between bargaining dynamics and the rampant deunionization surrounding the negotiators. Negotiations had taken around seven months to settle in 1966 and over eight months in 1969–1970. In contrast, start to finish negotiations dwindled in length from a little less than four months in 1976, to around two months in 1979, 1982, and 1985, and a month or less in every bargaining round since.4 Most significantly, the CBC has not seriously raised the threat of a national strike against GE since 1970. While 1973 marked the zenith of CBC unity and, despite a few cracks in the CBC’s upper structure, post-1970 unity has been remarkably solid and has certainly not witnessed a return to the cold war dissension of the first post-war decades. The all out assault on labor after 1972 drove the CBC coalition even closer together, as “old animosities seemed less important at a time when unions of all persuasions were fighting for survival” (Filipelli & McColloch, 1995, p. 182). In 1971, in a historic step, UE President Albert Fitzgerald and IUE President Paul Jennings addressed one another’s Executive Boards’, with Fitzgerald urging “reunification of all the workers in our industry so that we’re all again under the banner of one union.” While UE and IUE have never seriously considered merging, the UE did sign formal no raiding agreements with the Steelworkers and IUE (International Union of Electrical Workers, 1971). This unusual degree of coordination and cooperation has brought GE’s unions significant material gains at the bargaining table (see Table 1). The IUE-CBC

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Table 1. Major GE-IUE-CBC Contract Terms, 1976–2000.a Negotiation Year

Wages and Benefits

Job and Income Security Provisions

Pension Provisions

1976

Wage increases of $1.10 an hour, or 22%, plus additional 5 cents to 50 cents for skilled workers. Improved COLA capped at 7%, but increments reactivated if CPI rises by 9% or more annually. Wage increases of 84¢ per hour over three years which, when combined with Improved COLA, produce wage and benefit increases below 23% over three years. Dental plan for the first time at GE. Two wage increases of three percent each in 1983, and 1984, plus improved COLA for 1983 and 1984. Wage and benefit increase of 28% over three years, assuming 7% annual inflation.

Company blocked demand for union shop and retirement after 30 years’ service regardless of age.

Increased (unspecified) minimum pension rates, unemployment pay, and insurance benefits.

Company blocked demand for neutrality pledge in union organizing and for various penalties or benefits to raise the cost of shutting down plants. GE conceded “maintenance of membership” clause.

Full pensions at age 60, down from 62, and minimum monthly pensions up 25% from the previous range. GE agreed to reduce workers’ contributions to the pension plan. Pension guarantees, floors for employee pension contributions, supplemental payments, and medical coverage for retirees raised.

1979

1982

1985

Increased pension benefits for normal retirement. Improved and expanded medical care plan.

FRANK BORGERS

Three percent first year pay bonus and two annual 3% wage increases, plus immediate decompression increases of 1 cent to 35 cents per hour for higher paid workers. Improved COLA. New vision care program and expanded medical coverage.

Six months’ advance notice of plant closings and work transfers. Scaled (by years of service and age) lump sum payments/annual income option for employees affected by plant closings. New re-employment assistance program providing counseling, job placement and up to $1800 for education and training. Hourly production employees whose jobs are eliminated by work transfer/automation and moved to lower rated job guaranteed former pay rate for 26 weeks. Agency shop. Preferential hiring rights at other plants for workers hurt by shutdowns; $5,000 retirement bonus for eligible workers impacted by automation; expansion of existing provisions, including definitions, entitlements, training allowance, etc. Improved early retirement, with the regular supplement increased and years of service cap removed and an additional special pension supplement, of $200 per month until age 62 for workers with 25 or more years service who retire at age 60.

Immediate wage increase of 2.5% and two further 1.5% wage increases, plus two special cash payments ($165 and $900), plus five COLA adjustments, over term of contract. Expanded medical and dental insurance. Pre-tax set aside for employee benefit contributions.

Early retirement options for employees affected by job loss, and nationwide preferential hiring. One-time “early retirement window” for employees at locations with layoffs. Retirement bonus payment raised and expanded to include discontinuation of a product line. Retraining assistance for those affected by plant closings and annual maximum benefit for all training and education under GE’s Individual Development Program raised were increased.

1991

Three general wage increases (3.5%, 2.25%, 2.25%), five improved formula COLA adjustments, and first year increase for higher rates in pay structures – expected to raise the pay of the average GE worker by 13.5% over contract. Moderate increases in employee medical care cost sharing, with somewhat expanded services and opportunity to purchase long-term care insurance. Three general wage increases (3.5%, 2.5%, 2.5%), six COLA adjustments, and first-year increase that applies to higher rates in pay structures expected to raise the pay of the average GE worker by 13% over contract. Moderate increases in employee medical care cost sharing, with somewhat expanded services.

Renewal of early retirement option and new plant closing pension option. Various preferential hiring arrangements at other GE locations, increased tuition refunds for outside coursework. New provision requires GE to discuss with union before making subcontracting decisions.

1994

Renewal of early retirement and plant closing pension options. New supplemental benefit for long-service employees affected by job loss and weekly supplementary layoff payments increased. Improvements in preferential hiring, including increased payments for employees who transfer to other GE locations. Retraining and education benefit increases.

Floors for employee pension contributions, for retirees raised, quicker vesting of pension rights, new interest-bearing personal pension accounts, and higher supplement payments for longer service employees who retire early. Guaranteed pensions increased twice. Special early retirement opportunity renewed. Increases in guaranteed and regular pension formulas, higher supplements, updates in benefits for past service and other enhancements. Agreement increases regular supplements paid to those who retire before age 62 and raises the special retirement supplement for long-service employees.

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1988

Increases in guaranteed and regular pension formulas, higher supplements, updates in benefits for past service, and other enhancements.

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Table 1. (Continued ) Wages and Benefits

Job and Income Security Provisions

Pension Provisions

1997

Three general wage increases (3.75%, 2.5%, 2.5%), six COLA adjustments, and first-year increase that applies to higher rates in pay structuresexpected to raise the pay of the average GE worker by 13% over contract. Somewhat expanded medical benefits.

Guaranteed and regular pension benefits and regular and special pension supplements increased.

2000

Three general wage increases (4.0%, 3.0%, 2.5%), six COLA adjustments, and first-year increase that applies to higher rates in pay structuresexpected to raise the pay of the average GE worker by 14% over contract. Somewhat expanded medical benefits.

GE locations with ≥100 employees will form Job Preservation Steering Committees to study technology, workflow and work practices and recommend changes in training and production methods to ensure maximum productivity and efficiency. Notice and local decision bargaining on sub-contracting and similar actions. Jobs preserved through the decision bargaining process will be protected for two years or until the end of the contract. Improved company-wide Preferential Placement System and retraining opportunities for employees. Plant Closing Pension Option and Early Retirement Option renewed and expanded. Early-retirement options for employees with 30 or more years of service affected by business changes. GE’s early retirement options renewed and enhanced. New joint company-union leadership meetings will be held at businesses to review opportunities to protect jobs. Job Preservation Steering Committees will be formed at more sites to discuss training needs and work practices. Expanded Preferential Placement and funds for education and training. Expanded opportunities for early retirement with retiring workers being replaced one for one. The pool of eligible replacements was enlarged to include new hires.

a Source

of above contract summary data are PR newswire releases.

Increases in pension tables, formulas and supplements while reducing employee contributions, updating for long-service employees, increasing the Guaranteed Pension table and Regular Pension formula, increasing supplements and enhancing survivor benefits.

FRANK BORGERS

Negotiation Year

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was consistently able to secure wage and benefit increases from 1976 through 2000. This is of wider significance given that the GE contract was the pattern setter for the wider electronics industry and was crucial to the CBC’s efforts to bring reluctant competitors, in particular Westinghouse, in under the pattern. Most significantly, the CBC was able to establish a fairly generous cost of living adjustment (COLA) formula in the early seventies. In contrast to many industrial unions, the CBC was able to carry its wage and COLA improvements through the concessionary bargaining climate of the 1980s and 1990s (Voos, 1994). The CBC also moved slowly toward its long term goal of establishing union shops throughout GE, a bargaining demand that had always been vigorously rejected by management. In 1979 the CBC won a maintenance of membership clause, and in 1985 an agency shop clause. While this language ultimately did nothing to stem the loss of union jobs at GE, New York Times Labor Editor, A. H. Raskin proclaimed this “An Industrial Breakthrough,” noting the significance of this gain during a “period of open war on unions by much of American management” (Raskin, 1985, p. 27). The remainder of the job and income security provisions won by the CBC have primarily focused on retraining, and in particular early retirement language that was put in place in the 1980s and subsequently strengthened. Likewise, pension provisions have gradually but consistently been improved throughout the period, while also bringing down the age of pension eligibility. Today it is possible for GE employees to retire with full pension benefits at 60 or with various retirement options after 30 years employment. Consequently, it has become increasingly attractive for senior workers to retire out of GE, allowing the partial absorption of workforce reduction through early retirements. In contrast, throughout the 1980s, GE refused IUE-CBC demands for a neutrality clause and any language that would interfere with or raise the costs of corporate reorganization. It was not until the nineties that GE conceded slightly on these issues, and even then the resulting language barely interfered with management prerogatives. For example, the 1991 contract contained a provision requiring management to discuss subcontracting decisions with the union before implementing, but didn’t actually restrain GE’s power to implement on their initial terms. While the 1997 contract expanded this language to give IUE restricted bargaining rights over sub-contracting, these terms still fall far short of the employment level guarantees patterned on the UAW-big three contracts that the IUE-CBC was demanding. Likewise, the 1997 contract put in place “Job Preservation Committees” at plants with over 100 workers “to study technology, work flow and work practices and recommend changes in training and production methods to ensure maximum productivity and efficiency” (Lewis & McCabe, 1997). These provisions were expanded and further joint committees were established under

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the 2000 contract. However, as GE workers have learnt through bitter experience, and as argued in Working Smart (Labor Notes, 1994), union participation in joint committees and embrace of management oriented productivity and efficiency language has rarely produced sustained job growth or increased job security. While these contract improvements may have provided a little leverage at the local level, their inadequacy is painfully obvious when placed against the backdrop of GE’s untrammeled capital mobility and reorganization and its extraordinary destruction of union jobs during this period.

THE CBC AND THE CORPORATE REORGANIZATION OF GE Despite the CBC’s impressive achievements at the bargaining table and in building peak coordination and unity, the CBC unions have been unable to halt or even slow GE’s corporate reorganization, post 1970. GE’s capital mobility strategy has intensified and evolved from domestic-regional relocation, to encompass international mobility, domestic and international sub-contracting, and under Welch’s tenure, the explicit use of capital mobility as bargaining leverage against its domestic and overseas unions. During the nineties, GE reduced its global employment from 373,000 to 210,000 employees, while driving the ratio of U.S. to non-U.S. employees from more than four to one to under one to one5 (Meyer, 2001). Consequently, Fortune Magazine was able to declare that the “globalization of General Electric may be the greatest legacy of Jack Welch’s nineteen years as CEO” (Fortune Magazine, September 27, 1999). In order to debate union strategy, we must look beyond GE’s awesome powers and evaluate, critically and honestly, the failings of labor’s response. Such an analysis reveals the organizational and political-economic challenges confronting union efforts to halt, slow, or steer the global mobility of U.S. manufacturing capital. This final section highlights the CBC’s limitations in order to understand why its victory against Boulwarism in 1969–1970 was swallowed by labor’s larger defeat at the hands of GE’s radical corporate reorganization. The history of the CBC reveals that the AFL-CIO and CBC unions utterly failed to confront the deeper significance of GE’s corporate restructuring post 1946. The roots of this failure extend beyond a lack of union resolve. The central weakness of the CBC was that, while it created the embryo of a potentially radical bargaining strategy for dealing with networked corporations, its organizational structure and agenda remained locked within the narrow parameters of business unionism. As Moody has argued, labor’s continued operation within these narrow parameters has severely limited the potential of coordinated bargaining.

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To take responsibility for a new, complex area of endeavor like coordinated bargaining means more time, more intricate ‘politics’, more headaches as the targeted corporate giant resists and maneuvers in return. There is the apprehension that coordinated bargaining might involve a new mode of functioning with unforeseen repercussions on the internal life of the union. Most of all, it points to a new level of confrontation (on the part of the employer if no one else) that gives ulcers to modern business unionists. So coordinated bargaining remains rare throughout industry and partial where it is attempted. It is a great idea awaiting a leadership with the courage, imagination, and appreciation of rank-and-file initiative to carry it out (Moody, 1988, p. 112, emphasis added).

The CBC and Cold War Divisions Within U.S. Labor The fragmentation of bargaining, and the decimation of UE’s, and ultimately the CBC’s, density at GE were rooted in the full-scale attack launched against UE during labor’s Cold War. Labor’s political climate has warmed significantly, political differences have been partially sublimated to a unifying struggle for survival, and UE plays a far less significant role in contemporary CBC bargaining. Nevertheless, the triumph of conservative business unionism during the Cold War in the electrical industry, has significantly weakened the capacity of the contemporary CBC. The expulsion of UE from the CIO in 1949 and the consequent raiding by AFL-CIO affiliates decimated UE’s ranks at GE, sowed disunity and “defections” within UE, diverted untold resources away from organization of the growing non-union GE operations, and left a legacy of deep hostility and mistrust between GE’s unions (Matles & Higgins, 1995; Schatz, 1983). The destruction of a highly organized, unitary union presence at GE was replaced by “a crazy-quilt pattern of bargaining which left General Electric and Westinghouse workers nearly as divided as they had been during the non-union era of the 1920s” (Schatz, 1983, p. 226). These divisions were a key dynamic in explaining the success of Boulwarism. The exclusion of the UE insured that, no matter how militant or solidaristic the AFL-CIO affiliates were prior to 1969, GE was left free to whipsaw across this division (Matles & Higgins, 1995; Northrup, 1964; Schatz, 1983). It has taken thirty years of concerted effort within the CBC to bridge these Cold War divisions, and the CBC’s success has allowed it to narrow the gap between GE contracts and those in other manufacturing industries. However, the losses in union density incurred during the post 1949 raiding were never recouped and these have dramatically lowered labor’s bargaining leverage at GE.6 Beyond such immediate losses, UE’s expulsion, along with the broader purge of left labor activists, solidified “the bureaucratic character of industrial unionism,” and destroyed the “political pluralism” of the earlier CIO. The presence of the

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left, and especially Communists within the CIO ensured that “virtually every tendency in the CIO attempted to portray itself as politically progressive and/or industrially militant” (Moody, 1988, pp. 50–51). These developments exerted a powerful influence over the direction of the CBC, due to its domination by the virulently anti-Communist leaders of the IUE and AFL-CIO, and had a huge impact on labor’s leverage in the electrical industry. It is not too much to say that what was left after the fracticide was labor the bargainer. What had gone was labor the movement. It didn’t take long to see that the first was much less effective without the second. With all their occasional faults . . . many of the militant left-wingers, first among them the Communists, brought with them a genuine commitment to the working class. It would be simplistic to attribute the long decline of the labor movement which began shortly after the purge solely to the removal of the left wing. But it would also be wrong to suggest that it was not a major factor. The tragedy of unionism in the electrical manufacturing industry stands as grim testimony to that truth (Filipelli & McColloch, 1995, p. 193).

These weaknesses, inherited from labor’s Cold War, continue to haunt the contemporary CBC, limiting its’ internal and external organizing capacity, and creating a narrow analytical framework for dealing with questions of corporate reorganization. While the UE represents an alternate paradigm for dealing with these challenges, it’s diminished presence in the CBC make it unlikely that the IUE or other AFL-CIO affiliates will seriously examine the applicability of such alternatives in confronting GE.7

The Limitations of NLRA Bargaining The CBC was explicitly created as a mechanism to counter Boulwarism and the huge bargaining leverage it gave GE through its exploitation of the divisions between multiple unions bargaining in isolation across GE’s network of unionized production facilities. It is crucial to recognize that the CBC’s central goal was to bring GE “back to the table” and re-establish “good faith bargaining” over basic economic terms and conditions. IUE President Paul Jennings explicitly cautioned, in the mid-sixties, that the purpose of the CBC was “not to declare a war against GE and Westinghouse” (IUE, 1965b, p. 1). Within this conception, the CBC separated GE’s strategy of corporate reorganization from that of Boulwarism. GE’s real offense was not the creation of a growing non-union capacity, rather it was its “absolute denial,” through Boulwarism, of “the ability to meet at a bargaining table and resolve differences” (Jennings, 1971, p. 164). The CBC’s inability to expand the framework of NLRA bargaining, which precludes direct union influence over corporate reorganization, has resulted in the regressive narrowing of labor’s bargaining demands around immediate

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economic gains for an ever shrinking core of unionized workers. This framework has prioritized labor’s deployment of its political-economic resources, including membership mobilization, in defense of these gains rather than around the larger questions of corporate reorganization. This has left GE’s remaining unionized U.S. facilities as small islands surrounded by a vast ocean of non-union production. Locals’ only point of contact is every three years during CBC negotiations, where questions of work reorganization, sub-contracting, plant closure, and organizing are buried beneath an agenda of wage and benefit improvements. GE locals confront these complex, fundamental issues in isolation, and without the benefits of CBC coordination or cross plant strategy and solidarity. The point is not that the CBC never raised demands around corporate reorganization. The IUE, UE, and CBC made various demands limiting management prerogatives in both the pre- and post-1970 bargaining rounds.8 However, given that such demands are designated as “voluntary” by the NLRA, and have consistently been met with extreme hostility by GE, the CBC should never realistically have expected to win in this arena through the use of traditional bargaining or in the absence of significant member mobilization.9 It is important to stress that the CBC’s orientation toward corporate reorganization follows the dominant pattern of post-war bargaining. A key parameter of the post-war U.S. labor “accord” was capital’s retention of power over questions of corporate governance and capital investment, which were designated exclusive management prerogatives (Davis, 1986; Moody, 1988). Despite the broad recognition that the “Golden Age” of U.S. capitalism ended sometime in the late seventies, and the fact that GE has shown little interest in operating within the parameters of the accord since 1946, the CBC and broader labor movement has yet to move beyond its faith in “partnership” and “good faith bargaining,” and toward an analysis and strategy that adequately reflects these changed circumstances.10 While the UE has historically rejected the AFL-CIO’s and its affiliates embrace of partnership, UE’s diminished size and increasing self-isolation precluded the possibility that its oppositional vision would infect the CBC and its other affiliates.11 With IUE and CBC leadership delegating responsibility for bargaining over corporate reorganization to individual locals, the CBC’s potential as a coordinating mechanism for organizing and bargaining in opposition to work reorganization was squandered, and locals were left to fend for themselves. GE was left free to pick off resisting locals or UE plants, threatening and/or implementing work reduction or wholesale plant closure where it could not attain local compliance. By limiting CBC coordination strictly to bargaining over narrow economic terms every three years, GE was free to pursue Welch’s vision of ever increasing global capital mobility and work intensification. “Globalization is the oldest current initiative in GE, driven by the GE operating system for about

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fifteen years, (and) is like Work-Out, becoming so pervasive and ingrained in the company that it’s less an ‘initiative’ now and more a reflex” (GE, 1999, p. 4). The confinement of the CBC’s bargaining agenda was partly framed by ideological and political-economic constraints. However, the CBC’s inability to impose restrictions on GE’s reorganization and capital mobility was also due to the inadequacy of CBC leverage for overcoming GE’s intense opposition. This power deficit was due to the CBC’s limited capacities for internal and external mobilization.

The CBC and Internal Mobilization While the CBC represented a radical departure from traditional bargaining structures, its internal organization replicated business unionism’s “obsession with protocol and hierarchy” (Moody, 1988, p. 111). Business unionism, and the labor-management accord, required capital to be willing to bargain in good faith over basic terms and conditions. Equally important, it required that union leadership channel member demands and class discontent within the parameters of the accord, and have the power to deliver on its side of the bargain – membership ratification of narrowly construed contracts (Davis, 1986). So, while the CBC was created in order to confront GE’s transgression of the accord (i.e. Boulwarism), it had an equally important self-disciplining function. While capable of mass mobilization (as in the 1969–1970 strike), the CBC only engaged these capacities to back narrow economic goals, and organized within a carefully crafted internal hierarchy. Assessing the CBC’s weaknesses with regard to internal mobilization requires a critical examination of both the structure and rhetoric deployed to organize the CBC’s membership. While the voices of locals and the rank-and-file were “heard” through CBC bargaining surveys, these demands were centralized into a uniform bargaining agenda, ultimately determined by nationally appointed representatives, and quickly dispatched in ever shortening bargaining rounds. In particular, rank-andfile demands for job security in the face of GE’s rampant reorganization have been translated into early retirement or transfer options, and weak, decentralized bargaining mechanisms. While the CBC has at times engaged in more intensive mobilization, it has largely relied on a predictable series of rallies and protests, often organized by national leadership, and mostly convened to bolster the CBC’s “reasonable” demands for “good faith” and “fairness” on the part of GE. Militant leadership rhetoric attacking GE’s managerial prerogatives, and demanding greater control over corporate reorganization is hard to find. While such rhetoric has emerged prior to bargaining, militancy has quickly retreated in the face of

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stiff opposition from GE, and the CBC’s unwillingness or inability to support its’ rhetoric with mass mobilization. Cohen (1973) examined the internal structure of the CBC through 1970, and his observations regarding centralization are quite revealing. Cohen observes the domination of the CBC by the leadership of the AFL-CIO and IUE, possible control of the Steering Committee’s “consensus” decision making by IUE, and, the use of leadership appointments throughout CBC committees. Likewise, all communication across the CBC teletype network originated from the top and flowed down through centralized nodes, blocking direct communication between regional coordinators, let alone local unions. Further, despite significant differences within the CBC leadership and between the CBC steering committee and locals in both the 1966 and 1969–1970 bargaining rounds, these appear to have been settled on IUE’s terms and by leadership decree. CBC Conventions seemed to restrict member involvement to little more than ritualistic consent to leadership goals. At the 1966 CCB convention, 300 delegates representing 160,000 workers were able, after one day of “discussion,” to approve, with almost no changes, a joint bargaining program drafted by the AFL-CIO’s Executive Council. The vote was followed by the endorsement of a “Resolution of Unity” that declared that “Our members will know and the companies will know that all bargaining units will be directing their energies toward the same national goals” (IUE, 1965a, p. 5). Given the scale and complexity of forging consensus across the CBC’s multiple internationals and vast network of locals, such assertions of unanimity and consensus seem suspect. Given that the structure and functioning of the CBC has not fundamentally changed since Cohen’s analysis, these questions remain. However, in the absence of member surveys, detailed organizational analyses, or visible dissent it is hard to gauge contemporary rank-and-file demands for a more democratic or decentralized CBC structure. However, rather than casting democracy and centralization as a simple dichotomy, it seems more useful to think of organizational centralization and democracy as separate, but intimately related processes. Both centralized and decentralized decision making can be more or less democratic, depending on organizational structures and the degree of mobilization within those structures. The challenge for peak organizations such as the CBC is to ensure that centralization is structured in a democratic fashion and that rank-and-file demands are well represented.12 It is equally important to recognize that centralization and democracy are not simply questions of static organizational structure but that they require attention to issues of membership mobilization and education. In the absence of a lived history, union culture, and leadership constantly creating and nourishing union democracy and militancy, the demand for such from the membership may

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disappear. In the absence of both lived and intellectual experience with class, or social-movement consciousness, member demands for greater decentralization and militancy may atrophy or become buried beneath a layer of cynicism and withdrawal from the union’s political life. The complex organizational dynamics of mobilization are very difficult to measure, especially from a distance, and in the absence of careful longitudinal and comparative analyses. Nevertheless, based on Cohen’s (1973) survey of CBC locals, it is possible to identify some tentative patterns. Cohen’s survey revealed that most local unions through the 1969–1970 bargaining round did not participate in the locally “mixed” bargaining committees envisaged under the CBC structure. Local coordination was characterized as unnecessary, given national level coordination. Cohen, argues that while such a perspective may be understandable, “when measured against the principles and objectives of the coordinated bargaining theory, this course of ‘individualism’ as practiced by most GE unions at the local level in 1966 and in 1969–1970 seems a strange and rather incompatible phenomenon” (p. 205). Based on his interviews and surveys of local and national officers, Cohen claims that local unions supported the idea of centralized control “willingly,” and that they had “been consulted by their national unions prior to announcing the formation of coordinated bargaining” (Cohen, 1973, p. 120). It is very likely that these sentiments reflect local leader’s pre-CBC experience of local fragmentation and whip-sawing under Boulwarism. From this perspective, the CBC’s centralized bargaining structure represented a huge improvement, and understandably there would be little appetite for a return to decentralization. However, alternate organizational structures that combined centralization with greater democracy and mobilization were extremely rare in the mid-sixties. Consequently, local leader sentiments around the CBC’s structure may simply reflect their lived experience and their ignorance of alternatives. The question then becomes whether there were viable alternatives present at the time from which CBC locals could have learnt. UE’s consistent focus on internal democracy and debate, relatively flat hierarchies, and its promulgation of a left critique of the parameters of the U.S. accord have historically created a significantly more militant and engaged shop-floor culture than its AFL-CIO counterparts. This process can be observed in Matles and Higgins’ (1995) discussion of rank-and-file militancy within UE locals toward work reorganization which emerged within the context of leadership critique of partnership programs. Likewise, Stepan-Norris and Zeitlin (1991) highlight the dramatic differences in member militancy and engagement in shop-floor politics between UE and AFL-CIO locals, and they attribute these to UE’s explicit politicization of the workplace. However, the central dynamic within inter-union relations at GE has been the exclusion and dramatic weakening

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of UE. Consequently, UE has never been in a strong enough position from which to export its model of unionism to the rest of the CBC locals. The 1969–1970 strike seems to reveal the potential of membership mobilization when union leadership escalates the militancy of its rhetoric and steeps its analysis in moral outrage. Time magazine titled its lead article on the 1969–1970 strike, “Inflationary End to a Class War,” and characterized CBC membership “as united in bitterness against their employer as any band of workers who fought the U.S. industrial class wars of the 1930s.” The article also quoted Ralph Boyd, one of several hundred black workers at the GE Schenectady plant: Some people think this is a strike for a few cents an hour, but it is about human dignity. It is about the workingman’s right to organize, and it is about an employer’s duty to bargain, not to tell us to take or leave his offer. For those issues, I would rather starve than surrender (Time, 1970, p. 72).

While such evidence is extremely circumstantial, it does lend credence to the notion that, had the CBC leadership mobilized its membership against the immorality of the costs of GE’s relentless reorganization and capital mobility, it might have generated deep member support for demands that increased union control over managerial prerogatives. Would a deeper class analysis, that raised questions about the morality of capital governance and prerogative, have provided an alternate, more compelling basis for cross-union unity and membership mobilization? Would GE workers have backed the prioritization of bargaining demands over capital controls? While it is impossible to definitively answer these questions in hindsight, the absence of such an agenda for the CBC speaks volumes about the truncated nature of post-war business unionism. These questions also confront the contemporary CBC as it attempts to shift its organizational focus. It seems highly probable that today’s CBC is burdened by a deep residue of membership alienation and powerlessness. The majority of today’s GE workers did not directly experience the unity, militancy, and tremendous gains of the 1969–1970 round. Members have experienced years of job insecurity and work intensification while their leadership has appeared impotent to intervene on their behalf, except to garner them transfer or early retirement rights. The sense of powerlessness generated by thirty years of retreat will likely make it extremely difficult, and certainly impossible in the short run, to mobilize members behind the type of militant, coordinated campaign imagined by some for the 2000 bargaining round (Hickey, 2000). Moving the membership in a direction that might support such efforts would require a combination of: (a) intensive education around the history and political-economy of GE, including its labor relations practices, and including union and CBC failures; and, (b) a gradual accumulation of small (domestic) campaign victories that

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show that it is possible to successfully confront one of the world’s most powerful multinationals. Finally, the CBC must thoroughly redefine its orientation to GE as a capitalist entity, and find a way to break out of its self-imposed imprisonment within the confining parameters of the post-war accord. The CBC’s adherence to a philosophy of “partnership” and “good faith bargaining” must be abandoned. Despite GE’s relentless and explicit deunionization, for over fifty years, the U.S. labor movement and the CBC have continued to come back to the table year after year, vainly trying to reconstruct a social accord which, in the case of GE never existed post 1946.13 Partnership and good faith will never be ceded voluntarily by GE but may only be approximated if the CBC is able to develop the means to exert significant leverage. The CBC’s acceptance of a complete lack of control over GE’s managerial prerogatives, in particular over decisions of corporate investment or disinvestment, must be abandoned. Without developing and pursuing serious proposals to increase control or raise the costs of capital reorganization and mobility, the CBC will remain incapable of producing job security for its membership. Further, such demands must become the centerpiece of CBC bargaining – demands which cannot be traded for wages and benefits, demands that are backed with serious organizational and political capital, and demands for which the unions are willing to take serious organizational risks. Such a reorientation must be systemic. Both leaders and members are trapped within the assumptions of business unionism. Bargaining leverage derives from a mobilized membership, and contracts are ultimately ratified by the membership. If the rank-and-file are unwilling to prioritize demands for union control of managerial prerogatives over wage and benefit gains, leadership loses the capacity to push for these in negotiations. Consequently debate and education must take place throughout the network of CBC unions, and must involve a serious internal organizing effort to produce deep member support for such demands.

The CBC and External Mobilization The CBC never developed a GE wide organizing strategy and, despite some tentative contemporary efforts, has never operated as an organizing body. As with questions of work reorganization and capital mobility, responsibility for organizing was delegated to its constituent unions, who organized on a plant-by-plant basis. Consequently the CBC’s coordinating capacities were never extended to organizing. The CBC’s ability to confront GE’s reorganization at the bargaining table has been critically injured by the absence of a coordinated organizing strategy. As union density declined, GE reorganized, and the CBC continued to

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operate in isolation of broader social movements, the power imbalance between GE and the CBC grew increasingly skewed. The organizing stasis of the CBC and its constituent unions mirrors the limitations of post-war business unionism as regards organizing. Both Davis (1986) and Moody (1988) argue that the U.S. labor movement lacked the scale, sophistication, and militancy required to achieve meaningful gains against anti-union corporate giants such as GE. (T)he approach of most unions to organizing since the 1950s has been a routine, shop-by-shop approach which could not organize large numbers of workers even if it were well financed. In a round table discussion on the difficulties of organizing, Charles McDonald of the AFL-CIO’s Organizing Department pinpointed one of the problems: ‘What many people fail to recognize, however, is that few unions have a national organizing strategy; instead most organizing efforts are initiated and carried out at the local level.’ Obviously, such a parochial approach is ill-suited to dealing with today’s conglomerate, multinational corporations (Moody, 1988, pp. 124–125).

Faced with the twin challenges of sophisticated union avoidance and radical corporate reorganization at GE, CBC union organizing efforts receded.14 Where organizing did occur it suffered the limitations typical of post-war organizing, including limited resources and a top down strategy, overly reliant on external organizers and neglectful of rank and file mobilization. By the late 1970s, the CBC recognized its lack of organizing capacity at GE and began to attempt to address this weakness through bargaining.15 The CBC first introduced the demand for management neutrality during organizing drives as early as 1979, and continued to raise the issue throughout the 1980s. Ed Fire’s presidential campaign included a call for organizing neutrality and the issue was once again placed on the table in the 1997 bargaining round. However, as with all previous attempts to win neutrality at the bargaining table, this demand was met with stiff management opposition, and was buried, along with the stronger job security proposals, beneath a quick agreement on wage and benefit issues.16 The CBC’s organizing capacity has also been limited by the structural mismatch between GE’s multi-divisional, networked morphology and the CBC’s unidimensional structure. This lack of organizational correspondence is of particular relevance to discussions of union density and organizing. This can be illustrated by examining the state of unionization at three of GE’s historically unionized manufacturing divisions – GE Aircraft Engines (GEAE), GE Power Systems (GEPS), and GE Appliances GEA.17 Appendix 1 provides an overview of the domestic and global structure of each of these divisions. This analysis reveals that while union density remains relatively high across many of GE’s older U.S. facilities, these have been dramatically downsized over the last five decades. More significantly, GE’s unionized U.S. capacity is enmeshed in a massive and rapidly growing network of domestic

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and global non-union capacity. GE has evolved into a complex combination of production networks, organized into divisional groupings. Under Welch’s leadership these divisions operate with a degree of operational independence, but within tight financial parameters set by GE’s upper management. The production chains within GE’s divisions are paradigmatic of what Brecher and Costello (1998) have called the “disintegrated corporation,” or what Harrison (1994) termed “networked production.” For some divisions, such as GEA, it seems clear that the long-term, downward trajectory of its U.S. unionized facilities is on an irreversible course. However, even the very high domestic union density at GE’s wholly owned plants in divisions such as GEAE, is hardly reassuring. Given GE’s massive domestic and global network of suppliers, joint partnerships, and joint production agreements, such density figures are an extremely poor measure of the CBC’s leverage and the extraordinary organizing challenge it faces. The CBC has completely failed to address the growth of domestic and overseas suppliers, joint ventures, partnerships, and agreements. From an organizing perspective, the CBC’s blindness to the supplier chains has been particularly disastrous. These “non-GE” firms have been the destination for much of the work that has been down-sized and outsourced from GE’s unionized plants. However, the CBC currently does not have accurate data on GE’s supplier networks, let alone an organizing strategy for dealing with them. Again, it is important to note that GE’s corporate evolution did not occur overnight. The growth of supplier networks is a logical outgrowth of the corporate decentralization strategy initiated over fifty years ago, and which was accelerated dramatically by Jack Welch over twenty years ago. It is hard to find any evidence that the CBC or its constituent unions paid any attention to this long term structural shift. The CBC’s blindness is emblematic of the broader labor movement’s failure to confront a reorganized capital. In the past quarter-century, capitalism has undergone a revolutionary restructuring in the United States and worldwide. Meanwhile, the American labor movement retains the basic structure it established more than half a century ago. Organized labor will have a future if and only if it can redesign itself to cope with the restructuring of capitalism. Neither the new leadership of the AFL-CIO nor its critics on the left and right have engaged in more than a desultory discussion of the changes organized labor must undergo to meet the restructuring of global capitalism (Brecher & Costello, 1998, p. 5).

The resultant structural mismatch between GE and the CBC creates a fundamental crisis for the CBC’s organizational and representational capacities. The immediate challenge for the CBC is to develop a strategy for organizing GE’s supplier network. This is obviously a huge and daunting challenge. The image of hundreds of small and relatively powerless suppliers, spread across the globe represents an

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organizing nightmare. However, strategic corporate analysis of GE could produce a more layered, and manageable picture of the organizing challenge. Such a task is obviously well beyond the scope of this paper, and should in any case be the purview of the CBC and its unions. However, it is possible to point to some tentative possibilities. First, it must be noted that service sector unions such as SEIU and HERE have managed to win large organizing victories in industries and against corporate targets, at least as challenging as that presented by GE’s networked structure. These victories have been wrought by a combination of sophisticated industrialcorporate analysis, a massive investment of organizing resources, bottom-up organizing, and a willingness to organize as a social movement (Lerner, 1996). The CBC unions could probably learn a great deal by studying the campaign strategies of such service sector unions. Of course, the organizational changes necessitated by such an approach are quite fundamental. At a minimum, they require a very significant redistribution of union resources, and a dramatic change in organizing philosophy. Perhaps most daunting, such a large scale organizing drive needs central coordination. The CBC, or at least some evolved version of the CBC, would be the logical locus of such coordination. Obviously the CBC does not currently play this role, and its transformation in this direction would present a significant organizational challenge. The most difficult question would be the CBC’s role in settling jurisdictional disputes, and beyond that, its ability to provide and enforce strategic coordination of union organizing efforts. Second, GE’s multiple divisions operate with considerable operational autonomy and are marked by great structural and market diversity. Developing an organizing strategy based on this divisional structure not only breaks down the scale of the task, it produces an analysis that actually matches GE’s corporate and market dynamics and may thus have some chance of developing some real leverage. Some tentative suggestions can be advanced to illustrate this point. Based on the divisional analysis presented in Appendix 1, one might conclude that GEA does not represent a viable target division for a U.S.-based organizing drive and that the CBC should expend its organizing resources on other divisions. GEA appears to be approaching end game status in terms of its manufacture of appliances in the U.S. Consequently, it may make sense for the CBC to simply continue its historic bargaining pattern for GEA workers and attempt to maximize “exit” benefits (generous pension, job retraining and relocation provisions). However, given that GEA is still part of GE and has a long union history, the CBC could explore the possibilities of a coordinated, international campaign around labor rights and in support of overseas organizing drives, as initiated in the 2000 round, but focused specifically on GEA.

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In contrast, GEAE and GEPS represent viable, although quite different targets for U.S.-based organizing. At GEAE, CBC unions still have very high density rates at GE’s core manufacturing and service sites. The challenge here would be to develop a strategy that targets the vast supplier chain, and that leverages their control at GE production sites to pressure its suppliers into compliance. In contrast, union density at GEPS is much lower. However, it seems highly probable that, given the relative immobility of its large, capital-intensive U.S. production facilities, the CBC could mount organizing campaigns at GEPS’ non-union U.S. sites without invoking credible capital mobility threats. Beyond this, organizing at GEPS would need to develop a supplier organizing strategy similar to GEAE. Production networks for both GEAE and GEPS are likely structured within GE’s international three pole structure. Consequently, significant elements of these production networks are likely to extend into Canada, Mexico, and parts of Latin America. Any successful organizing strategy would have to carefully explore this transnational morphology and develop a corresponding international element to its campaign. Moody (1997) has discussed the strategic implications of such “Regionalized Production Chains”: (T)he regionalization of production in many important industries, particularly those with a unionized base in both North and South, has strong implications for trade-union strategy . . . It is along these regionalized production chains that workers can begin to make contact to exchange information on corporate strategies, to organize mutual support, and to make common decisions about future actions (p. 75).

The power of such transnational networking is that: (a) it links workers within actual production networks that share a common employer and common industrial sector; and (b) such linkages can be made within a relatively constrained geographic realm. Consequently, GEAE and GEPS divisions of the CBC could focus on developing transnational campaigns focused on building leverage in a meaningful way, and could do so within manageable geographic parameters.18 Finally, organizing and bargaining at GE has largely been conducted in complete isolation from other social movements. While the CBC was able to elicit some community support during the 1969–1970 strike, its organizing efforts, and its most recent attempts to build a corporate campaign against GE have not produced strong links to broader social movements. A central problem for the CBC is that it’s limited agenda narrows the space for building meaningful relationships with non-labor groups, whose vision of social and economic justice lay far beyond the narrow parameters of business unionism. Given its historic trajectory, the prognosis regarding the CBC’s ability to expand its agenda and become part of a broader social movement is not very optimistic. However, without such a transformation the CBC seems doomed to bargain itself into isolated oblivion. Given the CBC’s

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extremely low density and weak leverage, neither a conventional strike, or even a more creative corporate campaign will have the necessary impact on GE. In order to increase its leverage and effectively pursue a bargaining agenda that addresses GE’s corporate reorganization and global capital mobility requires that the CBC become part of a broader movement demanding corporate responsibility. Of particular contemporary significance are the potential links between CBC unions and the emergent anti-globalization movement. Everything from GE’s extraordinary profits, outrageous managerial compensation, and Jack Welch’s abrasive persona, to GE’s record as despoiler of the environment, destroyer of communities and unions, to its willingness to brutally leverage its global capital mobility to achieve these ends make GE a perfect corporate target for joint labor-anti-globalization campaigns. While the 2000 mobilization and the development of an electronic sweatshops campaign against GE point in the right direction, the links between GE’s unions, and in particular, the CBC and the anti-globalization movement remain extremely tentative.19

CONCLUSION In sum, the conclusions of this paper are both optimistic and pessimistic. On the optimistic side, the foregoing analysis reveals the buried historical and contemporary potential of the CBC to confront GE’s corporate reorganization. Further, these capacities are primarily domestic in nature and largely concern inter and intra union transformations. This conclusion stands in stark contrast to most analyses of global capital mobility that portray the challenges to labor as overwhelming and/or residing in international contexts not easily accessed by domestic unions. This is of significance given that a central challenge to developing union responses to “globalization” is overcoming the sense of powerlessness and hopelessness that accompanies discussions of issues such as capital mobility. While this case study has concerned a very specific corporate actor, operating within a number of specific industries, it seems entirely feasible for U.S. manufacturing unions to produce detailed, strategic corporate-industrial analyses, that illuminate points of leverage and organization. On the pessimistic side, the analysis reveals two serious challenges. GE’s growth, diversification, and global reorganization may have been allowed to develop unchecked for so long that it may prove impossible for its U.S. unions ever to recoup the losses documented here. While there may be some hope for a reinvigorated labor presence in some of GE’s divisions, others will likely continue to downsize and deunionize in the U.S. Regardless, it seems clear that the CBC

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will never reclaim the unitary leverage exerted by UE some sixty years ago. However, it should be recognized that GE is fairly exceptional in this regard and that pessimism or optimism regarding labor’s prospects should be based on a case by case basis. There are likely many industrial sectors and multinationals in which the deployment of a militant, networked unionism may substantially increase U.S. unions’ leverage. More significantly, the foregoing critique of the CBC and the tentative suggestions for its transformation run strongly against the grain of historic and contemporary union practice in the U.S. The political and organizational challenges facing the emergence of networked social movement unionism, especially within extant U.S. unions, are extremely daunting.

NOTES 1. According to the IUE’s David Lasser, chair of the steering committee, unanimous agreement reached by consensus was required in all committees on all major decisions. However, Cohen (1973) argues that at least one top union leader disputed the accuracy of this depiction of decision making (Cohen, 1973, Chapter V, fn. 20). Cohen is not very clear how the relationship between the CBC Steering Committee and local unions worked other than quoting the Allied Industrial Worker, “problems involving local working conditions will be dealt with by each union separately, as in the past” (November 1965, p. 1, quoted in Cohen, 1973, p. 114). 2. GE consistently opposed the CBC’s proposed “mixed bargaining committee,” basing its rejection on legal grounds, and arguing that this proposal represented an attempt on the part of the CBC unions to engage in illegal coalitional bargaining. (See Cohen, 1973, p. 138 for a discussion of the NLRB ruling which spells out the parameters of, legal, coordinated bargaining cf. illegal coalitional bargaining.) At the preliminary bargaining meeting company negotiators protested the composition of the CBC bargaining team, promptly walked out, and then publicly denounced the CBC as a “subterfuge,” and refused to meet again until “such time as the IUE is ready to deal with us in a sincere effort to form GE-IUE subcommittees” (GE, 1967, p. 86). This rebuttal launched a legal battle with both sides filing Unfair Labor Practice Charges. The NLRB ultimately dismissed GE’s charges and issued an injunction forcing GE to go back to the negotiating table. After various appeals, the Supreme Court ultimately ruled in favor of the injunction, and GE was left with no alternative but to meet with the CBC committee. The NLRB, and Second Circuit Court both eventually ruled GE’s Boulwaristic bargaining strategy as Unfair Labor Practices (General Electric Co. 150 NLRB, at 196; NLRB v. General Electric Co., 418 F2d 736 (2d. Cir. 1969) at 762) See Cohen (1973, pp. 94–96) for a more detailed account. Despite the legal ruling against Boulwarism and Boulware’s retirement from GE, GE continued to adhere to Boulwaristic practices (see Cohen, 1973, p. 106). 3. Matles and Higgins (1995, p. 300) point out that GE’s net income in 1971 was more than one and a half times that of the combined net income of its closest European and Japanese competitors, while GE’s employment was less than half.

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4. This is counting length of time between official opening of bargaining to IUE-CBC settlement at the table. Member ratification was typically completed in ten days or less. 5. While GE claims that the 2000 ratio of U.S. to non-U.S. employees is 1.25:1, it’s calculations are based on its annual reports which underreport foreign employment and don’t include employment in GE joint ventures, even where GE owns more than 50% of the company. By CBC estimates GE in 1999 actually had 197,000 U.S. employees and 224,000 non-U.S. employees, and a more accurate estimate of the ratio of U.S. to non-U.S. GE employees is therefore below one to one (0.88:1). (Meyer, 2001). Given the globalized and networked structure of GE’s contemporary manufacturing capacity it is extremely difficult to even provide basic density figures. Density calculations based on wholly owned, or even subsidiary, domestic GE plants massively underestimate GE’s non-union capacity and do not provide an accurate sense of the CBC’s (lack of) corporate leverage. Within GE’s corporate morphology, domestic density figures are not only hard to generate but may be largely meaningless as a measure of labor’s leverage. 6. By 2000 the CBC represented, at most, some 47,00 workers, or 36% of GE’s reported 131,000 U.S. employees. IUE’s GE membership was down to 23,000 members (or 18%) and UE’s GE membership was down to 5,000 members (or 4%) (GE 2000 10-K; Department of Labor, Collective Bargaining Agreements File, http://www.bls.gov/cba/, June 2001). These figures may be considerably overstated. According to media estimates at the start of 2000 bargaining, IUE represented only 17,000 GE workers the UE about 4,600, and the 11 other unions about 10,000. This would place the CBC total at around 31,600 (PR Newswire 2000a). However, other media reports claimed slightly higher numbers, with a PR Newswire putting CBC membership at around 40,000 (PR Newswire, 2000b). 7. UE has maintained a unique organizational structure that is based on strong principles of membership control and internal democracy, modest leadership and staff salaries, and a commitment to member-based organizing. UE has also maintained its political-ideological independence and has assumed positions, whether on work reorganization or electoral politics that lie well to the left of the AFL-CIO and its industrial affiliates (Filipelli & McColloch, 1995). 8. In 1979, the CBC raised the demand for a neutrality pledge in union organizing and for various penalties or benefits (thirty years and out retirement language) to raise the cost of shutting down GE plants. However, these demands were dropped after securing solid wage increases, defending the COLA, and most significantly, GE’s acceptance of a “maintenance of membership” clause. The 1988 round opened with William H. Bywater, President of IUE and chair of the CBC, claiming that job security language (including a plant closing moratorium, a no-layoffs clause, and stronger limits against subcontracting) was a central demand. GE refused the job security proposals point blank, and the final contract contained none of these provisions (Bernstein et al., 1988). By the 1991 and 1994 rounds, real job security demands had slipped into virtual invisibility. In 1991, neutrality was listed as an “important” area, but was ranked behind the “crucial” wage and benefit demands that ultimately dominated the settlement (PR Newswire, 1991). In 1997, IUE President Ed Fire, who had toppled outgoing President Bywater by campaigning hard on the issue of GE job security at GE, included demands for UAW style union job guarantees, and organizing neutrality. While threatening to strike over these demands, the CBC’s density at GE was so eroded that the threat of a national strike had become almost meaningless (Lewis & McCabe, 1997). One month later the CBC had reached a tentative pact, which saw Fire’s demands for UAW style union job guarantees and organizing

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neutrality replaced by local “Job Preservation Committees” – a mechanism that would prove spectacularly incapable of stemming GE’s wholesale destruction of union jobs (PR Newswire, 1997a, b; The New York Times, 1997). While the CBC in 2000 launched a far broader and more ambitious contract campaign, focusing on capital mobility, than it had ever attempted before, the campaign was actually more limited than some had hoped (Hickey, 2000). Despite the IUE’s aggressive rhetoric demanding job security from GE, the 1997 goal of UAW style union job guarantees, and organizing neutrality appeared to have been dropped (PR Newswire, 2000c; The Associated Press State & Local Wire, 2000). 9. For example, Welch had “reacted like a bull to a red flag,” to Fire’s 1997 Job Security demands, telling 400 GE line managers that Fire’s demands were “not for us in any way.” Welch called the job guarantee language “crazy demands that are non-competitive,” and said that the “issue of neutrality makes absolutely no sense to us.” He warned his managers “(y)ou better get prepared like you’ve never been prepared . . . to operate in a strike and not flinch” (Bernstein, 1997, p. 178). Welch promised “that if the unions wanted a strike, GE would show the corporate world how to run a strike” (Swoboda, 1997, F10). 10. At GE, as was noted previously, IUE President Fitzmaurice had greeted Jack Welch as a friend of labor, despite no objective proof of such sentiments in Welch’s prior career at GE. Later IUE leadership and the AFL-CIO have been equally willing to extend the hand of “partnership” to Welch (see for example: Davis, 1986, p. 134; Moody, 1998, p. 147; Slaughter, 1998; Bernstein, 2000). Viewed in relationship to GE’s more than 50 years of deunionization, hard-ball opposition to union organizing of new facilities, and relentless reorganization, this faith in GE and Jack Welch is stunning. Nevertheless, this view can be explained by reference to the battered parameters of business unionism that frame labor leadership’s improbable belief that “what is good for GE is good for us.” Under these terms, GE’s profitability is equated with a larger pie to “share” with labor. The fact that there is hardly any labor left to share in what has indeed become a gargantuan pie, falls outside leadership’s narrow calculation of what is negotiable. 11. UE resisted the imposition of GE’s productivity initiatives, and stood alone in rejecting “Quality Circles” at GE and Westinghouse in the 1970s. UE’s leadership also steadfastly resisted Welch’s reorganization programs, arguing that these led to speed-up and work reduction, and that team discussions of “quality” issues allowed management to impose greater standardization and regimentation. Likewise, team production was rejected, because it led to worker internalization of ever tightening, management dictated goals that put unbearable pressure on older, slower, less experienced or less healthy workers. Finally, team based self-discipline was opposed on the grounds that it divided workers and undermined workplace solidarity (Matles & Higgins, 1995). 12. CBC structures could certainly be democratized, without losing the advantages of centralization or coordination. CBC committees could be staffed by election rather than by appointment. Elections could be structured so as to ensure proportional representation based on the relative size of internationals and locals within the CBC. The need to have elected representatives with bargaining and technical expertise could be ensured through election requirements (for example requiring candidates to have served on local bargaining committees and/or have undergone significant training). While legally challenging, the process of contract ratification could be reversed. Instead of seeking ratification of the national contract followed by local bargaining, none of the internationals would endorse or ratify the national contract until every local had settled their local contracts. The CBC could serve as the coordinating body for providing solidarity and support for locals that

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were facing difficult negotiations. Finally, the role of the AFL-CIO could be restructured to provide more expertise, networking, and other resources, and less control and ideological direction over the CBC. 13. See note 10. 14. According to Business Week, in 1999 the AFL-CIO actually proposed a $25 million organizing drive at GE. However, IUE leadership wasn’t willing to embrace such an ambitious and aggressive organizing strategy. Instead the IUE and thus the CBC settled on a far less ambitious campaign focused on traditional tactics like rallies and protests. Ironically, the article goes on to identify the limitations of the more conservative strategy. “Labor’s new campaign may embarrass Welch and even prompt GE to tone down its demands on suppliers. But it won’t rebuild the union’s clout at the bargaining table the way a serious organizing drive might have done. Until that happens, Welch probably has little to fear from his restive unions” (Bernstein, 1999, p. 74). 15. Cohen (1979) details the CBC’s contract demands through the 1969–1970 bargaining round but does not list any relating to organizing. 16. See note 8 for more details. 17. GE is sub-divided into twelve divisions: Aircraft Engines, GE Appliances, GE Capital Services, GE Industrial Systems, GE Information Services, GE Lighting, GE Medical Systems, GE NBC, GE Plastics, GE Power Systems, GE Supply, GE Transportation Systems. 18. While the challenges of distance and logistics should not be underestimated, GE’s unions have access to a technology that can significantly aid the sustenance of such long distance relations – the Internet. Moody (1997) is probably correct in arguing that face to face contact and direct worker exchanges are a crucial foundation upon which to build transnational exchanges. However, such activities are extremely expensive and time consuming and cannot realistically provide the means for ongoing and intensive communication over long distances. The Internet can provide a very powerful and relatively inexpensive means for maintaining contact, exchanging information, and engaging in significant joint strategy development. The Internet also provides the capacity for the decentralization of communication. Rather than filtering all communication and exchange through a centralized body such as the CBC or union leadership, the Internet would allow locals to be in direct and meaningful contact with one another. The fact that GE’s networked divisions are crucially dependent on internet technology should come as no surprise. Again, the CBC’s capacity to study and learn from GE’s practices, in this case with regard to the Internet, might provide valuable clues for the development of a corresponding union network. Likewise, the CBC could fruitfully study the crucial role played by the Internet as the communications backbone for the anti-globalization movement. This movement has been extremely successful in using various Internet-based tools to link an extraordinary range of loosely knit groups, across the globe, to forge common opposition to, and coordinate action against particular international neoliberal initiatives. The fact that the proposed GE networks would link workers and unions around a far narrower agenda, and within a more constrained geographic sphere bodes well for the potential contribution of Internet-based communication. 19. Given the heavy baggage carried by the CBC unions, embracing the beliefs, practices, and organizational structure of the anti-globalization movement will be enormously challenging (see Borgers, 2000 on the organizational fault lines surrounding the 1999 anti-WTO mobilization in Seattle). Nevertheless, the CBC and its unions should strive to become active coalition members in the anti-globalization movement. The actions and

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campaigns emanating from this coalition are well suited for confronting GE, and present an extraordinary opportunity for communication, education, and solidarity across the labor-social movement divide.

REFERENCES AFL-CIO (1969a). AFL-CIO News (November 15). AFL-CIO (1969b). AFL-CIO News (November 29). Associated Press (1999). GE job cuts in jet engine production not over (September 24). Associated Press (2000). Union recommends company’s ‘final offer’ to members (June 28). Behr, P. (1984). Automation putting pressure on jobs. The Washington Post (August 2), D1. Bernstein, A. (1997). High tension at General Electric. Business Week (March 24), 178. Bernstein, A. (1999). Welch’s march to the south. Business Week (December 6), 74, 78. Bernstein, A. (2000). Hey Jack Welch, can we talk? Business Week (March 6), 130. Borgers, F. (2000). The clouds clear: Labor, Seattle and beyond. Against the Current (March/April). Brecher, J., & Costello, T. (1998). Labor and the challenge of the dis-integrated corporation. New Labor Forum, 2, 5. Business Week (1969). GE bind tightens (September 6). Business Week (1970). The rough road to GE’s settlement (January 31). Business Week (1982). What led the electrical giants to settle so high? (August 9), 29. Business Week (1984a). Swapping work rules for jobs at GE’s ‘Factory of the future’ (September 10), 43. Business Week (1984b). A bold tactic to hold on to jobs (October 29), 70. Business Wire (1984). GE union employees ratify agreement for ‘factory of the future’ in Lynn (June 27). Carey, C. (2000). GE to cut 870 jobs from Bloomington, Ind., Refrigerator Plant in December. The Indianapolis Star (October 17). Carey, C. (2001). General Electric recalls laid-off workers at Bloomington, Ind., Plant. The Indianapolis Star (February 3). CBC (2000). GE: We Bring Sweatshops to Life. Power Point Presentation. Cohen, A. (1973). Coordinated bargaining at General Electric: An analysis. Unpublished Ph.D. thesis, New York State School of Industrial and labor Relations, Cornell University. Cullen, D. E. (1965). Negotiating labor-management contracts. Ithaca, NY: New York State School of Industrial and Labor Relations, Cornell University, Bulletin 56. Davis, M. (1986). Prisoners of the American dream. London: Verso Books. Downing, G. B. (1967). The changing structure of a great corporation. In: W. Lloyd Warner et al. (Eds), The Emergent American Society, I, Large Scale Organizations. New Haven, CT: Yale University Press. Filipelli, R., & McColloch, M. (1995). Cold war in the working class: The rise and decline of the United Electrical Workers. Albany, NY: State University of New York. GE (1999). 1999 Annual Report. Goett, P. (1999). Jack Welch: He brings good things to GE. Journal of Business Strategy (September/October). Harrison, B. (1994). Lean and mean: Why large corporations will continue to dominate the global economy. New York, NY: The Guildford Press. Hartford Courant (The) (1994). GE plant layoffs (October 12), F2.

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Hayes, T. C. (1980a). GE names Welch, 45, Chairman. The New York Times (Section 2, December 20), 31. Hayes, T. C. (1980b). Changing the guard at GE. The New York Times (Section 3, December 28), 1. Hickey, R. (2000). Labor and Goliath: GE workers in the age of globalization. Unpublished Paper, Cornell University. International Union of Electrical Workers (1965a). IUE News (March 24), 5. International Union of Electrical Workers (1965b). IUE News (November 25), 1. International Union of Electrical Workers (1971). IUE News (June). International Union of Electrical Workers (1998). IUE News (March–April). Koenig, B. (1999). General Electric to layoff 1,400 in Bloomington, Ind. The Indianapolis Star (December 11). Jennings, P. (1971). The experience as seen by union leadership. Collective Bargaining Today, Proceedings of the Collective Bargaining Forum – 1970, BNA. Journal of Commerce (1993). June 15, 3B. Kuhn, J. W. (1971). On the significance of the General Electric strike. Collective Bargaining Today, Proceedings of the Collective Bargaining Forum – 1970, BNA. Land-Kazlauskas, C., & Balfour, J. (2000). GE Aircraft Engines: Industry and Corporate Analysis. Amherst, MA: University of Massachusetts at Amherst Labor Center Research Report (June). Lerner, S. (1996). Strategic labor organizing: How to win against the odds. Dollars and Sense, 205, 32–37. Lewis, D. E., & McCabe, K. (1997). GE, unions girding for negotiations; Workers vow strike if no job security clause. The Boston Globe (May 28), D2. Matles, J. J., & Higgins, J. (1995). Them and us. Englewood Cliffs, NJ: Prentice-Hall, Inc. updated reprint. Meyer, D. (2001). Building union power in a global economy. Labor Studies Journal, 26(1), 60–75. Moody, K. (1988). An injury to all: The decline of American unionism. New York, NY: Verso Books. Moody, K. (1997). Workers in a lean world: Unions in the international economy. New York, NY: Verso Books. New York Times (The) (1997). Unions at GE approve three-year contract. The New York Times (July 4), 15. Northrup, H. R. (1964). Boulwarism. Ann Arbor, MI: Bureau of Industrial Relations, Graduate School of Business Administration, University of Michigan. PR Newswire (1987). Union meeting explores declining employment at General Electric (January 28). PR Newswire (1991). Contract talks begin at General Electric (May 29). PR Newswire (1997a). GE, unions reach tentative agreement (June 29). PR Newswire (1997b). GE union members to vote next week on new contract (July 3). PR Newswire (2000a). GE begins union contract talks (May 30). PR Newswire (2000b). Job security, pension improvements top agenda as 14 unions open talks with General Electric (May 30). PR Newswire (2000c). GE presents final contract offer to unions (June 26). Raskin, A. H. (1985). An industrial breakthrough. The New York Times (July 23), A 27. Schatz, R. W. (1983). The electrical workers: A history of labor at General Electric and Westinghouse 1923–1960. Chicago, IL: University of Illinois Press. Schoch, E. B. (1999). GE discusses moving jobs out of Bloomington, Ind., and Louisville, Ky. The Indianapolis Star (July 31). Slaughter, J. (1998). AFL-CIO seeks partnership with GE’s ‘neutron Jack’. Labor Notes (October), 1, 12.

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Swoboda, F. (1997). GE contract’s retirement proposal could mean thousands of new jobs. The Washington Post (July 5), F10. Time (1970). Inflationary end to a class war (February 9). United Electrical Workers (2000). UE-GE National Contract Negotiations – Contract 2000 – Some GE Bargaining History You Should Know, www.ranknfile-ue.org/contract2000 barghist.html Voos, P. B. (1994). An economic perspective on contemporary trends in collective bargaining. In: P. B. Voos (Ed.), Contemporary Collective Bargaining (pp. 1–24). IRRA. Wypijewski, J. (2001). GE brings bad things to life. The Nation (February 12), 18–23. www.ue.org, CBC history type up proper citation format.

APPENDIX 1 OVERVIEW OF GE AIRCRAFT ENGINES (GEAE), GE POWER SYSTEMS (GEPS), AND GE APPLIANCES GEA GE’s Aircraft Engines (GEAE):1 GEAE is the world’s leading provider of aircraft engines and aeroderivative propulsion engines and services for commercial, military and marine applications. GEAE is the second largest and most profitable GE division (after GE Capital), with operating margins exceeding those of the company as a whole. GEAE’s revenues have climbed steadily since the early 1990s as have its operating profits, and GEAE posted $10.5 billion in revenue and $2 billion in profits in 1999. Corporate headquarters for GEAE’s American operations are located in Evendale, Ohio. The CBC has identified eight major manufacturing facilities and five service centers in the United States that together employ almost 9,000 and over 1,400 people respectively.2 The wholly-owned GEAE operations in the U.S. are still highly unionized, with the manufacturing side reporting 70% density, and the services side reporting 98% density. These sites are represented by the IUE, IFPTE, IAM, UAW, and UE. GEAE claimed to have 34,000 employees in its wholly-owned manufacturing operations and 6,200 employees in its wholly-owned service operations, dispersed across 86 countries in 1998.3 GEAE has both wholly and jointly owned assembly and parts operations, as well as joint production agreements with companies in 11 countries.4 GEAEs partnerships in France, Germany, Italy, and Sweden all have a major union presence as do the service shops in Britain and Brazil.5 While both its domestic and international plants are relatively highly unionized, GEAE’s facilities have all seen massive downsizing (CBC, 2000; Land-Kazlauskas & Balfour, 2000). Further, GEAE’s global capacity is extended far beyond its wholly and jointly owned plants through a complex network of “independent” suppliers and government contracts that span the world’s markets. Some analysts estimate

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that almost 60% of GE’s aircraft engines are built by subcontractors, and they have identified upward of 625 separate contractors connected to GEAE globally (Land-Kazlauskas & Balfour, 2000). GEAE operates these networks under a three-pole structure – Latin America, Europe, and Asia. It seeks 4–6 major sources in each pole and 2–3 suppliers per commodity. Suppliers had been required to reduce costs 5% annually in order to retain contracts, and in 1999 GEAE raised these targets to 14% for its North American suppliers (Aaron Bernstein, “Welch’s March to the South,” Business Week, December 6, 1999, p. 74). Thus, suppliers have little choice but to adopt GE mandated productivity enhancements, e-business applications, or, most recently, to move to low-wage countries. Given the challenges of conducting domestic, let alone international research on the extent and nature of the GE-supplier networks, the current CBC has no accurate estimate of these operations6 (Land-Kazlauskas & Balfour, 2000). Nevertheless, it is highly probable that much of this supplier network is not unionized.7 GE Power Systems (GEPS):8 GE has been a world leader in gas turbines for over forty years and has been a major force in steam turbines since the early part of the Twentieth Century. The corporate headquarters of GEPS are located in Schenectady, New York, the historic center for the company’s manufacture of power generation equipment. It was anticipated that GEPS would surpass GEAE as the largest manufacturing division within General Electric in 2000. The division was predicting revenues for the year 2000 to exceed $14 billion, and if accurate would mean that the division had doubled its revenues over five years. Historically, GEPS was a heavily unionized U.S. operation, based in Schenectady, New York, where 4,400 workers are still represented by the IUE and IFPTE. Today there are six major manufacturing facilities in the United States that together employ over 9,000 people.9 However, all of GEPS newer U.S. manufacturing facilities are non-union. With the increased production of gas turbines (which now accounts for 80% of GEPS revenue), and through the decentralization of operations toward its non-union plants, especially Greenville, South Carolina, over half of GEPS U.S. manufacturing capacity is now non-union and the percentage is growing. The situation is even more acute in services where only one tenth of operations are unionized. The CBC has not identified union members in any of GEPS joint ventures. The CBC has identified significant manufacturing and service investment by GEPS in 15 countries,10 and GEPS sales operations in at least 56 countries. GEPS has been particularly astute in exploiting newly deregulated foreign electricity markets. Between June 1998 and the end of 1999, GEPS purchased 30 companies for more than $2.5 billion and half of GEPS’ current revenues come from industries it did not serve five years ago. Some operations in Canada, France, Italy, and Japan appear to be unionized. The CBC has only been able to detect a union presence in

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five of the fifteen countries where GEPS has significant direct investments and the number of non-union sites appears to be growing. If the employment figures for the division are accurate (the CBC has contested GEPS figures), then over half of GEPS oversees employees remain covered by collective bargaining contracts (Fig. 1). GE Appliances (GEA):11 GEA sells more than 12 million appliances each year in 150 countries. GEA corporate headquarters are located in the historic home of GEA’s “Appliance Park” in Louisville, Kentucky. Company-owned facilities produce refrigerators, dishwashers, ranges, and home laundry products. The division sources many more products from suppliers, and produces white goods under numerous brand names other than GE.12 GEA ranked fifth in revenues among GE’s seven manufacturing divisions in 1999 and profitability is considerably below the company average. In 1999, the operating margin was 11.5% while the company’s overall margin was 17.3%. Historically, GEA was a heavily unionized division, with up to three quarters of its U.S. production employees represented by the IUE, the IBEW, or the IAM.13 The CBC has identified six major manufacturing facilities in the United States that in 1999 employed almost 11,900 people. The core of GEA’s American production resides in Louisville, Kentucky, and to a lesser extent in Bloomington, Indiana. Union density across these facilities is about 72%, and workers are represented by the IUE, IAM, IBEW, and SMWA. Despite this high density, GEA’s U.S. plants have been severely downsized. As late as 1987, GE employed 13,000 union workers in Louisville, while today it has only about 5,500 employees. GEA also has roughly 2,000 first-tier and second-tier suppliers for production in the U.S. all of whom are assumed to be non-union. GEA claimed that in 1997 it employed 53,000 workers worldwide.14 GEA, even more than GEPS and GEAE, has exhibited intensive capital migration away from high wage locations, especially in the US, to low wage, non-union, overseas locations. While unions represent production employees at GEA facilities in Argentina, Brazil, Canada, Malaysia, the Philippines, and the U.K., the CBC has concluded that GEA is determined to continue its strategy of disinvestment from the United States and other high-wage countries. This pattern is due to three factors. Since ratification of NAFTA, GEA has increasingly shifted U.S. work to its Mexican facilities which have become major suppliers to the U.S. market. There has consequently been a consistent drain of jobs from the large, heavily unionized U.S. facilities toward its non-union Mexican facilities operated under GE’s joint venture with Mabe SA de CV. As discussed earlier, GEA has used its low cost Mexican capacity to wring concessions out of its U.S. locations. Second, market saturation across high income economies, combined with the price-setting power of big retailers in the U.S., have made high wage markets and production locations less profitable. In contrast, the potential for explosive growth

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in major developing countries, such as China and India, as well as extremely low production, and especially labor, costs have made these much more profitable markets. Finally, GEA has discovered a model of networked growth that may even make the highly profitable GE-Mabe maquila-based strategy obsolete. In 1999, after failing to find satisfactory local manufacturing partners in China and India, GEA settled instead for marketing GE-branded appliances manufactured by independent local vendors that have been approved as reaching GE production standards. As a result, GE is able to leverage its brand name while risking little of its capital and can produce GE-branded products at a fraction of the cost of its main production facilities. This intensely profitable, low risk Asian model of wholesale subcontracting or “contract manufacturing” may be where GEA will invest the bulk of its capital in the future. According to Fortune, the new mantra at GEA in Louisville is: “We manage markets, not factories.”15 It is unclear whether GEA will continue investing in “bricks and mortar” in low-wage countries or shift to contract manufacturing – the Mabe vs. China strategy. Under either strategy, its is clear that, “(u)nfortunately for the men and women who have worked hard to make high-quality GE white goods for almost a century, it appears that GEA is determined to continue its strategy of disinvestment from the United States and other high-wage countries.” (CBC, 2000, GE Appliances World Operations)

APPENDIX NOTES 1. Source: GE Aircraft Engines World Operations, prepared by the Coordinated Bargaining Committee of GE Unions (CBC), http://www.cbcunions.org, June 2000. 2. This total does not include joint ventures or recent acquisitions. 3. These figures do not include employment in numerous joint ventures. The employment figure for service operations are for 1996 and the CBC estimates that subsequent acquisitions would significantly increase worldwide employment. 4. These include: Canada, France, Russia, China, South Korea, Turkey, the Czech Republic, Germany, Italy, Japan, and Sweden. GEAE’s largest joint venture is with the government-owned Soci´et´e Nationale d’Etude et de Construction de Moteurs d’Aviation (SNECMA), CFM International (CFMI) in France. The GE-CFMI venture has existed since 1974, and operates more like a cooperative than an independent joint venture. The GE-CFMI venture has produced at least twice the number of engines than has GEAE on its own. 5. Works councils are also mandated in all European countries except Britain. 6. For example, neither parent company in the GE-CFMI venture can be compelled to include detailed information (employment, sales, investment, etc.) on the joint venture in their governmental reporting. 7. Although, especially in many European countries, suppliers may fall under industry-wide agreements and/or be required to have Works Councils in their facilities. 8. Source: GE Power Systems World Operations, prepared by the Coordinated Bargaining Committee of GE Unions (CBC), http://www.cbcunions.org, July 2000.

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9. This employment total does not include joint ventures or recent acquisitions. 10. These include: Canada, Austria, France, Germany, Italy, Norway, the United Kingdom, India, Japan, Saudi Arabia, Singapore, Brazil, Chile, Mexico, and South Africa. 11. Source: GE Appliances World Operations, prepared by the Coordinated Bargaining Committee of GE Unions (CBC), http://www.cbcunions.org, August 2000. 12. Additional products sourced by GEA through suppliers include: microwave ovens, room air conditions, water softening and filtering products, and freezers. GEA also produces under the following brand names: Canon, Creda, Durex, Hotpoint, Kenmore, Mabe, Madosa, McClary, Moffatt, Monogram, Patrick, Profile, RCA, Redring, White Westinghouse, Winner, and Xpelair. 13. Union density has always been much lower in repair services and non-existent in its call centers. 14. The employment figures may be somewhat lower today given the downsizing in the United States. This figure does not include employment in either its seven global joint ventures, employment by other manufacturers producing under license for GEA, nor its oversees supplier networks. 15. Non-attributed quote cited in GE Appliances World Operations.

PARTNERSHIPS OF STEEL? FORGING HIGH INVOLVEMENT WORK SYSTEMS IN THE U.S. STEEL INDUSTRY: A VIEW FROM THE LOCAL UNIONS Saul A. Rubinstein ABSTRACT This paper evaluates the only industry-wide process initiated by a union through collective bargaining to reorganize traditional work systems and transform labor relations. It analyzes attempts over the past decade by the United Steelworkers of America to introduce its model for a more participative work system in an effort to gain access to business information, share in business decision making, improve quality, reduce costs, and build better relations between management and the union in the U.S. basic steel industry. This study shows that the Cooperative Partnership Agreements have produced mixed results. Using survey and interview data, the paper compares plants that successfully implemented the CPA with those that did not and analyzes the reasons for the variation in their impact. Further the paper draws out the lessons from this unique union-driven contractual approach to industry reform.

Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 115–144 © 2003 Published by Elsevier Science Ltd. ISSN: 0742-6186/PII: S0742618603120057

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INTRODUCTION Over the past two decades the United States has witnessed a wide variety of arrangements by both management and organized labor designed to improve industrial relations while also changing work systems and enhancing productivity and quality performance (Eaton & Voos, 1994; Heckscher & Schurman, 1997; Ichniowski, Kochan, Levine, Olson & Strauss, 1996; Kochan, Katz & McKersie, 1986; Levine & D’Andrea Tyson, 1990; Osterman, 1994, 2000; Rubinstein, 2001a). Most of these efforts have been directed toward plants or facilities and were focused on operational problem solving and decision making, although a few (such as the CWA/ATT Workplace of the Future or Kaiser-Permanente) have been corporate level efforts. Further, the majority of these efforts have been initiated by management (Eaton, 1990; Schurman & Eaton, 1996). While some of these arrangements have been negotiated, most have been based on non-contractual agreements or understandings between the parties. This article analyzes the only union-initiated effort to reform work systems and labor relations across an industry through collective bargaining. Through the Cooperative Partnership Agreements (CPA) negotiated first in 1993, the United Steelworkers of America (USWA) attempted to introduce its vision and model for more participative and productive work systems throughout the basic steel industry. The CPA structured joint labor-management planning, problem solving and decision making processes at every level of the organization – shop floor, department, plant, division, and corporate – extending to union appointees for each company board of directors. It also prescribed participants from both the union and management at each level and included substantial training for all of them. In addition to improving relations and performance the USWA sought to increase its access to business information and influence over strategic as well as operational decision making. Virtually every steelmaker accepted the CPA language in their agreements with the USWA during these negotiations. Yet to date they have received little attention by industrial relations scholars, and no evaluation has been conducted of their implementation and impact. This paper examines the CPA experience over the past decade primarily from the perspective of the local unions involved. The purpose of the study was to assess the effectiveness of the industry-wide contractual language and the centralized uniondriven approach to workplace reform at the local level. This top-down negotiated approach to participation is unique in the U.S. and provides an alternative to the company or plant level patterns of diffusion of participative work systems seen in most other industries. Therefore, it is important to draw out the lessons from this experience for local and national unions as well as managers, policy makers and scholars. The data for this study come from a survey of the basic steel local unions

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covered by the CPA agreement and from interviews with local union leaders, managers and leaders from the USWA International.

BACKGROUND For decades the United States basic steel industry has struggled for its survival because of world-wide overcapacity due to increased global competition, the use of substitute products, and subsidized foreign producers (Noble, 1993). The unionized sector of the U.S. basic steel industry includes most of the large integrated producers who produce steel from iron ore. This sector has also faced increased competition from the emergence of domestic non-union mini-mills sector that produce steel from scrap metal, a process with cost advantages in raw materials and energy. Over this time period, the United Steelworkers of America which represents the vast majority of workers in the basic steel industry has seen its membership decline from 1.2 million in 1980 to less than 700,000 in 2001. Starting in the 1970s the large integrated U.S. steel producers were at a competitive disadvantage in terms of both cost and quality when compared with foreign competition, particularly from Japan. Among the reasons for the U.S. industry’s problems were antiquated technology, an industry-wide bargaining structure which separated wage increases from productivity improvements, and a bureaucratic system of job classifications and work rules designed for an environment of market stability and the promotion of labor peace. This Taylorist system was composed of narrowly defined jobs, individual incentives, standardized procedures, strong managerial controls and extreme specialization (Dertouzos et al., 1988; Hoerr, 1988). During the 1970s, steel industry executives and USWA leaders tried a number of tactics to deal with their competitive problems. They lobbied Washington to negotiate voluntary restrictions on Japanese steel imports and established joint productivity committees. However, these productivity committees were centralized, focusing on the union and company leadership. They failed to involve the workforce at the plant level and did not produce the results needed. The parties also bargained an Experimental Negotiating Agreement (ENA) which prevented strikes and lock outs. Throughout this period, steel management and the union were still committed to a centralized industry-wide bargaining structure as the way to solve the productivity problems of the industry. Typically one company, U.S. Steel, led the negotiations for the other 11 companies, and the entire industry adopted essentially the same agreement. This left little room for differences in work organization and wage rates as steel markets began to fragment and companies pursued diversification strategies (Hoerr, 1988).

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Since the focus of the industry had been on employment levels, wages, and employee buy-outs not on investment, technology, and the organization and improvement of production, competitive problems were not solved. Thus, the 1970s marked the beginning of a period of downsizing, mergers and bankruptcies in the industry that continue to the present. Concession bargaining followed in the 1980s and it contributed to a break up of industry-wide negotiations by 1985. In its place the USWA has been able to establish a less formal system of pattern-bargaining.

Labor-Management Participation Teams During the 1980 negotiations, the USW and the industry attempted a new approach toward dealing with their productivity and quality problems. The effort was called Labor Management Participation Teams (LMPT) and a two page LMPT Experimental Agreement (see Appendix I) outlined a set of organizing principles. While the Experimental Agreement was nationally negotiated, recognition was given to the fact that many of the industry’s productivity and quality problems existed at the plant level in the organization, and process improvement through widespread workforce participation was required to solve them. Unlike earlier efforts that were directed at top level committees or collective bargaining solutions (Hoerr, 1988), this initiative was focused on the work site by establishing problem-solving teams of rank and file union members and their supervisors. The LMPT Experimental Agreement indicated that participation was voluntary, and teams could take up matters such as “means to improve department or unit performance, employee morale and dignity, and condition of the work site. Appropriate subjects, among others, which a Team might consider include: use of production facilities; quality of products and quality of the work environment; safety and environmental health; scheduling and reporting arrangements; absenteeism and overtime; incentive coverage and yield; job alignments; contracting out; and energy conservation transportation pools.” LMPTs could also consider new bonus or incentive arrangements. On the other hand, LMPTs were urged to stay away from grievances or attempts to alter the collective bargaining agreement. Teams typically met weekly to work on problems ranging from quality and productivity to safety and the work environment, and union members along with their supervisors received up to forty hours of training in subjects such as problem solving, statistical process control, conflict resolution, meeting skills, and group dynamics. Some companies also had plant and department level union-management committees to administer the team process and solve problems at a higher level, although the emphasis of the LMPT processes was at the team or shop floor level.

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The LMPT experience produced mixed results as we will see from the analysis below. During the 1980s hundreds of teams were formed throughout the industry producing millions of dollars of savings and solving substantial safety, quality and productivity problems. To provide support for the effort, the USWA used its own national education facility, Linden Hall, to hold regular LMPT training sessions for its staff along with corporate management and local union and management leaders from the plants. The results were uneven however, as some companies never embraced the process while others dramatically reformed their labor relations and work systems. In order to capture the gains of LMPT and minimize this variation the USWA decided to strengthen the process by contract in the 1990s.

Earlier Attempts at Participation LMPTs were not in fact the first time that a plant level problem-solving initiative had been generated by the USWA. The first effort grew out of the organizing drives of the CIO (Steel Workers Organizing Committee, 1938) before WWII, and expanded extensively in the armaments industries during the war (Golden & Parker, 1949; Golden & Ruttenberg, 1942; Slichter, Healy & Livernash, 1960). USWA president Philip Murray promoted an effort that involved approximately 500 locals in plant level labor-management committees established to increase product quantity and quality in support of the war effort. For the most part these joint labor-management committees were based on the involvement of only top-level local union leaders and plant management. Since these committees were both off-line and top level, they could be accommodated within the Taylorist model of organization as it fragmented the production process, separating thinking and planning (management activity) from execution and implementation (the role of labor). While these efforts succeeded in increasing product quantity and quality, most tended to be relatively short lived. In fact most such arrangements disappeared by the 1950s as the need to bolster war-time production disappeared and as management reasserted its claim to its managerial prerogatives.

NEW DIRECTIONS BARGAINING In the early 1990s the basic steel industry was experiencing great difficulty. The U.S. economy was in recession and competition from foreign steelmakers and mini-mills was intensifying for the large integrated unionized producers. Under

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Fig. 1 Source: United Steelworkers of America.

the leadership of Lynn Williams who became president in 1984, the International union adopted a new strategy for bargaining in the 1993 negotiations. As mentioned earlier, while formal multi-employer bargaining had been abandoned by the companies, the union sought to maintain consistency across the industry through “pattern bargaining” which forced each company individually to accept the same contract negotiated with all other companies. The pattern for the 1993 negotiations was called the “New Directions Bargaining Program,” and it established twelve priorities for the union (see Fig. 1). This strategic approach to pattern bargaining was used in all basic steel negotiations throughout the industry during the 1993–1994 period, and virtually every steel company accepted this language for six year contracts (Kaufman, 2001).

Cooperative Partnership Agreement One of the key elements of the New Directions approach, the Cooperative Partnership Agreement (Item 1, Fig. 1) introduced into each company negotiations was a proposal to create a joint labor-management planning, problem solving and decision making process at every level of the organization – corporate, division, plant, department and shop floor. In this proposal the USWA attempted to build upon its experiences increasing the participation and influence of its members through the LMPT process of the 1980s. The specific practices the union

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wanted to carry over from LMPT included shop-floor problems solving teams, training, a departmental and plant level infrastructure for union and management leaders to support participation and teams, and union and management appointed facilitators. However, the USWA wanted to expand the effort in two ways – increasing union involvement in decision making at higher levels of the company and developing stronger contract language to assure consistency and compliance. While Williams felt that the LMPT process had produced important and tangible results for the union, its members, and the steel companies, he also thought it was too fragile, difficult to sustain, open to manipulation by management and subject to being “held hostage” by either side angry over other issues or looking for leverage.1 Williams believed the process should have less variation across companies and more stability which stronger contractual language could provide.2 He also wanted to extend participation to the strategic level of the companies and introduce employment security and organizing neutrality as necessary components of any labor-management partnership (Williams, 1993). LMPTs were more open to manipulation by management than arrangements more firmly founded in the agreement. [They were also open] to being held hostage and dependent on the good will of the players rather than being firmly grounded in the collective bargaining agreement. Former USWA President Lynn Williams

The Cooperative Partnership Agreements attempted to provide a framework for: (1) joint decision making at all levels of the corporation, from the shop floor to the board of directors; (2) full and continuing access to business plans, records, and information including products, pricing, markets, capital spending, cash flow, finance, mergers, acquisitions, joint ventures and new facilities; (3) jointly implementing new work systems and technology; (4) comprehensive education and training to provide the skills necessary for effective problem solving and participation. Specifically, improvements were targeted in quality, service, productivity, competitiveness, profitability, and safety. The agreement also advanced the goal to make the workplace “more equitable, less authoritarian, and less stressful.” The agreement established a multi-tiered structure with joint committees at the corporate, plant, and department levels, and at the shop-floor. The contract also specified the membership, roles, meeting frequencies, access to information and reporting requirements of each committee with the exception of shop-floor teams. In addition, the USWA had at least one union-nominated seat on each company board of directors.

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Minimum training levels were established for each committee: plant level – five days per year; department level – twelve days per year; shop-floor teams – twelve days per year; other union and management leaders – five days per year; and all members of the organization, both union and management were to receive at least a one day orientation session. The agreement stated that “Both Company and Union representatives shall receive training by their respective organizations . . .” However, in practice the agreement also stipulated that training, “other than union training, shall be jointly developed and implemented.” However, the USWA policy has been that CPA training be conducted “by the union and for the union only.”3 Finally, the agreement established a joint process for workplace redesign including the implementation of self-directed work teams and a shifting of responsibility for daily operations, planning, scheduling, and administration from supervision to bargaining unit members. It also outlined a process for the implementation of technological change including advance notice and information. If the parties were successful in implementing workplace redesign, then the union received joint decision making authority over the effects of any technological change including the number and types of jobs required by the new technology, the skill and training requirements, the inclusion of new jobs in the bargaining unit, new work rules or operating procedures, and any health, safety, or environmental programs required. While both the CPA and LMPT were established through national negotiations, they differed in important ways. For example, LMPT was a two-page voluntary “experimental agreement” that offered general enabling language for local parties to design a process to develop and support joint union-management shop-floor problem-solving teams. The fourteen-page CPA, on the other hand, emphasized union involvement in higher-level strategic decision making, workplace redesign, and change in technology. It also prescribed committee structures and who would participate from the union and management leadership at each level of the organization, particularly corporate, plant and department. In addition, while LMPT training was delivered jointly to union and management participants, CPA training for union members was conducted by the union. The Cooperative Partnership Agreements were negotiated first in 1993 under six-year contracts and they were renewed again with little change in the 1999 round of collective bargaining under the new USWA International President, George Becker. This top-down contractual approach to industry-wide workplace reform provides an alternative to both the company or plant-specific patterns of diffusion of high performance and participative work systems seen in most other industries, and to the earlier LMPT efforts in the steel industry itself.

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DATA AND METHODS This study uses a mix of qualitative and quantitative data. The quantitative data come from a survey of union leaders in all plants in the basic steel industry that have negotiated Cooperative Partnership Agreements. The data is used to compare the experiences of individual plants and companies in their implementation of various components of the agreements. The surveys were filled out by presidents, grievance committee chairpersons, union CPA coordinators or other union officials. The Cooperative Partnership Agreements were negotiated with 11 different companies in the basic steel industry. In two cases – Inland/Ispat and LTV – the CPAs were put on hold due to disputes between the USWA and the companies over organizing, however three plants in those companies continued to implement the CPA and participated in this study. The remaining companies had twenty−seven plants that were covered by the CPA language, bringing to thirty the number of possible plants to include in this study. Twenty−seven local unions responded covering twenty−four of these plants (in some cases more than one local union represents employees in one facility, typically separating production and maintenance from the office and technical workers). The survey asked respondents to rate the implementation of various components of the CPA. Specifically, it examined the extent to which the organizational structures described in the agreement were implemented and effective, particularly the corporate, plant and department joint union-management committees, union nominated board members, internal facilitators, and the shop-floor problem solving teams. The questions also covered the sharing of business information, and the extent of training actually given to employees as part of the CPA implementation. Further, the survey asked about the use of the provisions for workplace redesign and joint technological change, and about barriers to the implementation of the CPA. In addition, the survey dealt with the overall benefits of the agreement for the union, management, and employees, as well as the impact of the CPA specifically on quality, job security, productivity, decision making, safety, cost reduction, problem solving opportunities, skill development, and union-management relations. Finally, the study investigated the earlier efforts to implement LaborManagement Participation Teams (LMPT) prior to 1993. Questions were either yes/no or structured as five-point scales, with answers ranging from Not Effective (1) to Very Effective (5). Each survey respondent was also invited to write additional comments about their experience with the implementation of the CPA, and most did. I will quote from a number of these comments to illustrate the common themes raised by the surveys. These qualitative data are supplemented by over twenty-five interviews, including nine

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with corporate and plant-level steel company managers and nine with USWA International union leaders, to assess their views of the effectiveness of the CPAs. The balance of the interviews were held with local union leaders. Most of the interviews were taped and transcribed and I will use excerpts from them to illustrate the points they raised.

RESULTS As we can see from Table 1, the implementation of the Cooperative Partnership Agreements was not uniform across the industry. While (96%) reported establishing CPAs, and (81%) reported the agreement was still operating, there was wide variation in the degree to which they complied with the contractual requirements for information sharing, training, and structuring joint committees at all levels of the organization.

Information The CPA called for extensive sharing of business information with the union. The majority of local unions reported receiving information on markets (80%), business plan development (75%), competition (70%), and financial performance (62%). However, information on long-term strategy (40%) was less forthcoming.

Training Sixty-seven percent of the locals reported receiving training as part of the CPA implementation. However, the contract called for five days of training per year for the Plant Leadership Committee and twelve days per year for Department Area Committees and Problem Solving Teams. In practice the actual amount of training conducted for these groups averaged between two and two and a half days per year, substantially less than anticipated by the agreement. Further, the required one-day orientation for supervisors was conducted in only (33%) of the plants.

Structure While (72%) of the local unions reported that a Corporate-Level Joint Strategic Partnership Committee had been formed between executives of the company and

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Table 1. Descriptive Statistics. % of Locals

N

Did Local Establish Cooperative Partnership Is CPA Still Operating Did Your Local Establish LMPT

96% (0.196) 81% (0.402) 77% (0.429)

26 21 26

Information Has the Local Regularly Received Information on Markets Business Plan Development Competition Financial Performance Long-Term Strategy

80% (0.41) 75% (0.444) 70% (0.47) 62% (0.479) 40% (0.502)

20 20 20 21 20

Structure Have Company-Level Joint Strategic Committee Receive Reports from Joint Strategic Committee Have Contact w/Union-Nominated Board Member Estab. Plant CPA Joint Leadership Committee Estab. Plant Level LMPT Committees Estab. Department/Area CPA Committees Department Level LMPT Committees Estab. Shop Floor Problem Solving Teams Have Union CPA Facilitators Have Company CPA Facilitators Implemented Workplace Redesign under CPA Estab. Joint Tech. Change Program under CPA CPA Results Regularly Communicated to Employees

72% (0.458) 28% (0.443) 12% (0.325) 85% (0.362) 86% (0.351) 56% (0.506) 73% (0.455) 60% (0.488) 50% (0.5) 28% (0.462) 42% (0.503) 4% (0.208) 34% (0.472)

25 20 26 27 22 25 22 24 23 21 24 23 22

67% (0.467) 66% (0.483) 33% (0.485) 73% (0.455) Days per Year 2.33 (2.01) 2 (3.6) 2.53 (3.25)

23 21 18 22 15 13 13

100% (0.0)

22

Training Received Training for CPA Conducted Orientation for Members Conducted Orientation for Supervisors Received Training for LMPT Scope of Training Training for Leadership Committee Training for Dept. Area Committees Training for Problem Solving Teams Barriers Believe More Could be Accomplished with CPA What has Prevented further Development of CPA Management Resistance Lack of Training Lack of Resources Lack of International Support Union Resistance Employee Resistance

86% (0.351) 55% (0.509) 41% (0.503) 32% (0.476) 27% (0.455) 18% (0.394)

22 22 22 22 22 22

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international union leaders, only (28%) of the locals were receiving the regular reports on their activities called for in the agreement. Most plants (85%) had established a Joint Leadership Committee at the plant level, but far fewer (56%) had organized the Department/Area Committees or formed shop-floor problem solving teams (60%). Half of the plants had union facilitators while only (28%) had facilitators out of the management ranks. Workplace redesign efforts had taken place in (42%) of the plants, yet only (4%) had attempted the provisions for a Joint Technology Change Program. Just over one-third (34%) communicated the results of the CPA regularly to employees. Further, only (12%) of the local leaders had regular contact with the unionnominated member of their Board of Directors. Impact of CPA Local leaders did not rate the overall results of the CPA for the union as positive (2.59). The assessment of these union leaders was that management faired slightly better (3.04). Improvements were judged highest in understanding the business (3.52), safety (3.23), access to information (3.23), and quality (3.04). Problem solving teams were reported to have a greater positive impact on quality (3.46), safety (3.46), and on cost reduction (3.07) (see Table 2). Comparison of Locals with Successful and Unsuccessful CPA Experience Given the variation in CPA implementation across the basic steel industry, I used the median ratings of overall CPA results for the union to divide the locals into two equal groups which allows us to compare those plants with successful CPAs “High CPA” (3.54), with unsuccessful ones “Low CPA” (1.63), to see what factors were associated with success and failure. As is clear from the means comparisons in Table 3, there are statistically significant differences between the CPA processes in the two groups: (1) The management of the successful plants shared more business information with their union counterparts than did the unsuccessful plants: business plan information (3.8 vs. 2.55) and business strategy (3.1 vs. 1.66). (2) The successful plants had implemented more of the supporting infrastructure outlined in the contract: Plant-level Joint Leadership Committees (100%

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Table 2. CPA Results. Scale of 1–5 CPA Results for Union CPA Results for Company LMPT Results for Union LMPT Results for Company

2.59 (1.14) 3.04 (1.25) 2.65 (1.46) 3.1 (1.44)

22 22 20 19

Overall CPA

Problem Solving Teams

Better Understanding of the Business Improved Safety Improved Access to Information Improvement to Quality Increased Worker Responsibility Skill Development Productivity Improvement Greater Problem Solving Opportunities Cost Reduction Improved Union-Company Relations Employee Participation in Decision−Making Union Decision Making Improvement to Job Security Influence over Introduction New Technology

3.52 (1.32) 3.23 (1.44) 3.23 (1.51) 3.04 (1.2) 2.76 (1.22) 2.76 (1.17) 2.71 (1.3) 2.71 (1.41) 2.7 (1.17) 2.42 (1.28) 2.33 (1.06) 2.38 (1.2) 2.38 (1.32) 2.09 (1.22)

21 21 21 21 21 21 21 21 20 21 21 21 21 21

Support Local Union Involvement in CPA Management Involvement in CPA

3.17 (1.07) 2.21 (1.04)

23 23

3.07 (0.954) 3.46 (1.12)

13 13

3.46 (0.776)

13

2.76 (1.09)

13

3.07 (1.18)

13

2.61 (1.19)

13

Note: Standard deviations in parentheses.

vs. 72%), but even more importantly Department/Area Committees (91% vs. 27%). (3) Those plants reporting High CPA results for the union had significantly more overall training (91% vs. 40%); Department/Area Committee training (4.17 days vs. 143 days); coordinator/facilitator training (6.17 days vs. 2.24 days); and membership orientation (100% vs. 40%). (4) The locals in the High CPA group also reported that their management counterparts were also significantly more involved in CPA implementation (2.81 vs. 1.6). (5) Improvements specifically in safety, quality, union decision making, productivity, and costs were different for the two groups as well, with significantly higher results for the High CPA group.

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Table 3. Comparison of Successful and Unsuccessful CPAs. High CPA

Low CPA

N

2.55 (1.23)** 1.66 (1.11)*** 20% (0.421)

19 19 21

Information Sharing Plant Committee Sharing Business Plan Plant Committee Sharing Strategy Regularly Communicate CPA to Employees

3.8 (0.788) 3.1 (0.994) 45% (0.522)

Structure Plant CPA Joint Leadership Committee Estab. Department/Area CPA Committees Estab. Shop Floor Problem Solving Teams Company-Level Joint Strategic Committee Plant Committee Meeting Frequency Number of Union Coordinators Number of Company Coordinators

100% (0.0) 91% (0.301) 73% (0.467) 60% (0.516) 3.31 (0.404) 1.9 (2.72) 0.555 (1.33)

72% (0.467)* 27% (0.467)*** 60% (0.516) 82% (0.404) 2.78 (1.07) 1.25 (1.66) 0.5 (0.836)

22 22 21 21 18 18 15

Training CPA Training Days/year of Department Training Days/year of Coordinator Training Membership Orientation Supervisor Orientation Days/year of Problem Solving Team Training

91% (0.301) 4.17 (4.53) 6.17 (3.43) 100% (0.0) 43% (0.534) 4 (4.04)

40% (0.516)** 0.143 (0.378)** 2.14 (2.67)** 40% (0.516)*** 30% (0.483) 1.28 (1.88)

21 13 13 19 17 13

Involvement in Implementation Management Involvement in CPA Local Involvement in CPA

2.81 (0.981) 3.36 (0.924)

1.6 (0.699)*** 3.2 (1.13)

21 21

Results Overall CPA Results for the Union Safety Improvement Quality Improvement Increased Union Decision Making Productivity Improvement Cost Improvement

3.54 (0.687) 4.09 (1.04) 3.72 (0.786) 3.36 (0.674) 3.27 (1.10) 3.27 (1.0)

1.63 (0.504)*** 2.3 (1.25)*** 2.3 (1.15)*** 1.3 (0.483)*** 2.1 (1.28)** 2 (1.0)**

22 21 21 21 21 20

Note: Standard deviations in parentheses. ∗ Significant at the 0.10 level. ∗∗ Significant at the 0.05 level. ∗∗∗ Significant at the 0.01 level.

Predicting CPA Results for Local Unions Table 4 shows the results of regression models using CPA training, the presence of Department/Area Committees, coordinator/facilitator training, and management

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Table 4. Predicting CPA Results for Local Unions. CPA Results for Local Unions Eq. (1) Independent Variables CPA Training

Eq. (3)

0.607*** [3.417]

0.123 [0.578] 0.542** [2.54]

0.386* [1.826]

Dept./Area Committees Coodinator/Facilitator Training Management Involvement in CPA Implementation F for Equation R2 Adjusted R2 N

Eq. (2)

3.334* 0.149 0.105 21

Eq. (4)

Eq. (5)

0.535* [2.099]

0.473* [2.003] 0.398 [1.685]

11.677*** 5.371** 4.407* 0.369 0.374 0.286 0.337 0.304 0.221 22 21 13

Eq. (6)

Eq. (7)

Eq. (8)

0.45** [2.195]

0.217 [0.814] 0.272 [1.182] 0.469 [1.665]

0.279 [1.233] 0.601** [2.659]

4.812** 4.818** 4.701** 6.954** 0.49 0.202 0.61 0.582 0.389 0.16 0.481 0.498 13 21 13 13

∗ Significant

at the 0.10 level. at the 0.05 level. ∗∗∗ Significant at the 0.01 level. ∗∗ Significant

involvement in CPA implementation to predict positive CPA results for the local unions. Because of the limited sample sizes available for the regression analyses, these results should be interpreted with caution. They are presented here to further explore and illustrate the separate and joint effects of these variables on CPA performance. Equations (1)–(8) introduce variables individually, and in combination, due to the sample size. (1) shows the independent effect of CPA training; (2) demonstrates the separate effect of the Department/Area Committee structures. Independently, both CPA training and the presence of Department/Area Committees were found to be statistically significant predictors of positive overall CPA results for the union. However, in combination; (3) CPA training was not a significant predictor; (4) shows the independent effect of coordinator/facilitator training, a significant predictor; (5) combines coordinator/facilitator training with department/area committees resulting in an adjusted R2 of 0.389; (6) introduces an assessment of local management’s involvement in CPA implementation and is found to be a significant predictor; (7) and (8) combines management’s involvement with coordinator/facilitator training and department/area committees; (8) provided the best fit and allows us to explain almost (50%) of the variation in CPA results for local unions. In summary, these regression results reinforce the earlier findings (Table 3) that the Cooperative Partnership Agreements were more successful for local unions

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when they have: (1) mid-level department structures; (2) training resources; and (3) management involvement.

BARRIERS TO IMPLEMENTATION Local union leaders identified several barriers to the successful implementation of the CPA. They perceived that they were much more involved in implementing the CPA (3.17), than were their management counterparts (2.21) (see Table 2). Further, every local leader believed more could be accomplished with the CPA and blamed the lack of progress on management resistance (86%), lack of training (55%), lack of resources (41%), lack of support from the USWA International (32%), union resistance (27%), and employee resistance (18%) (see Table 1). However, the data presented thus far focus on an assessment of the union-initiated CPA from the point of view of the local unions. The quantitative data will now be supplemented by interviews and statements from plant and corporate management as well as from local and national USWA union leaders who were reacting to the survey and its findings. I will use quotes to illustrate the common themes.

Managerial Resistance Previous research (Eaton & Voos, 1994) has identified managerial resistance or the lack of support as an ongoing constraint to joint labor-management efforts at workplace reform. It was somewhat surprising that (86%) of union leaders report this resistance even to a negotiated agreement. While the Cooperative Partnership Agreements are part of the contract, that does not necessarily mean they will be implemented and enforced as can be seen by the following statements from those responsible for contract administration: This local union has been involved in trying to implement change under the language of the contract. Due, somewhat to the constant change in the plant leadership nothing tends to move forward. We believe the Partnership language provides great opportunities for both union and management. I strongly feel there is little or no commitment for any involvement by the International or corporate. The Partnership language is largely viewed as just another “something” that can be, and is, ignored. Local Union Vice President Company upper management is resisting our understanding of the partnership language. They have a continuous improvement process in place and are not living up to our language. But we will stand strong on this language. Local Union Grievance Committee Chairman

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Its about power and control of the workplace, the bosses do not want to turn it over to labor, its frustrating. USWA International Field Staff

Underlying part of the managerial resistance problem is turnover, an area identified in previous research (Eaton & Voos, 1994). When management who help create a partnership and who develop strong working relationships with union counterparts are replaced by others without those experiences, the result is often an erosion of managerial support: These Partnership Agreements are only as good as the top level of both organizations want them to be. By that I mean that if it isn’t top driven, it will break down and fail somewhere on the way to the shop floor level. Our General Manager at the inception of the effort would not tolerate any manager trying to sabotage the program. When he was replaced, the old management attitude returned and eventually the few good managers who believed in this joint effort were driven from the company. The gains that were made were eventually lost and the employees started to blame the union for all of management’s negative decisions. Local Union President I started in this process in 1989. Over the last five years when we hired management from the outside things seemed to deteriorate rapidly. They are not interested in this process, and have tried to dismantle it . . . While I do believe that the Cooperative Partnership Process is the way to go, I feel that it has just about run its course here unless we get new management that believes in the process. Local Union Coordinator

Another union leader saw the benefit in trying to institutionalize the partnership through the contract rather than relying on individual leaders. If the leadership changes, and if we based all of our credibility on a good leader for management and that changes, now the union is hung out here. When our plant manager left we had a new plant manager who didn’t talk to us for 17 months. So although he wasn’t anti-partnership he also wasn’t telling the superintendents what his position was. So many of them simply reverted back to the old management style because that’s really what they wanted in the first place. If there is a way that it’s not based on a person, it’s based on some sort of relationship – maybe how it’s written [in the contract]. Local Union Coordinator

The managers interviewed recognized the problem with turnover in leadership, but pointed out that changes in union leadership can also be detrimental to the partnership process: We have not taken as much advantage of CPA as we could have due to changes in leadership, both union and management. Particularly with outsiders coming into management there’s lots of management churning. The new managers are not connected with the process and the benefits, they do not make the connection with the long term benefits of participation. Vice President Human Resources and Labor Relations

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When the local [union] leader left to become an international staff rep, it hurt this plant immeasurably, because that leadership and that guidance was no longer there. He was the visionary. We’ve lost that vision there. Here’s a guy that you can sit down with, and we can work out problems. In my opinion, probably the most crucial thing we’ve lost. Management Coordinator

Another form of managerial resistance expressed by union leaders was management prioritizing its own agenda over time to the detriment of a truly joint partnership process: I have been here as a union rep thirty years and as always it starts out with management as a 50–50 deal and then they want it all. Local Union President We had a fairly active partnership but even then it was the company trying to get what it wanted only. The rest of the partnership language and sharing of decisions was not addressed. Local Union Executive Committee Member

Local Union Resistance An alternative perspective on the issue of resistance is offered by a senior human resources manager who argued that rather than managerial resistance, the problem is one of scarce resources coupled with the reluctance of union leaders to give up control to their members. The issue of the tension between local leaders and members has been identified in previous research (Schurman & Eaton, 1996): Some things that get into the collective bargaining agreement are enabling, not binding on either side, not binding that anything has to be done. Sometimes in labor agreements you carry forward language without actively implementing it. The CPA is not a priority given our financial conditions, so the union does not press us for training. It will not help operations immediately. I do not see management resistance. There is a recognition that limited things can be done with limited resources. These processes dilute the local’s authority so there is some resistance there too. They are reluctant to relinquish control to the members. There is reluctance on the part of the union to get involved in cooperative management, and management resists relinquishing responsibility to the union. When the union is given the opportunity they do not take it because they don’t want the responsibility. Vice President Human Resources

Further, it is not necessarily the case that union leaders are rewarded by the membership when they assume the new roles required by the partnership (Rubinstein, 2001b). This difficulty was recognized by this HR manager: Some strong union leaders have been disenchanted with the politics of the union. They liked participation but the membership has not recognized or rewarded them for it. None of the early leaders from LMPT are here now. Vice President Human Resources and Labor Relations

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On the other hand, union leaders recognized the need for strong local support of the partnership. Earlier research (Rubinstein, 2001b) has shown that union leaders need to develop and articulate such an agenda in order to make the partnerships work: I just think its extremely important that the union controls the program. The programs that work the best are the ones where the union’s involvement is sustained. Local Union Coordinator If, from the beginning the union had developed the concept of (50%) or more “ownership” of the process, we would be further down the road to that end. Local Union President

However, participation in a partnership does not necessarily mean cooperation, it means joint decision-making: The problem is that we think that when we are working in a partnership that we have to be compliant. But I’m of the opinion we could be just as militant, or maybe more militant in that area simply because [the CPA is] a different tool and at least we have their ear. Which gets to the (70 or 80%) of the people who are our members, they go to work each day and we never hear from them, and this is the stuff that they want. Local Union Coordinator

Structure The surveys pointed to a problem in many plants with implementing an infrastructure integrated across the organization at all levels to support the joint efforts. This finding was supported in the interviews: With CPA they [management] do not care about the teams, only the top, its not integrated. The Cooperative Partnership Leadership Committee just shares information, they do not engage in joint problem solving or decision making. Local Union Coordinator

Training The survey found that employees had received far less CPA training than was called for in the contract and this was reinforced in the interviews. Further, unlike the LMPT process that preceded it, the CPA provided union-only not joint union-management training. Typically, union-only training is complemented by joint training so that the parties can learn to work together and build trust in a joint educational process. The CPA states that “both Company and Union representatives shall receive training by their respective organizations . . .” It also

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states that “Training . . . other than Union training, shall be jointly developed and implemented.” The policy of the International union has been that the training for its members would be conducted by the union, a decision that caused concern for managers as well as some union leaders: Union-only training hurt. Yet the union training funds are not used for CPA. These funds are used to fund the Institute for Career Development and considered a benefit to members and are not supposed to be used in ways related to the workplace. Vice President Human Resources CPA does not cover training the management group and they need it. You have to train the salaried people too, and its not been done. You must train both groups. Vice President Human Resources and Labor Relations National Steel wanted joint training vs. the union-only training called for in [the] CPA agreement – training by union, for the union only. National saw this as backsliding to a uniononly process, so not all National Steel locals participated in our workshop. USWA International Headquarters Staff

The decision to emphasize union-only training conducted by the union resulted in two negative outcomes. First, since training was to be conducted by the union only, the International was hard pressed to provide the resources necessary to support the training effort throughout the industry, therefore training was constrained. Second, the opportunity to develop team-based working relationships between union members and management through the joint training intervention was missed. On the other hand, the decision to conduct union-only training was also assessed positively by the International as a way to make sure management did not subvert the process and union values were maintained: Our perspective is to make sure that the process is not averted and that it does not disrupt union values. The company has financed union only training for union leaders of that process. This met solidarity concerns. USWA International Officer

USWA International Support Management, local union leaders, and even USWA leaders themselves criticized the lack of attention and resources given to the CPA by the International union. This problem may be due in part to the capacities and structures of union organizations (Heckscher & Schurman, 1997; Rubinstein, 2001b): We the International did a terrible job at communicating to people that this was a tool. We are hard pressed to get people to understand. We did not live up to our commitment to do training – we did one or two sessions. We did not put resources into it. The International just did not commit anything to it. Ninety-five percent of the time we are firefighting. We do not have time

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for the strategic implementation to resolve long term problems. We created a tool without having the time to use it. The commitment to implement and do it is not there now to make it work. Senior USWA International Staff International screwed up bad, never really tried. They said here’s an option, do what you will with it, little training. Never put together our program, resources, training. Its never been our priority. Really migrated away from it. Never really explained to the staff how to administer CPA like part of the labor agreement. The union is not good at doing stuff without a gun to our head. As an organization we ought to do it. When our back is to the wall, and we have to do it, we finally act. CPA needs the International’s attention. We are not business focused. Its not what it could have been, not what we meant it to be. USWA International Field Staff We concluded that a train-the-trainer process would tie up the International too much. USWA International Headquarters Staff

This last comment is in stark contrast to the International’s involvement in the earlier LMPT effort throughout the 1980s and early 1990s. While the union did hold some workshops for its members at the outset of the CPA, follow-up was limited by time and resources. On the other hand, the union held multiple joint LMPT training sessions for union and management leaders and facilitators at its training and education center, Linden Hall, outside Pittsburgh. It also conducted regular LMPT workshops at its conventions for local leaders and International staff to build skills, share experiences, and develop union policies and agendas. While the CPA is a contractual obligation, the union did not attempt to enforce the language as a strategy for implementation. This caused frustration for local leaders as well as International staff: The international union does not enforce the CPA. They are not involved. The staff rep attends but does not challenge, does not step in. Local Union Coordinator I don’t think there’s been an aggressive drive on the part of the International to do it. I don’t know if the union membership has ever really understood the power of that language. It’s top down. I think it would have worked if International had a big staff that was in charge of aggressively pushing. Now it’s just an afterthought. Senior USWA International Headquarters Staff

While recognizing the problem of union resources, this VP of Human Resources pointed to the unused power the union has in the CPA contract and the influence the International could have on executives: The international leadership has changed, they have less involvement. Their resources are very limited as far as participation, they have a demanding workload on the staff and the International does not provide resources to support CPA at the local level. We’ve just not put in the resources to keep it alive.

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Union can influence management more. They have contractual language and they have influence. They will have more influence on the president of the company than will the VP of HR. It was the union that spearheaded LMPT in the 1980s. Vice President Human Resources and Labor Relations

Comparison with LMPT Some of the most interesting findings concerned the comparison and linkages between the CPA and the LMPT process that preceded it. As Tables 1 and 2 indicate, while not as widespread as the CPA (77% vs. 96%), the LMPT process showed slightly higher, albeit comparable results for local unions (2.65 vs. 2.59), and management (3.1 vs. 3.04). It also had comparable implementation of plant-level joint committees (86% vs. 85%), but more extensive training (73% vs. 67%) and much greater use of department-level joint committees (73% vs. 56%) – both elements of the most successful CPAs (see Tables 3 and 4). I conducted interviews with union leaders from the five locals reporting the best results from the LMPT process.4 In all cases they reported that their partnerships with management faired worse under the CPA. (Some of their explanations for this are quoted below.) I also examined the five locals reporting the best results from CPA, and an interesting pattern emerged. Two of the five were also in the group reporting the most positive results from LMPT, although as just mentioned their leaders reported a regression in moving to CPA. In addition, two of the other three high performing CPA locals had not even been able to initiate an LPMT process. Therefore, for those locals who had well developed and established LMPT processes, the prescriptive CPA language may have actually undermined the locally designed effort. On the other hand, for those locals that were unable to begin a joint process, the authority of the CPA contract may have helped them overcome the barriers to getting started. The following quotes from local union leaders and an International staff representative support this conclusion about which locals benefited from the CPA and which did not. These leaders describe how a strong LMPT process may be undermined by the implementation of CPA in two ways. First, strong prescriptive contractual language is perceived as rigid and not responsive to local needs. Second, key leaders who may not have held official union positions but who were appointed by the local leadership because of their skills or influence played important roles in the LMPT process. These individuals had no identified role in the CPA language and were therefore replaced by elected local officials who had contractually prescribed roles in CPA, but may have had no interest in the partnership: The plants that have benefited are the ones that had nothing under LMPT. The plants that were hurt were the ones with functioning LMPT as the new structure destroyed membership on

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older functioning plant and department committees. The CPA dictates who the people are that participate. You lose the people you could appoint under LMPT. Now there is less ownership by the local then there was with LMPT. Under LMPT the local was more involved. Now there is less of a role for support and facilitation by the internal coordinators. They became an arm of HR. Local Union Coordinator Well, under LMPT the local had input. They ran it, the union ran that LMPT. It was successful, and the union was very active. They got the membership involved. And where they did, they did some important changes to operations. The Partnership agreement now, the union doesn’t feel part of it. See, a contractual obligation, you have a structure, that’s very rigid. LMPT was very loose. The union had its own aggressive initiative, and they were aggressive, were able to do things and have some input. They don’t feel they have it anymore. I feel the CPA hurt locals with strong LMPTs. Because under the loose LMPT, they were in charge and they did everything and they pushed everything. And the companies went along with it because it helped the companies. In the locals LMPT was a different group. The LMPT group usually was separate and apart from the officers. They would find good people. Now under the new partnership agreement you’ve got the president involved, you’ve got the grievance committee involved. They [the International] dictated an administration. You have to have a president who understands that job. Senior USWA International Headquarters Staff The LMPT program still is in existence and we have many of the benefits of Partnership CPA because LMPT had already existed. We have quarterly reviews with the CEO and top corporate officials. The local union has a much more open access to corporate level managers than I see existing in [the rest of] the industry. Local Union President

Some local leaders also perceived an erosion in decision-making authority in the CPA because the language emphasized what the union would have to do under workplace redesign to achieve joint decision-making authority, and how management retained the ultimate decision-making authority. The LMPT agreement did not specify who had decision-making authority. Rather it focused on legitimizing areas for joint improvement. The USWA LMPT training emphasized the use of consensus decision-making: Overall, I think just the relationship has deteriorated. Part of it is that we always knew that management could make any decision that they want. But to have it written into the main contract – the Partnership language kind of took it back and said, well, we’re going back to doing business as usual. The [CPA] language steered us back to that, because the last thing [the] language says is that if you guys can’t agree, management has the right to unilaterally decide rather than work it out by consensus. That’s the language today. It didn’t say that then [under LMPT]. This language blew consensus right out of the water. Looking at the history of the grievances from ’90 to ’93 – they went spiraling downward. That meant things were happening here. If you look at the years since then, grievances have been going up. That means something isn’t working. Local Union Coordinator

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These quotes also speak to the issue of whether a centralized contractual agreement can be an effective approach to workplace and work-relations reform. Both LMPT and the were part of national contract language. Yet, as discussed above, LMPT was seen as enabling language establishing a set of general guiding principles, while the CPA was more prescriptive. Sabel (1993) and Ellerman (2000) provide theoretical arguments suggesting that these processes must be developed locally based on a set of enabling and guiding principles rather than mandated through prescriptive contractual language. Here are the views of both union and management leaders on this question: In 1993 when we legislated how things will be, it hurt the effort locally. We really got to a position where we over reached. It was the wrong way to go – too much [language] to put in there. USWA International Field Staff The ’93 agreement was not a positive. When you make language more specific you lose the focus of what you are trying to accomplish. Better to have goals and let the parties figure out how to get there instead of specifying a roadmap and a structured approach. We needed more emphasis on the objectives and let the parties decide how to get there. It starts with goals then the structure and training follows. If you start with the structure and training then you do not get support from the leaders. They are turned off by a mandated structure. More general enabling language is better. Need a process and must develop structure internally. When you negotiate industry-wide then everything has to be the same for everybody. That’s not the way to do it, needs are different. Vice President Human Resources and Labor Relations

This last comment speaks to the problem of an industry-wide approach that is not flexible enough to provide for variation based on local needs. Industry-wide language with guiding principles is certainly an alternative. Research has also shown that there are clear benefits to designing participation efforts as a voluntary process for individuals (Eaton, Voos & Kim, 1997). The shift from LMPT to CPA was perceived by these management leaders as a shift from a voluntary to a mandatory process: Superintendents felt that once the [CPA] language became hard, written language, it hurt them. Also, LMPT was voluntary. CPA took away some of the volunteerism. We all thought from the experiences we had seen specifically, when companies made their process mandatory with their contract, their whole process fell apart. We all here said jointly, we’ll never make that type of mistake. We’ll never put it in the contract, make it mandatory and force people into doing that, because we know what the results are. Management Coordinator There will be a backlash away from mandated behaviors. Individual companies all need to deal with issues in our own ways. Concepts are good, but not a mandated process. That may be what we’re seeing here with the CPA, retrenchment on both sides. In this detailed CPA process, we agreed to the pattern language and both parties [simply] allowed implementation to take its own course. Vice President Human Resources

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CONCLUSIONS AND IMPLICATIONS The experience of the USWA in implementing Cooperative Partnership Agreements across the U.S. basis steel industry has been mixed. The agreements appear to have generally increased the sharing of business information and to a somewhat lesser degree many local unions reported positive results in the areas of quality, safety, decision-making, productivity, and cost reduction. However, in most cases the contractual provisions for CPA implementation have not been completely fulfilled. In particular, training was far less extensive than anticipated by the agreements, and many plants lack the departmental joint structures and team efforts on the shop floor. Further, provisions for joint workplace redesign and union involvement in technological change have not been extensively implemented. Comparisons of successful and unsuccessful CPA implementation show significant differences in the extent of training, sharing of information, development of mid-level structures to support shop-floor teams, and managerial involvement. When these components were in place the CPAs provided positive results for the locals unions involved. Further, three main barriers to more complete implementation of the Cooperative Partnership Agreements were identified: The first was managerial resistance, the second was the lack of resources and priority given to the CPA by the International union, and the third was the nature of the agreement itself. The challenge for the USWA with the CPA was to get both a commitment through collective bargaining that the parties can’t walk away from, and the resources to implement the agreement effectively. These mixed results on the CPA should not be interpreted as failure by the USWA. Rather they represent a glass half full, diffusing workplace reform at a rate comparable or better than the rate of diffusion nationally (Osterman, 2000). The CPAs have also expanded the earlier LMPT efforts focused on the shop floor to a more strategic level involvement in decision-making. These union-led efforts in the steel industry also appear to have had more staying power than joint unionmanagement efforts such as the “Workplace of the Future” in telecommunications. More importantly, the experience of the USWA with the Cooperative Partnership Agreements sheds light on the factors that influence whether a centrally negotiated approach helps or hinders adoption and diffusion of workplace reforms: (1) Negotiated language might better focus on the key principles for partnership arrangements at each level of the organization rather than specify detailed standard rules regarding the structures and membership. When a contract mandates what has to happen at each level of the partnership arrangement the local parties may resist.

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(2) Contract language should build on the base of workplace innovations that may already exist at local levels, and be sensitive to the view that any centrally negotiated language may threaten those that have already begun their own efforts based on local needs. The negotiation of basic principles should have the flexibility to allow for equivalent structures or processes that meet the principles in ways tailored to local conditions. This may include involvement of union-appointed informal leaders as well as elected officials. (3) The agreements should emphasize providing resources to support implementation at local levels. In this case the emphasis in the agreement appeared to be on detailing specifications for the structure of the CPA and less on anticipating and providing resources for implementation. The challenge is to get both the commitment through collective bargaining that the parties can’t walk away from and the resources to implement the agreement effectively. (4) While union-only (and management-only) training may be appropriate for developing values and priorities, it should be supplemented by joint training to build working relationships, mutual understanding and support for implementation. In this case the insistence on union-only training constrained training by limiting both the supply since there were insufficient union resources, and the demand. (5) While a focus on higher level involvement in strategic decision-making can have great benefit for the union, in order to also have effective input into operational and shop-floor decision-making, joint mid-level structures are necessary to support teams. (6) There is a clear need to anticipate and plan for, or protect against, the effects of leadership turnover on both the management and union organizations. The language in the agreements does not guarantee that the initial commitment to the process will carry over to new leaders, so a process of education and leadership development for building this commitment in new leaders is needed. (7) If union-nominated board representation is to be included as a component of the partnership, provisions for ensuring that board representatives communicate with and regularly discuss the status of the partnership with local leaders and rank and file members (as well as national union leaders) is critical. These lessons from the experience of the USWA over the past two decades should be instructive for other unions and managers struggling with the challenges of workplace redesign and labor-management relations in an increasingly competitive global economy, as well as scholars and policy makers working on these problems. While the efforts of this union have produced both successes and failures in this regard, it has taken bold steps toward reforming industrial relations, corporate governance, and the design of the systems under which its members work. Much

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can be learned from its leadership in these areas and from this chapter in the history of organized labor’s efforts to advance greater industrial democracy.

NOTES 1. Interview with Lynn Williams February 11 (1997). 2. Interview with Lynn Williams October 12 (1998). 3. Interview with USWA Headquarters Staff, July 23 (2001). 4. The selection of best LMPT cases was reinforced by data from an unpublished study by Richard Walton, Scott Camlin, and Kathleen Scharf (Harvard Business School, 1991). In their extensive case studies of fourteen plants from six companies they found three plants that had the highest performing joint process rooted in LMPT. Those cases were all included among the five best performing LMPT processes in my survey and all of them reported declines under CPA.

ACKNOWLEDGMENTS The author thanks Lou Dopson for research assistance, Adrienne Eaton, Charles Heckscher, Thomas Kochan, Robert McKersie and Lynn Williams for comments on earlier drafts, and the Editors of (AILR) for helpful recommendations for revising the paper. The study also benefited from discussions with Sam Camens, and from earlier research by Richard Walton, Scott Camlin, and Kathleen Scharf. However, the conclusions reached in this article are those of the author.

REFERENCES Dertouzos, M., Lester, R., & Solow, R. (1988). Made in America, MIT Commission on industrial productivity. Cambridge, MA: MIT Press. Eaton, A. (1990). Extent and determinants of union control of participative programs. Industrial and Labor Relations Review, 43(5), 604–620. Eaton, A., & Voos, P. (1994). Productivity enhancing innovations in work organization, compensation, and employee participation in the union versus non-union Sectors. Advances in Industrial and Labor Relations, 6(6), 63–109. Eaton, A., Voos, P., & Dong-one, K. (1997). Voluntary and involuntary aspects of employee participation In: Lewin, Mitchell & Zaidi (Eds), Decision Making, Handbook for Human Resource Management (pp. 63–85). Stamford, CT: JAI Press. Ellerman, D. (2000). The indirect approach, policy research working paper. Washington: World Bank (August). Golden, C. S., & Parker, V. (1949). V. Causes of industrial peace under collective bargaining. New York: Harper and Bros.

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Golden, C. S., & Ruttenberg, H. (1942). Dynamics of industrial democracy. New York: Harper and Bros. Heckscher, C., & Schurman, S. (1997). Can labor-management cooperation deliver jobs and justice? Industrial Relations, 28(4), 323–330. Hoerr, J. P. (1988). And the wolf finally came: The decline of the American steel industry. Pittsburgh: University of Pittsburgh Press. Ichniowski, C., Kochan, T., Levine, D., Olson, C., & Strauss, G. (1996). What works at work: Overview and assessment. Industrial Relations, 35(3), 299–333. Kaufman, B. E. (2001). An interview with steelworkers president Lynn Williams. Journal of Labor Research, 22(1) (Winter), 145–171. Kochan, T., Katz, H., & McKersie, R. (1986). The transformation of American industrial relations. New York: Basic Books. Levine, D., & D’Andrea Tyson, L. (1990). Participation, productivity, and the firm’s environment. In: A. S. Blinder (Ed.), Paying for Productivity: A Look at Evidence. Washington: Brookings Institute. Noble, B. P. (1993). Reinventing labor: An interview with union president Lynn Williams. Harvard Business Review, 71(July/August), 115–125. Osterman, P. (1994). How common is workplace transformation and who adopts it? Industrial and Labor Relations Review, 47(2), 175–188. Osterman, P. (2000). Work reorganization in an era of restructuring: Trends in diffusion and effects on employee welfare. Industrial and Labor Relations Review, 53(2), 179–196. Rubinstein, S. A. (2001a). Unions as value-adding networks: Possibilities for the future of U.S. Unionism. Journal of Labor Research, 22(3), 580–597. Rubinstein, S. A. (2001b). The local union revisited: New voices from the front lines. Industrial Relations, 40(3), 405–435. Sabel, C. F. (1993). Studied trust: Building new forms of cooperation in a volatile economy. Human Relations, 46(9), 1133–1171. Schurman, S. J., & Eaton, A. E. (1996). Labor and workplace democracy: Past, present and future. Labor Studies Journal, 21(2), 3–26. Slichter, S., Healy, J. J., & Livernash, E. R. (1960). The impact of collective bargaining on management. Washington, DC: Brookings Institution. Steel workers organizing committee (1938). Production problems. Pittsburgh: SWOC Research Department. Williams, L. R. (1993). United steelworkers of America, quality progress. Milwaukee: American Society for Quality Control (September).

APPENDIX I Memorandum of Understanding on Labor-Management Participation Teams The following understandings have been agreed upon regarding an Experimental Agreement for Labor-Management Participation Teams. The strength and effectiveness of an industrial enterprise in a democratic society require a cooperative effort between labor and management at several levels of

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interaction. The parties hereto recognize that if steelworkers are to continue among the best compensated employees in the industrial world and if steel companies are to meet international competition, the parties must pursue their joint objectives with renewed dedication, initiative and cooperation. Collective bargaining has proven to be a successful instrument in achieving common goals and objectives in the employment relationship between steel labor and steel management. However, there are problems of a continuing nature at the level of the work site which significantly impact that relationship. Solutions to these problems are vital if the quality of work for employees is to be enhanced and if the proficiency of the business enterprise is to be improved. The parties recognize that a cooperative approach between employees and supervision at the work site in a department or similar unit is essential to the solution of problems affecting them. Many problems at this level are not readily subject to resolution under existing contractual programs and practices, but affect the ongoing relationships between labor and management at that level. Joint participation in solving these problems at the departmental level is an essential ingredient in any effort to improve the effectiveness of the company’s performance and to provide employees with a measure of involvement adding dignity and worth to their work life. In pursuit of these objectives, the parties believe that local union and plant management at a plant can best implement this cooperative approach through the establishment of Participation Teams of employees and supervision in departments or similar units at the plant. Accordingly, it is agreed that the following experimental program will be undertaken with respect to Participation Teams. (1) The Company and the International Union will select a plant, or plants, on a pilot basis to be covered by this Experimental Agreement and will determine the date, or dates, during the term of this Basic Labor Agreement on which the program shall commence. These determinations shall be made in consultation with local plant management and the local union and subject to their concurrence. (2) A Participation Committee will be established at the plant level to coordinate the activities of the Participation Teams at department or unit level. A Participation Team will be made up of a management co-chairman, an employees’ co-chairman, and employee and supervision members of the department or unit. Employee members and supervision members need not be equal in number, and may be rotated periodically to permit broader employee involvement. The employees of the department or unit will select their Participation Team co-chairman and members.

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(3) Each employee member of a Participation Committee or a Participation Team shall be compensated for time spent away form work in Committee or Team activities at his average straight-time hourly rate of earnings as calculated under Section 11-D-1. (4) Participation Team meetings shall be called by the co-chairman during normal working hours as often as the employee and supervision members agree. A Participation Team shall be free to discuss, consider and decide upon proposed means to improve department or unit performance, employee morale and dignity, and condition of the work site. Appropriate subjects, among others, which a Team might consider include: use of production facilities; quality of products and quality of the work environment; safety and environmental health; scheduling and reporting arrangements; absenteeism and overtime; incentive coverage and yield; job alignments; contracting out; and energy conservation transportation pools. The Participation Committee and the Participation Teams shall have no jurisdiction over the initiation of, or the processing of, complaints or grievances. The Participation Committee and the Participation Teams shall have no authority to add to, detract from, or change the terms of the Basic Labor Agreement. (5) A Participation Team shall be free to consider a full range of responses to implemented performance improvement, including, but not limited to, such items as bonus payments or changes in incentive performance pay. A Participation Team may also consider one-time start-up bonuses for employees on new facilities who reach target levels in specified periods. (6) To facilitate the establishment of these Participation Committees and Participation Teams, and to assist them, a Participation Team Review Commission will be established comprised of a headquarters representative of the International Union and a headquarters representative of the Company. Source: United Steelworkers of America

THE UNION COMMITMENT OF ADJUNCT FACULTY Kathleen L. Pereles ABSTRACT Although the organizational practice of using “contingent or non-traditional workers” has been escalating since the mid-1980s, only recently has research begun to focus on the consequences of this practice. In unionized workplaces, labor leaders have begun to organize these workers. Although it is believed that contingent workers are responding positively to union organizing drives, little is known about the attitudes and behaviors of contingent workers as union members. Using the Union Commitment scale developed by Gordon, Philpot, Burt, Thompson and Spiller (1980), the research project reported here compares the Union Commitment of traditional faculty and three categories of adjunct faculty. The results reveal that there are no significant differences across these employee groups for the factors of Union Loyalty, Responsibility to the Union, Willingness to Work for the Union and Alienation from the Union. The implications of these findings for research and practice are discussed.

INTRODUCTION Contingent Workers in the United States Organizations have always had the option of using “contingent or non-traditional” workers (Belous, 1989; Gappa & Leslie, 1993; Parker, 1994; Tschetter, 1987; Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 145–171 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 0742-6186/PII: S0742618603120069

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Verespej, 1989). However, prior to the mid-1980s, this practice was institutionalized only in some industries (e.g. academia, agriculture, hospitality, retail). Most other industries used contingent workers and non-traditional staffing arrangements only during periods of economic downturn and then returned to traditional employment relationships when the economy improved. When organizations continued the practice of using contingent workers after the recovery from the recession of 1980–1981, researchers and practitioners recognized a fundamental restructuring in the relationship between workers and the organizations for which they performed work (Burr, 1997; Carlsen, 1996; Koretz, 1996; Parker, 1994; Verespej, 1989). Although specific figures are not available, it is estimated that between 25 and 33% of the members of the current workforce hold contingent jobs, and this number is expected to increase (Carlsen, 1996; Fierman, 1994; Koretz, 1996; Nye, 1996). The widespread use of contingent workers is indicated by reports of contingent workers in all of the following industries: academia (Robinson, 1996); banking (Galant, 1993); clerical (Fields & Thacker, 1991); direct sales (Wotruba, 1990); entertainment (Polivka, 1996); government (McGettigan, 1994); hospitality (Worsnop, 1987); health care (Lundy, 1992); law (Molvig, 1995); mass transit (Lieb & Wiseman, 1996); newspaper (Radolf, 1988); petro-chemical (Kochan, Smith, Wells & Rebitzer, 1994); and retail (Darden, McKee & Hampton, 1993). Although there is currently no consensually accepted definition of the term contingent worker (Cooper, 1995; Pereles, 2000; Roberts, 1994; Thomson, 1995), the majority of academic researchers and human resources practitioners distinguish between contingent and traditional workers using the criteria that contingent workers have no explicit or implicit expectation of a stable on-going employment relationship with the organization for which they are performing work. Contingent workers can include workers who are hired on a non-full-time basis or temporary basis or workers who are contracted from a third party agency. Generally, these workers are considered as “disposable” or “marginal” by the organizations which use their services (AAUP, 2001; Belous, 1989; Cooper, 1995; Larson & Ong, 1994; Nollen & Axel, 1996; Thomson, 1995; Tilly, 1991; Van Dyne & Ang, 1998). As reported in anecdotes, mainstream news articles, practitioner descriptions, and academic research, the primary reason organizations use contingent workers is to reduce labor costs. Especially in the services sector, organizations routinely maintain a permanent workforce which meets only the minimum level of anticipated demand and then, when necessary, add additional contingent or nontraditional workers to respond to increases in demand. Using contingent workers lowers labor costs because these workers are paid lower wages, seldom receive raises, and have fewer benefits than traditional workers. In addition, the costs of selection (hiring, training, and separation) and the potential legal liability emerging

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from protective legislation can often be borne by others (Bartkowiak, 1993; Belous, 1989; Carey & Hazelbaker, 1986; Caudron, 1994a, b; Coates, 1995; Hipple & Stewart, 1996a, b; McNerney, 1995; Nollen & Axel, 1996; Parker, 1994; Salawan & Machalaba, 1884). However, organizations also use contingent workers for other reasons. For example, using contingent workers: (1) protects the job security of permanent workers; (2) gives the organization access to expertise which is not needed on a full-time permanent basis; and (3) alleviates or eliminates the turnover resulting from poor job conditions (Freedman, 1988; Gappa & Leslie, 1993; Granrose & Appelbaum, 1986; Kochan et al., 1994; Parker, 1994; Polivka & Nardone, 1986; Sunoo, 1996; Tarcy, 1994; Washington, 1995). In addition, there is evidence that some unionized organizations use contingent workers for “union busting” purposes (Crowe, 1994; Kilborn, 1993; Kochan et al., 1994; Levitan & Conway, 1988; Parker, 1994; Rousseau & Libuser, 1997; Salawan & Machalaba, 1884; Sunoo, 1995; Tilly, 1991; Wages, 1991). Acting on the assumption that employing organizations use contingent workers in order to reduce the bargaining power of the labor union in the specific workplace or the power of the labor movement in the larger economy, unions have responded: (1) by organizing the contingent workers; (2) by opposing the use of contingent workers; and (3) by supporting legislation which would provide contingent workers with the same rights and benefits as traditional workers (AAUP, 1992; Berver, Kurtz & Orton, 1992; Harris-Pereles, 1994; Moser, 2001; Reynolds, 1996; Robinson, 1996, 2001). Colleges and universities are the third largest users of professional-level contingent workers – second only to the dance and music industries (Robinson, 1996). Part-time contingent or non-traditional workers in this industry (generally called adjuncts) were initially used in the 1950s and 1960s when enrollments in post-secondary institutions increased and there were not enough qualified academics available to be hired. The practice continued in the 1970s, and 1980s as a way for colleges and universities to reduce operating costs (Gappa & Leslie, 1993; Tuckman & Tuckman, 1984). The continuing and increasing use of adjuncts in the 1980s and 1990s is documented by the National Center for Education. In 1987, 33% of faculty were adjunct; in 1992, 41% were adjunct (Kirshstein & Zimbler, 1997). In 1993, Palmer and Zimbler (2000) report that 62% of the faculty in two-year colleges were adjunct rather than full-time. Information about the unionization of adjunct faculty is difficult to find. Ongoing concern about the job conditions available to adjunct faculty is stimulating research by organizations representing and advocating for academics and these groups believe that the number of adjunct faculty being represented is increasing; but thus far, no written reports on the status of unionization of adjunct faculty can

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be found (e.g. AAUP, 1992; CAW, 1999; Moser, 2001; National Center for the Study of Collective Bargaining, 1982; Robinson, 1996). Research focused on the attitudes and behaviors of contingent or non-traditional workers as union members is almost non-existent. The author could not locate any systematic studies reporting the participation of contingent workers in labor unions. To summarize: There is evidence: (1) that universities and colleges are increasing their use of contingent faculty (Kirshstein & Zimbler, 1997; Palmer & Zimbler, 2000); (2) that unions are responding to the use of contingent workers by attempting to organize them (Harris-Pereles, 1994); and (3) that we know little about the attitudes and behaviors of contingent workers as union members. The project reported here contributes to our knowledge by comparing the Union Commitment of three types of adjunct faculty to the Union Commitment of the traditional faculty at that same institution.

Union Commitment Although the importance of Union Commitment has long been recognized as one of the cornerstones of union solidarity and bargaining power (e.g. Sayles & Strauss, 1953; Tannenbaum, 1965), the phenomenon was not studied as a “stand-alone” concept until the 1980s. Some of the earliest attempts to measure the concept actually emerged from the study of dual commitment (i.e. to commitment to the employing organization and commitment to the union) in the 1950s (Gordon et al., 1980). The first scale developed specifically to measure Union Commitment was reported by Gordon, Phillpot, Burt, Thompson and Spiller (1980); and although the psychometric properties of the scale have been the topic of an on-going discussion, an analysis of the existing literature reveals that the Gordon et al. Scale it is still the most widely used tool for measuring Union Commitment. Gordon et al. (1980) based their Union Commitment Scale on the organizational commitment scales of Porter and his colleagues (e.g. Porter, Steers, Mowday & Boulian, 1974) which included dimensions of believing and accepting the values of the organization, a strong desire to remain a member of the organization, and a willingness to work for the success of the organization. Using the concepts of organizational commitment, Gordon and his colleagues met with union leaders and members to develop the wording of the specific items to be included in the Union Commitment Scale. The scale was originally tested using a sample of white collar workers in a southern utility in a right-to-work state. Four distinct factors were identified. Union Loyalty included two elements – the pride members had in being part of the union and their awareness of the benefits of being members of the union. Responsibility to the Union identified the day-to-day

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responsibilities that members had to the union. Willingness to Work for the Union described the perceived willingness to do “special work” for the union. Belief in Unionism measured the level of conviction that members held concerning the efficacy and importance of the union movement. The analysis also revealed that although the factors were conceptually distinct, they were significantly correlated (Gordon et al., 1980). For example, Belief in Unionism was significantly correlated with both Union Loyalty and Responsibility to the Union and Responsibility to the Union was significantly correlated with Willingness to Work for the Union. The Gordon et al. (1980) scale and its four-factor result have been replicated in a large number of studies using different samples. These studies include Ladd, Gordon, Beauvais and Morgan (1982), Thacker, Fields and Tetrick (1989), Klandermans (1989), Kuruvilla and Iverson (1993), Iverson and Kuruvilla (1995), and Iverson and Ballard (1996). Not all researchers using the Gordon et al. Scale (1980) were able to replicate the results. For example, Fullagar (1986) was able to replicate Union Loyalty, Responsibility to the Union, and Belief in Unionism as factors; but was unable to replicate Willingness to Work for the Union. However, Fullagar did identify two other factors: (1) Perceived Union Instrumentality which measures a member’s perceptions that the union serves the goals of the members and (2) Organization/Work Loyalty which describes a situation in which job success is the primary goal of the worker and commitment to the union is based entirely on the instrumentality of the union in contributing to job success. Also in 1986, Friedman and Harvey initiated a discussion of the dimensionality of the Gordon et al. (1980) scale and concluded that a two-factor solution was a more parsimonious solution than the Gordon four-factor solution. Friedman and Harvey isolated Union Attitudes and Opinions which measures feelings about the union and Pro-union Behavioral Intentions which measures the actions or activities which the members are willing to undertake for the union. The factor Union Attitudes and Opinions is similar to Gordon et al. (1980) Union Loyalty; and the factor Pro-union Behavior Intentions is an amalgamation of Gordon et al. (1980) Responsibility to the Union and Willingness to Work for the Union. The Friedman and Harvey (1986) scale has also been used in replication studies and compared with the Gordon et al. (1980) study with mixed results. Thacker, Fields and Tetrick (1989), Kelloway, Catano and Southwell (1992), and Iverson and Ballard (1996) found that the Gordon et al. (1980) scale provided better results. Kuruvilla and Sverke (1993) and Johnson (1992) found that the Friedman and Harvey (1986) scale was a better fit. Studies comparing the levels of Union Commitment of different categories of workers in the same unionized workplace are relatively scarce and these studies all measure the Union Commitment of full-time workers in different occupations in

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the same workplace. Gordon, Beauvais and Ladd (1984) reported that among three different groups of workers in a southern public utility, engineers and technicians had the same levels of Union Commitment and both groups of workers had higher levels of Union Commitment than non-professional workers. Wetzel, Gallagher and Soloshy (1991) reported that men have higher levels of Willingness to Work for the Union than women. Iverson and Ballard (1996) reported that academics have higher levels of Willingness to Work for the Union than ancillary staff. The project reported here contributes to our knowledge in two ways. First, the study uses the Gordon et al. (1980) Union Commitment Scale to compare the Union Commitment of groups of professional workers (faculty in an urban two-year college) doing the same job but having different employment relationships with the organization (full-time traditional tenure-track positions and part-time temporary adjunct positions). Second, the study tests the validity of the Gordon et al. (1980) Union Commitment Scale with another sample of unionized workers. The study uses the Gordon et al. Scale because it has been used in more studies than the Friedman and Harvey (1986) instrument and it has been used for two other studies using academic samples (Iverson & Ballard, 1996; Iverson & Kuruvilla, 1995).

METHODOLOGY Definitions and Measurements Categories of Workers For the purposes of this study, Traditional Workers are those workers who have the expectation of a long-term full-time employment relationship with the organization for which they perform work. Contingent Workers are defined as workers who expect that the employment relationship will be temporary. However, not all contingent workers are alike (Pereles, 2000); and therefore, these workers are subdivided into three distinct categories: (a) Voluntarily Contingent Workers who have deliberately chosen to be employed in temporary non-traditional positions; (b) Moonlighters who are employed by one organization in a temporary non-traditional position in addition to holding a traditional full-time position with another organization; and (c) Involuntarily Contingent Workers who would prefer a traditional position but cannot find one and, therefore, have accepted the non-traditional temporary position. Union Commitment The study reported here uses the Gordon et al. (1980) Union Commitment. Twenty-two of the items from the original thirty-seven items on the Gordon et al. (1980) instrument were included on this questionnaire.

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Items were omitted for three reasons. First, they did not load onto factors in, at least, two earlier studies at a 0.400 loading weight1 (e.g. “Members should pay attention to the union label”). Second, they were not considered relevant to the sample (e.g. “The council newsletter is not worth reading”). Third, they were omitted at the request of the union (e.g. “Even though he/she may not like parts of it, the union member must “live up to” all terms of the agreement”). In an effort to measure actual participation in the activities of the union, six additional items were included in the questionnaire (e.g. “I always participate in contract ratification votes.” and “I would always support a strike”). All items in the questionnaire were worded to apply to the specific union which represented the respondents rather than having some items which applied to the specific union and some items which could be applicable to unionism or to the union movement. To test for the importance of a belief in unionism, an item asking specifically about the relationship between commitment to the union and a belief in unionism is included – “My loyalty to the XXX union is based on a belief in unionism.” Survey items are included in Table 1. The questionnaire used a Likert-type ranking with answers ranging from (1) strong disagreement to (6) strong agreement. There were no “neutral” or “not applicable” selection options in order to force respondents – both traditional and contingent – to select either an “above average” or a “below average” response.

Propositions Union Commitment – as defined by Gordon et al. (1980) – measures a connection with the union which is based on identification with the union and with the union movement, recognition of the benefits of being a member of the union, and a willingness to work for the union. The majority of the studies using the Gordon et al. Scale identified four distinct factors. The factor Union Loyalty includes two components: (1) a component which measures the pride members have in being members of their labor union; and (2) a component which measures their awareness of the benefits of being members of their union. The factor Responsibility to the Union identifies the on-going responsibilities that members have to maintain the bargaining power of the union vis-`a-vis the employing organization – for example participating in strikes and using the grievance procedure. The factor Willingness to Work for the Union describes the perceived willingness to do “special work” for their specific labor union which is traditionally interpreted as participating in union governance activities – such as being a union officer. The factor Belief in Unionism measures the level of conviction that members hold concerning the efficacy and importance of the union movement. At this point, it is important to remember that although the Gordon et al. Scale (1980) is the primary tool used to measure Union Commitment and its four-factor

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results have been consistently replicated in a number of studies, not all replication studies were identical. In 1986, Fullagar, using the Gordon et al. Scale, was able to replicate Union Loyalty and Responsibility to the Union but and was unable to reproduce Willingness to Work for the Union. Fullagar’s study, however, identified two other factors. Perceived Union Instrumentality measures member’s perceptions that the union serves the goals of the members and Organization/Work Loyalty measures the member’s belief that loyalty to the union is based on the union’s contribution to the worker’s job success. The propositions generated here will include both sets of results – the four factors identified by using the results of the Gordon et al. Scale (1980) and its replications – and the two additional factors identified by Fullagar (1986). All of the hypotheses focus on differences between Traditional and Contingent Faculty without specifying differences among different categories of Contingent Faculty although the analysis will identify one group of Traditional Faculty and three groups of Contingent Workers. Propositions 1, 2, and 3 are based on the reasonable supposition that workers who have a stable and on-going relationship with this specific union, who expect to continue to receive benefits from this specific union, whose primary economic benefits emerge from the strength of this specific union, who have more opportunities for socialization experiences within the union, and who, therefore, want this specific union to remain strong and effective will have higher levels of Union Commitment than workers who have a temporary relationship with the union. In addition, Proposition 3 is further supported by the fact that being willing to take on work for the union – i.e. accepting a position in the union, attending union meetings, and participating in negotiations – in addition to other work activities requires time. Therefore, it seems reasonable that those workers who have little “extra” time remaining after completing their required work activities will have lower levels of Union Commitment than workers who have more (relatively speaking) time available (Darden et al., 1993; Oswald, Mossholder & Harris, 1994; Wetzel, Gallagher & Soloshy, 1991). Moonlighters have other primary jobs and the Involuntarily Contingent Workers generally have heavier schedules than Traditional Workers and spend more time traveling between jobs (Scarff, 2000). Proposition 1. Traditional Workers will exhibit higher levels of Union Loyalty than all categories of Contingent Workers. Proposition 2. Traditional Workers will exhibit higher levels of Responsibility to the Union than all categories of Contingent Workers. Proposition 3. Traditional Workers will exhibit higher levels of Willingness to Work for the Union than all categories of Contingent Workers.

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There are no propositions generated for differences in Belief in Unionism because this value-based construct is not necessarily correlated with working status. For example, anyone can believe in the efficacy of the union movement – people who are not working, workers who have non-traditional relationships with the organizations for which they work (e.g. part-timers, temporaries, consultants, contract workers), and/or workers who are not union members. There are no propositions generated for Perceived Union Instrumentality because although the different worker groups presumably want the union to pursue different goals, there were no items in this study which identified these goals. For example, we could assume that Traditional Workers want the union to pursue economic benefits, job security, and professional growth, that Moonlighters want the union to pursue either economic benefits or the ability for them to gain additional experience (Baba & Jamal, 1992) and that Involuntarily Contingent Workers want the union to focus on improving their access to traditional positions, but no data were collected to test these assumptions. Having no way to identify the goals of the workers, any propositions concerning Perceived Union Instrumentality would be based on supposition rather than on logic. Therefore, no propositions are developed. There are no propositions generated for Organization/Work Loyalty for similar reasons. A primary focus on job success and a commitment to the union based on the level of the union’s role in that success is not necessarily correlated with working status. Any worker – (traditional or adjunct) can join the union only because he/she perceives or believes that her/his job success will be enhanced by union membership In addition, there were no items in this study which asked workers how they defined job success. Again, we could assume that Traditional Workers define job success as professional recognition both within and outside the college, that Moonlighters define job success as increasing pay or experience (Baba & Jamal, 1992) and that Involuntarily Contingent Workers define job success as attaining a traditional position (although not necessarily with this organization), but no data were collected to test our assumptions. For both of these reasons, any propositions concerning Organization/Work Loyalty would be based on supposition rather than on logic. Therefore, no propositions are developed.

Sample The data were collected from the unionized faculty of an urban community college in a northeastern state with high union concentration in both the public and private sectors (e.g. 95% of the public school teachers belong to unions). The

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state laws which regulate the organizing and collective bargaining rights of public sector employees provide for a “fair share” agreement under which members of the bargaining unit who are not union members pay a percentage of the union dues to the union to cover the costs of bargaining for working conditions. (For example, moneys which the union spends for political action are excluded when calculating the fair share figure.) Both the traditional and the contingent workers are represented by the same bargaining agreement although there are separate bargaining units. The first contract negotiated by the traditional faculty took effect in 1969 and the “full-timers” unit successfully won representation rights for the “part-timers” in the early 1980s. The first contract for the “part-timers” took effect in 1983. In addition to the traditional bargaining issues of pay and working conditions, the agreement specifies how many contingent workers can be used by the college; the wages, working conditions and selection of contingent workers; and the process by which contingent workers can become traditional workers. The full-time bargaining unit has approximately 400 members (Traditional Workers) of whom approximately 360 belong to the union. The part-time bargaining unit has approximately 1200 members (Contingent Workers) of whom approximately 800 belong to the union. Prior to this study, no information was available to identify the Contingent Workers as Moonlighters, Voluntarily Contingent, or Involuntarily Contingent; but based on anecdotal evidence and familiarity, the union leaders assumed that approximately one-third of the adjunct faculty fell into each contingent work category. A survey questionnaire including items to identify the employment relationship category for each respondent, years as a member of the union, whether the respondent had ever held a position in the union, and to measure union commitment was mailed to each faculty member in the union.2 Although it might have been desirable to collect additional demographic data (e.g. gender, age, race, etc.) and organizational data (e.g. field of discipline, academic rank, etc.), this information was excluded at the specific request of the union. However, based on the results of earlier research studies, this lack of demographic data should not impair data interpretation (Fullagar, 1986; Iverson & Ballard, 1996; Wetzel, Gallagher & Soloshy, 1991). In addition to the survey questionnaire, respondents received a letter from the union leadership requesting their participation, a brief vitae of the author, and a letter from the author explaining that there was no coding of the surveys and that all answers would be kept confidential. Approximately one month after the initial survey questionnaire was mailed, everyone in the original sample received a post card thanking those who had already returned the completed survey and asking those who had not yet returned the survey to please participate.

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RESULTS AND ANALYSIS Three hundred and forty-six usable surveys were returned from 119 Traditional Workers, 73 Moonlighters, 62 Voluntarily Contingent Workers, and 92 Involuntarily Contingent Workers. This return represents a 29% response rate from the entire sample; a response rate of 33% from the Traditional Workers; and a response rate of 28% of the Contingent Workers.3 However, only 283 of these surveys were complete for all final factors of the scale. Complete cases were available for 90 Traditional Workers, 62 Moonlighters, 51 Voluntarily Contingent Workers, and 77 Involuntarily Contingent Workers. The response rate for complete cases was 24% for the entire sample, 25% for Traditional Workers and 24% for Contingent Workers. Approximately 80% of the total responses received and approximately 80% of the responses received from each employee subgroup were complete cases. Principal components analysis with a promax (oblique) rotation process was used to test for conceptual distinctness and factor reliability of the factors in the Union Commitment Scale. An oblique rotation process is recommended if the factors are theoretically correlated (Hatcher, 1994; Parks, Gallagher & Fullagar, 1995; Thacker, Fields & Tetrick, 1989) and both the earliest and the latest studies have reported that the factors are correlated (Gordon et al., 1980; Iverson & Ballard, 1996). This initial analysis was conducted using all questionnaires. After the initial analyses were performed, the inter-scale correlations of all responses included in the principal components analyses of each individual factor were compared to the inter-scale correlations of those responses which were complete for all factors. Based on the strong similarities of the inter-scale correlations, the decision was made to use only complete cases in the ANOVA procedures used to compare the employee groups. Table 1 presents the results of the principal components analysis. Item loadings of 0.400 or greater are considered acceptable (Stevens, 1986). All acceptable loadings are bolded. Items which loaded onto two or more factors are indicated with an asterisk (∗). Items which were reverse coded for reliability testing are indicated with a pound sign (#). Using the decision criteria that (a) the items loading onto each factor be conceptually related; (b) any factor retained for analysis should contain at least three items which load only onto that component; and (c) eigenvalues for retained factors should be greater than 1.00 (Hatcher, 1994); only five factors could be identified at this stage of analysis. Factor No. 1 (Items 1, 2, 3, 11, 12, 17, 18, 20, 22, 30 and 31) corresponds to the Union Loyalty factor identified by Gordon et al. (1980). Cronbach’s alpha is 0.91 for the entire sample.

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Table 1. Item Loadings. F#1 1. I am proud of being part of Union. 2. Based on what I know now and what I believe I can expect in the future, I plan to be a member of the Union for as long as I work for the employer. 3. The record of the Union is a good-example of what dedicated people can get done. 4. The only reason I belong to the Union is to make sure I get promotions or other rights to job assignments. 5. I rarely vote in elections for Union officers. 6. It is the responsibility of every Union member to ensure that the employer “lives up to” all the terms of our collective bargaining agreement. 7. I generally keep my membership in the Union a “secret” a non-employer 8. It is the responsibility of every Union member to “keep his/her ears open” for information which might be useful to the Union. 9. Members of the Union are expected to have a strong personal commitment to the Union. 10. Moving ahead at XXX is more important than remaining a member of the Federation. 11. I feel little loyalty to the Union. 12. If I am doing the kind of work I enjoy, it does not matter if I belong to the Union. 13. I rarely participate in the internal governance activities of the Union. 14. It is the responsibility of every Union member to support or help another worker use the grievance procedure.

F#2

F#3

F#4

F#5 −0.17

0.69 0.83

0.74

0.15

−0.11

F#6 −0.12

−0.14

−0.13

0.21

−0.55

0.78

−0.30

0.86

−0.16 −0.71

0.10

−0.26 −0.56# −0.61#

0.25

−0.63

0.11

−0.75

0.11

0.47

−0.14 −0.13

0.24

−0.14

−0.81# 0.12

−0.14

−0.73

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Table 1. (Continued ) F#1 15. I only belong to the Union because it is economically beneficial to me. 16. I am willing to put a great deal of effort beyond that normally expected of a member in order to make the Union successful. 17. I enthusiastically encourage my friends and colleagues to become members of the Union. 18. There is much to be gained by joining the Union. 19. I doubt that I would do special work to help the Union. 20. Deciding to join the Union was a good decision for me. 21. I always participate in the contract ratification activities. 22. My values and the Union’s values are very similar. 23. It is the responsibility of every member to know the contents of the collective bargaining agreement. 24. I rarely tell others that I am a member of the Union. 25. If asked, I would serve as an officer or a committee person for the Union. 26. It is not easy to “be yourself” and also a member of the Union. 27. Members of the Union do not get enough benefits for the dues we pay to the Union. 28. I participate in the Union negotiating activities with the employer. 29. I don’t think that Union members have any obligation to introduce new employees to the activities of the Union. 30. My loyalty to the Union is based on a belief in unionism. 31. I would always support a strike by the Union. Variance Explained (%)

F#2

F#3

F#4

F#5

F#6

0.15

0.18

0.81 0.24

0.48

−0.35

0.50

0.19

−0.27

0.72 −0.24

−0.57#

0.73 0.14

−0.13

0.21 −0.34

0.23

0.18

0.27

−0.18

0.12

−0.14

−0.12

0.12 −0.10

−0.45

−0.20 0.61

−0.31

0.50

0.15

0.29

−0.12

0.35

0.48∗

0.40∗

0.11

0.67

0.11

−0.19

0.41

0.27

−0.21

0.52∗

0.46∗

−0.28

−0.11

0.26

0.43

0.20

−0.19

−0.26

−0.27

0.15

0.14

−0.17

−0.24

0.17

0.24

5.5

4.5

4.3

3.3

0.46 33.6

0.14 0.64

0.67

−0.18

0.10

8.1

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Factor No. 2 (Items 13, 16, 19, and 25) corresponds to the Willingness to Work for the Union factor identified by Gordon et al. (1980). Cronbach’s alpha is 0.80 for the entire sample. Factor No. 3 (Items 4, 10, and 15) corresponds to the Organization/Work Loyalty factor identified by Fullagar (1986). Cronbach’s alpha is 0.66 for the entire sample. Factor No. 4 (Items 6, 8, 9, 14, and 23) corresponds to the Responsibility to the Union factor identified by Gordon et al. (1980). Cronbach’s alpha is 0.77 for the entire sample. Factor No. 5 (Items 7, 26, 27, and 29) has not appeared in any earlier research but it appears to contain elements of dissatisfaction with and alienation from the union and is therefore named Alienation from the Union. Cronbach’s alpha is 0.64 for the entire sample. Using the same decision criteria, the responses of each employee group were analyzed for reliability and validity. Table 2 presents the reliability results for the entire sample and each of the four employee subgroups. The results of the entire sample and subsample analysis for Union Loyalty (Factor No. 1), Responsibility to the Union (Factor No. 4), and Willingness to Work for the Union (Factor No. 2) indicate that these factors are reliable for each employee subgroup and therefore can be included in the ANOVA analysis (Nunnally, 1978). The alpha score for Organization/Work Loyalty (Factor No. 3) for the entire sample is marginal; and an examination of the subsample scores revealed that for three of the four employee subgroups, the alpha scores, although consistent, are only slightly above 0.60. The decision was made that this factor is not reliable and it will not be included in the ANOVA analysis. The alpha score for Alienation from the Union (Factor No. 5) for the entire sample is marginal; but an examination of the subsample scores revealed that for three of the four employee groups, the alpha scores are 0.68 or higher. The alpha score for the other employee group (Involuntarily Contingent Workers) is 0.49. The decision was made that this factor is reliable for three of the four groups and it will be included in the ANOVA analysis. Table 3 presents the descriptive statistics and the Pearson correlation matrix for the four factors which will be included in the ANOVA. The existence of significant correlations between the factors justifies the use of an oblique rotation process.4 A one-way ANOVA between-groups design revealed no significant differences between the employee groups for any of the four reliable factors. Table 4 reports the mean scores of the four groups. Using the results of the ANOVA, all propositions must be rejected.

Variable

Union Loyalty (F#1) Responsibility to the Union (F#4) Willingness to work for the Union (F#2) Alienation from the Union (F#5) Organization/Work Loyalty (F#3)

All Groups

Traditional Workers

Moonlighters

Voluntary Part-Timers

Involuntary Part-Timers

0.90, N = 311 0.77, N = 327 0.79, N = 326 0.64, N = 321 0.66, N = 329

0.93, N = 104 0.77, N = 107 0.84, N = 110 0.68, N = 107 0.62, N = 106

0.90, N = 67 0.72, N = 71 0.77, N = 70 0.71, N = 68 0.63, N = 72

0.88, N = 56 0.79, N = 59 0.74, N = 61 0.69, N = 58 0.74, N = 62

0.88, N = 84 0.82, N = 90 0.77, N = 85 0.49, N = 88 0.60, N = 89

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Table 2. Reliability Table.

159

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Table 3. Descriptive Statistics. Variable Union Loyalty (F#1) Responsibilities to the Union (F#4) Willingness to work for the Union (F#2) Alienation from the Union (F#5) a

Alpha

Mean

Std. Dev.

Loyalty

Responsibility

0.90 0.77

5.2 5.3

0.44 0.63

0.55a

0.79

5.0

0.36

0.00

0.04

0.67

4.1

0.50

−0.51a

−0.36a

Willingness

Alienation

0.10

Correlation is significant at the 0.01 level (2-tailed).

Significant Differences The findings of no significant differences are puzzling. Broadly interpreted, the propositions expressed the logic that Traditional Workers would have higher levels of Union Commitment than Contingent Workers because the Traditional Workers have a more stable and on-going relationship with the union, want the union to remain strong in order to protect them in the workplace, and have more opportunities for socialization experiences within the union – all of which are factors which have been demonstrated to increase commitment (e.g. Buchanan, 1974; Fullagar, Gallagher, Gordon & Clark, 1995; Steers, 1977; Weiss, 1981). Another broad interpretation of the propositions is that those workers whose job benefits are principally derived from membership in this union will have higher levels of Union Commitment than worker groups whose job benefits are not principally derived from membership in this union. Having no significant differences revealed, the logic must be re-examined and explanations for the actual findings must be developed and considered when engaging in future studies. The following explanations are offered. First, perhaps the closer connection of the Traditional Workers to the union gives those workers a more complete understanding of the day-to-day difficulties of belonging to the union and “depresses” their commitment while Table 4. Comparison of Worker Group Subsamples (N = 283). Group

N

Commitment

Responsibilities

Participation

Alienation

Traditional Workers Moonlighters Voluntarily Contingent Involuntarily Contingent

93 62 51 77

5.25 5.25 5.28 5.28

5.22 5.28 5.28 5.39

4.95 5.04 4.96 5.05

4.04 4.19 4.11 4.13

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the less complete understanding of the Contingent Workers “enhances” their commitment. Second, the job security (at least partially) provided to the Traditional Workers by the tenure process may depress their union commitment – especially during periods when the organizational job conditions are satisfactory. Third, perhaps the commitment levels of the Traditional Workers ebb and flow in response to the climate in the organization whereas the commitment levels of Contingent Workers remain stable. If the commitment of Traditional Workers is (relatively) lower during periods of “peace” and increases when they perceived increased commitment is necessary (e.g. during contract negotiations), then external stimuli may be an antecedent of commitment. The data analyzed in this study was collected during a period of “peace.” Fourth, Contingent Workers who want the union to become even stronger than it currently is in order to negotiate for increased wage and benefit levels for them or to negotiate for increased opportunities for them to attain traditional positions may have higher levels of commitment because they believe that increased commitment from them will enable the union to negotiate better conditions for them. Fifth, the Contingent Workers maybe committed to the union in this workplace as a result of a commitment to unionism or they may be members of a union in one of their other workplaces (especially true for Moonlighters and Involuntarily Contingent Workers) and may transfer that commitment to the union in this workplace. Sixth, Willingness to Work for the Union only measures an expressed favorable inclination or readiness to participate in behaviors which support the union. The factor does not measure actual participation. Perhaps the equality of “willingness” among the worker groups will not be transformed into equal levels of actual participation. Considering that the logic of the hypotheses generated prior to the study and the logic of the explanations developed to explain the actual findings appears equally plausible, additional research focusing on the phenomenon of Union Commitment is critical to improve our understanding. Studies which investigate the Union Commitment of other groups of Contingent Workers, the antecedents of Union Commitment (especially motivation to join the union) for different worker groups, the effect of the industrial relations climate in the organization on Union Commitment, and the consequences of Union Commitment (especially on actual participation behavior) for different worker groups are all needed to help complete the picture of the differences (or lack thereof) between the Union Commitment of Traditional and Contingent Workers.

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Union Commitment Scale The results of this study provide further support that three of the four factors identified by Gordon et al. (1980) are stable measures of three dimensions of Union Commitment. Union Loyalty To summarize the findings concerning Union Loyalty: The diversity of samples which have validated this particular dimension using these specific items suggests that the dimension is stable and that the items are reliable. Of the eleven items which loaded onto the factor named Union Loyalty for this sample, eight had loaded onto the original factor identified in 1980; these eight include all six of the items which were included in the reduced scale tested by Kelloway, Catano and Southwell (1992), and the majority of these items were also identified by studies replicating Gordon et al. (1980). These items (Items 1, 2, 3, 11, 12, 18, 20, and 22) are conceptually similar in that each measures either pride in being a member of the union and/or awareness of the benefits of being a member. The original Gordon et al. (1980) results had seven additional items which loaded onto this factor. Three were not included in this study and four loaded onto other factors in this study. Those items loading onto other factors will be discussed when reporting on the other factors. In this study, three new items also loaded onto the Union Loyalty factor. Item 17 (if I’m doing work I like, it doesn’t matter if I belong to the union) loaded onto Gordon et al.’s (1980) Belief in Unionism scale and was assumed to indicate a commitment to unionism in that analysis. However, in this sample, there seemed to some difficulty in interpreting the item. One respondent asked if this question should be interpreted as making a choice between “would he prefer to not join a union if he was doing work that he liked and there was a union available, or would he prefer to do work that he disliked in order to have the opportunity to belong to the union.” In future studies, this item should probably be reworded for clarity. Item 31 (“would always support a strike”) indicates support for the primary collective action which the union can use to gain or maintain the benefits it provides of the union. In future studies, for the purposes of clarity of concept, this item should probably be reworded to focus on active participation in strike activities. Item 30 (“my support of XXX union is based on a belief in unionism”) was specifically included to test whether a general belief in the union movement is a separate dimension of Union Commitment or contributes to Union Commitment. Having this specific item load onto the factor measuring identification with the union suggests that a belief in the efficacy of the labor movement contributes to a member’s Union Commitment rather than being a separate dimension of Union Commitment; and this finding is

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also consistent with some of the Gordon et al. (1980) replications (e.g. Kelloway, Catano & Southwell, 1992). Future studies should continue the investigation of the relationship of a belief in unionism and Union Commitment. Responsibility to the Union To summarize the findings concerning Responsibility to the Union: The diversity of samples which have validated this particular dimension using these specific items suggests that the dimension is stable and that the items are reliable. Of the five items which loaded onto the factor named Responsibility to the Union for this sample, four had loaded onto the original Gordon et al., study in 1980; the four included three of the items which were included in the reduced scale tested by Kelloway, Catano and Southwell (1992); and the majority of these items were also identified by those studies replicating Gordon et al. (1980). These items (Items 6, 8, 14, and 23) are conceptually similar in that each measures the on-going responsibilities that members have to maintain the bargaining power of the union and the integrity of the collective bargaining agreement. The original Gordon et al. (1980) results had four additional items which loaded onto this factor. None of these other items were included in this study. However, in this study, an additional item from the original Gordon et al. (1980) scale loaded onto this factor. Item 9 (“members are expected to have a strong commitment to the union”) had been included in the original Gordon et al. (1980) scale but it had loaded onto Union Loyalty rather than onto Responsibility to the Union. Since the item contains the phrase “members are expected to have . . .” rather than “members have . . .,” it seems reasonable that the item could be included in a factor identifying responsibilities. However, in future studies, the wording of this item should be examined from the perspective of construct validity and modified if necessary. Willingness to Work for the Union To summarize the findings concerning Willingness to Work for the Union: The diversity of samples which have validated this particular dimension using these specific items suggests that the dimension is stable and that the items are reliable. Of the four items which loaded onto the factor named Willingness to Work for the Union in this sample, three had loaded onto the original factor identified in Gordon et al. (1980); the three included all three of the items which were included in the reduced scale tested by Kelloway, Catano and Southwell (1992); and the majority of these items were also identified by studies replicating Gordon et al. (1980). These items (Items 13, 15, 25) are conceptually similar in that each measures a readiness to work for the union. Note: The original Gordon et al. (1980) results had four items which loaded onto this factor. Two of these original items (“if

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asked I would serve on a union committee” and “if asked I would serve as a union officer”) were combined for this study. In this study, one new item loaded onto the Willingness to Work for the Union factor. Item 13 (participation in internal governance) was created for this study and it certainly describes a disposition to work for the union. I believe that this item should be included in future studies. Alienation from the Union To summarize the findings concerning Alienation from the Union. This factor was neither identified in the original Gordon et al. (1980) study nor in any replication study and regardless of its reliability, should be more carefully examined before being accepted as a specific factor in the Union Commitment Scale. The four items which loaded onto the factor named Alienation from the Union (Items 7, 26, 27, and 28) clearly have some common conceptual basis. Each measures either dissatisfaction with the union (e.g. members of the union don’t get enough benefits for the dues we pay) or a sense of “dis-identification” with the union (e.g. its not easy to “be myself” and also be a member of the union). However, in the original Gordon et al. (1980) scale, Items 26 and 27 loaded onto Union Loyalty (reversed scored). Items 7 and 28 were developed for this study to investigate organizational citizenship behaviors. In addition, it is important to note that all the items which loaded onto this factor are negatively worded. Kelloway, Catano and Southwell (1992) made special note of the construct irrelevance which may result from the use of negatively worded items and recommend that items be positively worded to avoid this problem. It is clear that workers can be alienated from the union to which they belong as they can certainly be alienated from the organizations for which they work (Etzioni, 1975); however, this factor should be investigated carefully before being accepted as describing an actual dimension of Union Commitment. In future studies, the items loading onto this factor should be tested using a variety of different wordings and the results compared.

DISCUSSION The primary objectives of the research project reported here are: (1) to identify whether Union Commitment differs as a result of the relationship between the worker and the organization for which the work is performed; and (2) to test the external validity of the Gordon et al. (1980) Union Commitment Scale. The results indicate: (1) that there are no significant differences between the Union Commitment of Traditional and Contingent Workers; and (2) that the Gordon

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et al. Scale (1980) is a reliable instrument for measuring Union Commitment. These results have implications for both research studies of union commitment and for the labor movement as it continues to respond to the increasing use of contingent workers by employers. Limitations on the generalizability of the results of this study are attributable to the sample. First, in academic workplaces, there is a unique work relationship between the workers and the organization – the tenure process. Second, the composition of the Contingent Workers sample used here may not be representative of the national sample of adjunct faculty. For example, the AAUP Report on the Status of Non-Tenure Track Faculty (1992) states that 16% of the adjunct faculty are Involuntarily Contingent; in this sample 27% of the adjunct faculty are Involuntarily Contingent. In a more recent national study, the National Center for Education Statistics reports that 53% of the part-timers are Moonlighters (Palmer & Zimbler, 2000); in this sample 33% are Moonlighters. Third, the participants in this study were all faculty at a community college. It is possible that faculty at four-year institutions, research institutions, etc. will have different levels of Union Commitment. However, the specifics of the sample should not detract from the importance of the study. The study is important because: (1) it is one of the first studies which measures the Union Commitment of the contingent workforce; and therefore, it provides a systematic starting point for further exploration; (2) it demonstrates the stability of three of the dimensions of Union Commitment as originally identified in the Gordon et al. (1980) scale; and (3) it provides labor unions with knowledge which can be used to make effective decisions about how to respond to the use of contingent workers by the employer. Having identified three stable dimensions within Union Commitment, two areas for future research can be identified: (1) measuring Union Commitment; and (2) identifying its antecedents and consequences. Union Commitment is a concept which has a number of aspects. The first aspect is a dynamic one which describes the process of “becoming” committed to the union. Feelings develop over time as the result of experiences and they may ebb and flow in response to the interaction between the union and its members or in response to stimuli external to the union. The second and third aspects are affective. The second aspect describes the feelings of being attached or bound to the union. It is a “snapshot” perspective in that it measures the level of feeling at one specific point in time. The third aspect describes a willingness to act on behalf of the union (e.g. Bar-Hayim & Berman, 1992) and it is similar to the first aspect – it measures the process by which a union member reaches the position of being prepared to contribute to the success of the union. Reaching this state of willingness requires

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time and the level of willingness may vary depending upon what contribution the member is being asked to make and the inclinations and personality traits of the member. The final aspect of commitment is behavioral and includes both informal (e.g. talking with the union leadership) and formal (e.g. holding union office) participative behaviors. Different behaviors may require different levels of affect or willingness for different members (e.g. Parks, Gallagher & Fullagar, 1995). A comprehensive measure of Union Commitment should logically be able to measure each of these different aspects. Future research should focus on ensuring that the instruments used to measure Union Commitment do, in fact, include these different aspects. The Gordon et al. Scale (1980) includes factors which measure the affective aspect (Union Loyalty) and the willingness aspect (Responsibility to the Union and Willingness to Work for the Union). Factors need to be developed to measure the process by which members become committed and the various stages and types of participative commitment. Another area for fruitful research should address the causality between the aspects. Does Union Loyalty predict Responsibility to the Union? or Does Responsibility predict Loyalty? It is generally assumed that attitudes (loyalty) predict behavior (e.g. participation) (e.g. Iverson & Buttigieg, 1995; Parks, Gallagher & Fullagar, 1995); however self-perception theory (Bem, 1992) reverses the causality and demonstrates that behaviors can predict attitudes. Some social policy legislation is based on the belief that by changing people’s behaviors their attitudes will change. For example, the decision to enact legislation making employment discrimination illegal will facilitate the employment of married women with children (behaviors) and the employment records of married women with children will change employer’s attitudes that married women with children are not stable employees. Research studies focusing on identifying the antecedents and consequences of Union Commitment – especially focusing on the differences between types of worker groups – would be very welcome. Until this additional research on the definition and measurement of Union Commitment is conducted, the results of the project reported here should be accepted and acted upon. This project demonstrates that, for at least some groups of contingent workers, the level of Union Commitment of Contingent Workers is the same as that of the Union Commitment of Traditional Workers. Therefore, the union response to the use of Contingent Workers by employing organizations should be to organize these workers rather than to oppose their use in the workplace. There are three reasons that unions should adopt the organizing strategy. First, the unionization concentration in the specific workplace will increase. The level of unionization in a specific workplace is one indication of bargaining power; therefore if the traditional workers are joined by the contingent workers, the

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bargaining power of that specific union has increased vis-`a-vis the employer in that specific workplace. Knowing that organizing contingent workers will increase the bargaining power of the union will provide the motivation for unions to overcome: (1) the structural barriers to organizing that are the result of the intermittent work schedules and scattered work sites of the contingent workers; and (2) the legal barriers to organizing that are the result of the perceived difficulty in demonstrating a community of interest among the contingent workers (Harris-Pereles, 1994). Second, the union will have more members who are willing to use their enthusiasm, energy, and expertise to support the union in its collective actions vis-`a-vis the employer and in its internal governance activities. Third, the unionization concentration in the United States will increase. If the level of union concentration at the national level is one indication of the ability of the union movement to act as force for social change, then an increase in the number of members nationwide enables the union movement to successfully advocate for policy and legislative changes (e.g. health and safety and benefit coverage) which will improve the lives of all workers in the United States. To summarize: The research reported here has contributed to our knowledge in three ways. First, using four different categories of work groups, it has revealed that there are no significant differences in the Union Commitment of Traditional Workers, Moonlighters, Voluntarily Contingent Workers and Involuntarily Contingent Workers. Second, it has extended the validity of the Gordon et al. (1980) Union Commitment Scale. Third, the findings and the explanations have provided a foundation for future academic research based on the results and have provided knowledge which unions can use to respond to the increasing use of contingent workers.

NOTES 1. The study reported here uses the Stevens (1986) item loading acceptability standard of 0.400. Earlier studies considered item loadings of 0.300 and 0.350 acceptable. When selecting items from earlier studies to include, the higher item loading value was one criterion used. 2. This study uses a subsample of a larger survey in which all the members of the bargaining unit participated and included items measuring organizational and professional commitment. 3. The response rates for the union members are the same as the response rates from the entire sample. For the entire sample, 452 usable responses were returned from 133 Traditional Workers, 107 Moonlighters, 94 Voluntarily Contingent Workers, and 118 Involuntarily Contingent Workers. This return represents a 28% response rate for the entire sample; a 33% response rate from the Traditional Workers; and a 26% response rate from the Contingent Workers.

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4. For analysis purposes an orthogonal principal components analysis was also carried out. There were slight differences in the results which need not be discussed here.

ACKNOWLEDGMENTS The author would like to thank the participants for their cooperation in this project and Gerald Zeitz and John Deckop for their counsel and encouragement.

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Reynolds, L. (1996). Labor’s blueprint targets contingent workers. HR Focus, 8. Roberts, H. S. (Ed.) (1994). Roberts dictionary of industrial relations (4th ed.). Washington, DC: Bureau of National Affairs. Robinson, P. (2001). American Federation of Teachers. Telephone interview 6/25/01. Robinson, P. (1996). Part-time faculty issues. Washington, DC: American Federation of Teachers. Rousseau, D. M., & Libuser, C. (1997). Contingent workers in high risk environments. California Management Review, 39, 103–123. Salawan, K. G., & Machalaba, D. (1884). Trucking firms, Teamsters agree to settlement. The Wall Street Journal (April 29), A3. Sayles, L. R., & Strauss, G. (1953). The local union. New York: Harper & Brothers, Publishers. Scarff, M. (2000). The full-time stress of part-time professors. Newsweek (May 15), 10. Steers, R. M. (1977). Antecedens and outcomes of organizational commitment. Administrative Science Quarterly, 22, 46–56. Stevens, J. (1986). Applied multivariate statistics for the social science. Hillsdale, NJ: Lawrence Erlbaum Associates. Sunoo, B. P. (1996). From Santa to CEO – Temps play all roles. Personnel Journal, 75(4), 34–44. Sunoo, B. P. (1995). Managing strikes, minimizing loss. Personnel Journal, 74(1), 50–60. Tannenbaum, A. S. (1965). Unions. In: J. March (Ed.), Handbook of Organizations (pp. 710–763). Chicago: Rand McNally & Company. Tarcy, B. (1994). Where’s the fit? Across the Board, 31, 36–40. Thacker, J. W., Fields, M. W., & Tetrick, L. E. (1989). The factor structure of union commitment: An application of confirmatory factor analysis. Journal of Applied Psychology, 74(20), 228–232. Thomson, A. (1995). The contingent workforce. Occupational Outlook Quarterly, 39(1), 45–48. Tilly, C. (1991). Reasons for continuing growth of part-time employment. Monthly Labor Review, 114, 10–18. Tschetter, J. (1987). Product service industries: Why are they growing so rapidly? Monthly Labor Review, 110, 31–40. Tuckman, B. H., & Tuckman, H. B. (1984). The labor market for part-time faculty at business schools. Quarterly Review of Economics and Business, 24(3), 95–103. Van Dyne, L., & Ang, S. (1998). Organizational citizenship behavior of contingent workers in Singapore. Academy of Management Journal, 41, 692–703. Verespej, M. A. (1989). Part-time workers: No temporary phenomenon. Industry Week (April 3), 13–18. Wages, R. (1991). Testimony of Rober E. Wages, President, Oil Chemical and Atomic Workers International Union, concerning the final report of the John Grey Institute. Submitted to the Environment and Housing Subcommittee of the Committee on Government Operations, U.S. House of Representatives. Washington, F. (1995). The underground workforce. WARD’s Auto World, 31, 20–24. Weiss, C. S. (1981). The development of professional role commitment among graduate students. Human Relations, 34(1), 13–31. Wetzel, K., Gallagher, D. G., & Soloshy, D. E. (1991). Union commitment: Is there a gender gap? Relations Industrielles, 46(3), 564–584. Worsnop, R. I. (1987). Part-time work. Editorial Research Reports (June 12), 290–298. Wotruba, T. R. (1990). Full-time vs. part-time salespeople. International Journal of Research in Marketing, 7, 97–108.

SHAPING POLITICAL PREFERENCES THROUGH WORKPLACE MOBILIZATION: UNIONS AND THE 2000 ELECTION Roland Zullo ABSTRACT For the AFL-CIO, the 2000 presidential election was a test of a revised political action program that concentrated resources on “issue based” political education and intensive member contact. Using quasi-experimental methods, I evaluate the effect of direct mailings, telephone calls, and workplace mobilization on the presidential preferences and voting rates of members from a Milwaukee area local union. Results indicate that only workplace mobilization successfully communicated the labor-endorsed candidate and shifted preferences toward that candidate. Voting rates were higher among union members that received a get-out-the-vote telephone call prior to the election.

INTRODUCTION While the 2000 U.S. presidential election will be remembered by many for its controversial finale, for the AFL-CIO and affiliates the event was a test of a revised political action program that concentrated resources on “issue based” political education and intensive member contact. One conspicuous departure Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 173–196 © 2003 Published by Elsevier Science Ltd. ISSN: 0742-6186/PII: S0742618603120070

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from previous election cycles was in the content of the political message. Rather than simply promote the labor-endorsed candidate, the 2000 literature featured the labor-endorsed and labor-opposed candidates, comparing their positions on “working family” issues, referencing voting records, candidate issue papers, responses to surveys, press statements, and so forth. By juxtaposing candidates with labor issues, the intent was to divert attention away from campaign issues involving non-economic social policy and to persuade members to choose candidates based on labor’s economic agenda. Also central to the strategy were the diverse methods for delivering the message. Volunteers and staff distributed flyers in the workplace, telephone banks were staffed to perform persuasion and get-out-the-vote calls, literature was dropped off at members’ doorsteps, and mass mailings were sent to members’ homes. Using quasi-experimental methods, this study evaluates the effect of labor’s 2000 political strategy on the perceptions and behavior of members from a Milwaukee-area local union. Three parallel sets of questions are addressed. First, did direct mailings, telephone calls, and workplace-level education successfully communicate the labor-endorsed candidate, and if so, what method was most effective? Second, did direct mailings, telephone calls, and workplace-level education persuade union members to favor the labor-endorsed presidential candidate, and if so, what method was most effective? Finally, did direct mailings, telephone calls, and workplace-level education stimulate voter turnout, and if so, what method was most effective? Pursuing these questions is an attempt to shed light on the role of organized labor as an agent for political mobilization.

BACKGROUND: LABOR’S STRATEGIC SHIFT TOWARD POLITICAL ACTION Several factors contributed to the recent strategic redirection of union political action. Chronologically first was the identification of a block of conservative, white, working-class voters (Greenberg, 1995; Teixeira & Rogers, 2000). Initially labeled “Reagan Democrats,” unionized workers in this group appeared unresponsive to the political endorsements of the AFL-CIO. Second, was the sense of urgency following the 1994 Republican takeover of Congress and the subsequent threat to labor’s progressive policy agenda (Gerber, 1999). Third, was a push from some affiliates, many in the service sectors, to embrace an inclusive and aggressive grassroots strategy for representing the interests of workers (Cornfield, 1989). This pressure resulted in the rise of politically active AFL-CIO labor councils (Ness & Eimer, 2001) and the election of John Sweeny to head the

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AFL-CIO in 1995. Fourth, was the result of polling sponsored by the AFL-CIO, which revealed that union members value political information (Hart, 1995). Fifth, and least discussed, is the inability of the new AFL-CIO leadership to facilitate growth in union representation during the latter half of the 1990s, a period of relatively favorable labor market conditions and political climate. Labors’ travails in the area of member organizing are not a topic of this paper. The matter is only raised to suggest frustration with the present conditions for organizing, and a growing awareness that changes in the regulatory and economic environment are needed to reverse the declining trend in union membership. Political action, especially in jurisdictions where labor enjoys regional strength, is providing opportunities for enacting policy that eases the task of organizing new workers.1 Reminiscent of earlier eras (Foster, 1975; Greene, 1998), issues of law and economic policy that threaten existing members and impede union growth are forcing organized labor into a more activist political mode.

THEORY AND HYPOTHESES The theoretical framework for this research is from the field of political psychology. Generally, political psychologists maintain that political attitudes and beliefs are shaped over a life-long socialization process (Campbell et al., 1960; Himmelweit et al., 1981). Partisan ideologies evident at childhood are highly correlated with parent attitudes (Greenstein, 1969; Hess & Torney, 1967; Jennings & Neimi, 1968), implying a strong intergenerational transmission of political beliefs. As people mature, kinship, friendship, and life experiences further establish normative parameters for political behavior. Eventually, citizens form decisional heuristics based on symbols, such as political party, political ideology, specific issues, and so forth (Sears, 1993). The overall implication of this social-psychological model is that the political behavior of voting adults is stable and resistant to the appeals made by interest groups that are not included within an individual’s heuristic formula. Attitudes and behavior can shift, but it requires an immersion into a cultural and social environment that imposes revised norms of political thinking. Should this theory apply to organized labor, then effective political mobilization must be integrated with the economic, community, and other class-based activities that unite workers as union members. Research at the local level presents an opportunity to test the socialpsychological view. Given that local unions are communities of workers with common economic interests, it is conceivable that workers also rely on local unions for the expression of common political values. Local leadership is particularly positioned to recommend candidates for political races and then

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leverage their proximity to members and control of union-sponsored outreach to influence the political behavior and attitudes of members. Thus, union political outreach should be positively related to member recognition of the labor-endorsed presidential candidate. Likewise, it is anticipated that the union outreach will be positively associated with a shift in member preference toward the labor-endorsed candidate and on voter turnout. However the social-psychological view would predict that the effect would vary across outreach types: strongest for activities that involve direct interaction at the local level and less strong for impersonal types of contact. It is therefore hypothesized that the greatest effect will be associated with political education delivered through workplace-level mobilization, followed by telephone contacts and direct mail. Stated formally, the hypotheses are: H1. Direct mail, telephone calls, and workplace-level education should be positively associated with member recognition of the labor-endorsed candidate. H2. Workplace-level education should demonstrate the strongest positive effect on candidate recognition, followed by telephone calls and direct mail. H3. Direct mail, telephone calls, and workplace-level education should be positively associated with a shift in member preference for the labor-endorsed candidate. H4. Workplace-level education should demonstrate the strongest positive effect on candidate preferences, followed by telephone calls and direct mail. H5. Direct mail, telephone calls, and workplace-level education should be positively associated with the voting rates of union members. H6. Workplace-level education should demonstrate the strongest positive effect on voting rates, followed by telephone calls and direct mail.

LITERATURE REVIEW Organized labor’s role in shaping electoral outcomes is a topic in the political science, labor history, and industrial relations literature. Empirical research addressing unions’ influence on political attitudes and candidate preferences is based exclusively on survey data (Masters & Delaney, 1987), probably because the public release of such information is prohibited. There are, however, two distinct data collection and analysis strategies. One is to use survey data that includes union and non-union respondents, and regress candidate preference on union status, controlling for identified predictors of political preference. The strength of this approach is that it allows a comparison between union and non-union

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populations over a broad geographic region. Studies of this type indicate that union respondents prefer labor-endorsed candidates at higher rates than non-union respondents (Delaney et al., 1990; Hojnacki & Baum, 1992; Sousa, 1993). While such findings imply a “union effect” on members, further research is needed to affirm causality. Cross-sectional comparisons are prone to omitted variable and simultaneity bias. Omitted variable arises with an incomplete specification: where the observed association between union status and candidate preferences is caused by some unmeasured factor, such as familial, cultural, and socioeconomic norms favoring unions, Democrats, liberals, or even political candidates who respond to working-class issues. Simultaneity bias concerns the tautological effect of the endorsement process. For many unions, candidate endorsements are based in part on an evaluation of member preferences. An association between union status and stated preference for union-endorsed candidates may be capturing the effect of members in determining the endorsed candidate, rather than the effect of unions in shaping member preference. Another limitation with the broad survey approach involves measurement. The key explanatory variable, “union status,” aggregates the effect of many diverse union organizations. Not every union organization endorses the same candidate, and even when labor is politically unified, “union status” fails to capture variation in political outreach effort and tactics across and within international union organizations. The alternative research strategy is to survey union members directly for their descriptions and opinions of union political outreach, then compare these opinions with stated candidate preferences. This approach improves on the matter of measurement, because member responses can be structured as a proxy for inter-union variation in political strategy. Studies of this type report that a sizable proportion (although usually not a majority) of union members find value in the political information and outreach efforts of their unions (Asher et al., 2001; Form, 1995; Kornhauser et al., 1956). A subset of this research has positively associated union information or contacts to candidate preferences (Bruno, 2000; Juravich & Shergold, 1988). Unfortunately, these studies were also based on cross-sectional survey data, and therefore susceptible to omitted variable and simultaneity bias. But a related and more critical limitation is the tendency for measures of independent and dependent factors to correlate when derived from the same survey instrument. For instance, we can expect that respondents who are active in union affairs will more likely respond to a union sponsored survey, rate the union outreach favorably, and express a preference for labor-endorsed candidates. Members unhappy with their union – or their union’s political activities – will tend to self-select by declining to participate.

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Common method forms of correlation are often intensified by selection, social desirability, and recall bias.

RESEARCH DESIGN The present analysis improves upon these analytical approaches in two ways. First, independence between the main explanatory variable: the union outreach, and the dependent variables: endorsement awareness, candidate preference, and voting is achieved by collecting union outreach data from non-survey sources. Specifically, data on telephone contacts is derived from the records of the labor organization performing the calls and workplace mobilization is manipulated across various work units using random assignment. This design reduces common method sources of correlation. The second advancement is the collection of panel survey data. Baseline survey data were collected two months prior to the election, before any union outreach was performed. Data was then collected a second time after the outreach. By controlling for pre-outreach candidate preferences, union outreach becomes a predictor of the change in member preferences, reducing omitted variable and selection sources of bias. Moreover, because candidate endorsements by the international union occur prior to the first survey, simultaneity bias is eliminated. The research subjects are union members affiliated with Local 1444 of the United Food and Commercial Workers (UFCW). Local 1444 is based in Milwaukee, Wisconsin, a state deemed critical for labor-endorsed presidential candidate Al Gore (Apple, 2000). Local 1444’s political outreach program in previous election cycles did not include workplace-level activities, making it possible to compare dormant Local 1444 units with units targeted for workplace-level education. Respondents were drawn from a list of Local 1444 members working in twenty-one Milwaukee-area retail grocery stores. The stores were categorized by size, ownership, and community location and randomly assigned to one of three outreach types: no outreach (or control group), outreach by the Milwaukee County Labor Council (MCLC), and workplace-level political education performed by Local 1444 staff. The three matching groups of stores constitute a quasiexperimental design. Restricting the analysis to the grocery industry brings three methodological advantages. First, grocery stores are nearly uniform in both size and function, and it is reasonable to assume that workers do not engage in meaningful interaction (at least on political matters) across grocery store locations. Second, grocery workers are relatively homogenous with respect to the work they perform, and due to the competitive nature of the industry, wage variation across employers is low. These

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organizational and labor market conditions serve as controls, reducing variation in political preferences associated with occupational and socioeconomic factors. Finally, compared with other industries, grocery workers are relatively young, have low seniority (caused by high turnover), and have weak associations with their unions.2 Younger, mobile members of society tend to be less politically active (Verba & Nie, 1972; Wolfinger & Rosenstone, 1980). Thus, if the aim is to increase overall political participation by union members, grocery workers profile as prime candidates for union outreach. Most local 1444 members reside within the geographic jurisdiction of the Milwaukee County Labor Council, a regional AFL-CIO body recognized for its political action program (America @ Work, 2000). The MCLC made telephone contacts to Local 1444 members during the election cycle to persuade them to vote. In addition, the MCLC financed and administered the surveys for this research, and integrated the research design into its election 2000 activities.

SURVEY DATA COLLECTION Prior to any political outreach, Local 1444 members were surveyed on their political attitudes toward candidates and issues, political ideology, political party preference, and demographic factors. An attempt was made to contact all members from a Local 1444 membership list (n = 1429) compiled in August 2000. Union lists are notorious for errors: a problem exacerbated when membership is younger, single, part-time, and there is a high level of membership turnover. Over 25% (n = 364) of the telephone numbers from the UFCW list were incorrect. Anywhere from five to ten attempts were made to contact each prospective respondent. Despite these efforts, over 33% (n = 475) of Local 1444 members were not contacted because calls were unanswered or there was no response to the requests for participation left on answering machines. Approximately 41% (n = 590) of Local 1444 members were contacted, 24% (n = 344) were surveyed, and 17% (n = 246) refused. The Survey-1 response rate is 33% and the completion rate, 55%.3 Between the first survey and the election, political outreach was administered to Local 1444 members in the three groups of grocery stores. One group of members (or cluster of seven stores) was the control group, and efforts were made to isolate this group from union outreach. This included purging the names from the regional AFL-CIO (i.e. MCLC) lists. Workers in the remaining fourteen stores were not purged from AFL-CIO lists and therefore were potentially exposed to the outreach scheduled by the MCLC, which consisted primarily of telephone calls aimed at increasing voter turnout. A final group of workers in seven stores were subjected

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Table 1. Survey Completion Statistics.

Local 1444 membership Survey 1 not completeda Survey 1 completed Survey 2 not completeda Survey 2 completed a Includes

UFCW Group

MCLC Group

Control Group

Row Totals

535 413 122 56 66

429 317 112 35 77

462 352 110 49 61

1426 1082 344 140 204

refusals, wrong numbers and non-contacted members.

to a workplace-level political mobilization and education program conducted by UFCW staff. The UFCW staff was asked to deliver a uniform program to all seven stores and complete diaries to document the dates, outreach activities, and their thoughts on members’ responses to the outreach program. Just after the election, but prior to the announcement of the presidential election outcome, Local 1444 members who completed the first survey were surveyed again to assess their political attitudes and candidate preferences.4 Of the 344 persons who completed the first survey, 217 were surveyed a second time, yielding a panel response rate of approximately 20%. A total of 204 responses were available that included data on all the measures. Table 1 presents a summary of the survey statistics.

MEASURES Table 2 provides the variable measures, definitions, and descriptive statistics. The dependent variables UFCW Endorsement and Candidate Preference were derived from the second survey. The UFCW endorsement variable is a dichotomous indicator for respondents that correctly identified Al Gore as the endorsed presidential candidate, zero otherwise. The otherwise group includes those who, in a preceding question, responded that they did not belong to a union.5 Building on earlier work (Zullo, 2002), the candidate preference variable was created from two branching questions. Respondents were first asked whether they preferred Gore or Bush as president. Candidates other than Gore or Bush were not offered as options. After their reply, respondents were asked whether their preference was “strong” or “not strong.” An ordinal scale was produced from these mutually exclusive response types as follows: strong Bush (−2), not strong Bush (−1), undecided/don’t care (0), not strong Gore (1), and strong Gore (2).

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Table 2. Variable Definitions and Statistics. Variable

Source

Definition

Candidate Preference

S2

UFCW Endorsement

S2

Voting

PVF

Preference for Gore

S1

Preference for Bush

S1

Preference Undecided

S1

Identify UFCW

S1

Political Ideology

S1

Party Identification

S1

Seniority (years)

UFCW

Workplace Contact

EXP

Phone Contact

MCLC

Mail Contact

S2

Five point scale (−2 to 2) where lower values indicate support for Bush and higher values support for Gore. Dichotomous indicator: 1 = respondent knew the UFCW endorsed candidate; zero otherwise. Dichotomous indicator: 1 = respondent voted and zero if there is no public record of voting. Dichotomous indicator: 1 = respondent preferred Gore in September; zero otherwise. Dichotomous indicator: 1 = respondent preferred Bush in September; zero otherwise. Dichotomous indicator: 1 = respondent was undecided in September; zero otherwise. Dichotomous indicator: 1 = respondent could identify the UFCW as their union; zero otherwise. Seven point scale (−3 to 3) where lower values indicate conservative ideology and higher values liberal ideology. Five point scale (–2 to 2) where lower values indicate support for the Republican Party and higher values support for the Democratic Party. Continuous measure of years of seniority at the time of election. Dichotomous indicator: 1 = respondent exposed to workplace-level education; zero otherwise. Dichotomous indicator: 1 = respondent household received telephone contact; zero otherwise. Dichotomous indicator: 1 = respondent reported they received direct mail; zero otherwise.

Mean (s.d.) 0.642 (1.626)

0.657 (0.476)

0.500 (0.501)

0.520 (0.501)

0.299 (0.459)

0.181 (0.386)

0.539 (0.500)

−0.221 (1.409)

0.392 (1.146)

3.964 (5.740) 0.324 (0.469)

0.235 (0.425)

0.436 (0.497)

Key: S1 = Survey 1; S2 = Survey 2; UFCW = Data from Local 1444; EXP = Experimental variable; MCLC = Data from MCLC; PVF = Public Voter Files.

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Whether a Local 1444 member voted was determined from municipal records. For all Local 1444 members for whom there was no voting record, their residential status was verified by cross-referencing UFCW name and address information with municipal files. Voting is therefore structured as a dichotomous variable where voting equals one and zero indicates a municipal resident with no public record of voting. Of the 190 eligible (18 years of age or older) Local 1444 members in the panel, 50% (n = 95) voted in the 2000 presidential election. The main independent variables of interest – Workplace Contact, Phone Contact, and Mail Contact – are indicator variables for the three types of union political outreach. Workplace Contact equals 1 for those respondents located in the seven stores targeted for workplace-level political mobilization, zero otherwise. Phone Contact equals 1 if the respondent was included in the contact records obtained from the MCLC telephone bank. Mail Contact equals 1 if respondents reported in Survey 2 that they received union mailings, zero otherwise.6 It is hypothesized that the three indicators will be positively related to the dependent variables, but that the effect will be strongest for Workplace Contact. Two control variables are included in the equations predicting an awareness of the UFCW-endorsed candidate to improve the precision of the main effects. The variable “Identify UFCW” is an indicator for those respondents who correctly reported in Survey 1 that they were members of the UFCW.7 By including Identify UFCW the intent is to factor out members who were unaware of their association with Local 1444 and those respondents who may have exited the local between August 2000 and the administration of the survey. Seniority is added as a control variable based on the theory that workers with a longer association with Local 1444 will more likely receive and recognize the union message. The seniority data was available from Local 1444 records. The social-psychological theory of voter behavior predicts that voters enter the election cycle predisposed to select a candidate or party. To control for pre-outreach preferences, candidate preference indicators from Survey 1 are modeled as predictors of candidate preference in Survey 2. The three indicators: Preference for Gore, Preference Undecided, and Preference for Bush constitute mutually exclusive response categories. In accord with the social-psychological framework, it is anticipated that the pre-outreach preference variables will be strong predictors of candidate preference. Two widely used predictors of candidate preference: Political Ideology and Party Identification, are included as controls. Political ideology is a seven-point continuous scale where low values (−3 minimum) correspond to self-described very conservative ideology and high values (3 maximum) very liberal ideology. Party Identification is a five-point scale where low values (−2 minimum)

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correspond to a strong identification with the Republican Party and high values (2 maximum) strong identification with the Democratic Party. Respondents identifying themselves as “Independent,” or who have no party identification, are coded zero.

THE UNION OUTREACH Workplace Contact UFCW field representatives coordinating the workplace-level education were instructed to conduct the same outreach across all seven sites. Beginning in the second week of September, staff met with stewards and members to discuss the importance of the November election. During these one-hour to two-hour informal sessions, UFCW representatives discussed the election issues, particularly with respect to the presidential candidates. By and large, staff described the majority of members as pro-Gore. One issue that resonated among female members was abortion, with most favoring Gore’s position. An issue that resonated among male members was gun control, which benefited Bush. During these discussions, members were encouraged to talk to their friends and family about the election, register to vote, and wear campaign buttons. Diary entries present a mixed picture of the effectiveness of the on-site visits. Most accounts characterize the political discussions as interactive and members as engaged participants. Occasionally, however, members are described as indifferent toward, or overwhelmed with, political information. Accounts of this latter type appear frequently near the end of the election cycle. One representative reported that Local 1444 members from a grocery chain were distracted by the possible sale of their company and its impact on employment. All representatives described logistical problems when they tried to discuss politics directly with Local 1444 members during work hours. The primary mechanism for educating members was through the distribution of handbills. Local 1444 prepared handbills that described labor’s issues and compared candidates Gore and Bush. Handbills were distributed directly to members by stewards, posted on bulletin boards, and left in break rooms. Representatives report that members generally acknowledged the content of the handbills during direct discussions. UFCW representatives also distributed voter registration forms in the workplace, and members were encouraged to register friends and family members. As the election neared, the on-site contacts became more frequent, with all seven sites receiving visits during the week before Election Day.

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Telephone Contact Political outreach performed by the Milwaukee County Labor Council focused on voter turnout. Operationally, the outreach consisted of telephone contacts and, in a limited number of city wards, door-to-door contacts. The telephone contacts were in two waves: an identification call approximately one month prior to the election to assess the level of support for the labor-endorsed-presidential candidate, and get-out-the-vote calls on Election Day. Calls were typically made between the hours of 4:00 p.m. and 8:00 p.m., and performed by both volunteers and paid staff. Telephone work intensified in the few days prior to the election and on Election Day.

Direct Mail Contact Local 1444 members were mailed a series of four brochures from the UFCW international during the election cycle. The first brochure criticized candidate Bush on several policy issues, including the privatization of Social Security, the tax cut plan, and indirectly, private school vouchers. Candidate Gore’s policies were described as “ideas that work for working families today and tomorrow.” The second brochure emphasized Bush’s anti-worker record on issues such as public education, health care, poverty, and the minimum wage while serving as Texas governor. Gore was only mentioned as a preferable alternative. The third brochure was a direct comparison between Gore and Bush on the issue of prescription drug coverage for seniors. No other issue was featured. The final brochure excluded Bush, and promoted Gore on the basis of Social Security, health insurance, college tuition, and a list of workplace rights, such as unionization and overtime policy. Thus, the overall strategy of the direct mail program was to decrease member perceptions of Bush early, weave comparative information into the rationale for favoring Gore, and end with a positive endorsement for Gore.

EMPIRICAL SPECIFICATIONS Awareness of Labor Endorsement Recognition of the endorsed candidate by members was one aim of the UFCW political strategy. A probit regression model is used to evaluate the relationship between the various types of outreach and member recognition that Al Gore was

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the endorsed candidate. Eq. (1) provides the specification for Local 1444 members’ awareness of the endorsed candidate: Pr(Y = 1) = ␤0 + ␤1 U + ␤2 R t−1 + ␤3 S

(1)

In this case, Y = 1 if the respondent correctly identified Al Gore as the candidate endorsed by the UFCW, and Y = 0 if otherwise. Thus the category “otherwise” includes wrong answers, as well as those respondents who did not identify themselves as union members. The probability of correctly identifying the UFCW endorsed presidential candidate in Survey 2 is modeled as a function of the union outreach (U), correct identification of the UFCW as their representative in Survey 1 (Rt −1 ), and seniority at the time of the election (S). Unbiased regression coefficients are given by ␤, and errors are assumed normally distributed with a mean of zero.

Preference for the Endorsed Candidate An even more crucial test of the effectiveness of the UFCW political strategy is whether the outreach shifted member preferences toward the labor-endorsed candidate. An ordered probit technique is employed to evaluate the discrete operationalization of candidate preference. Eq. (2) provides the specification for candidate preference, denoted as C. C = ␤0 + ␤1 U + ␤2 P t−1 + ␤3 Q t−1 + ␤4 I t−1

(2)

Probabilistic values for the five candidate preference categories from Survey-2 responses are modeled as a linear function of the union outreach (U), member preference at Survey 1 (Pt −1 ), political party identification at Survey 1 (Qt −1 ), and political ideology at Survey 1 (It −1 ). Again, ␤ symbolizes unbiased regression coefficients. As structured by Greene (2000), the estimated cut points ␮j−1 and the equation estimates C∗ are used to generate probabilities for UFCW member responses, such that: Pr(Y = −2) = (−C∗ ) Pr(Y = −1) = (␮1 − C∗ ) − (−C∗ ) Pr(Y = 0) = (␮2 − C∗ ) − (␮1 − C∗ ) Pr(Y = 1) = (␮3 − C∗ ) − (␮2 − C∗ ) Pr(Y = 2) = 1 − (␮3 − C∗ )

Strong preference for Bush; Not strong preference for Bush; Undecided or refused to answer; Not strong preference for Gore; Strong preference for Gore.

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Voting in the 2000 Election A final goal of the political mobilization program was to increase the vote turnout of members. As specified in Eq. (3), the effect of the outreach on voter turnout is evaluated using probit regressions. Pr(Y = 1) = ␤0 + ␤1 U

(3)

where Y = 1 if the respondent voted in the 2000 presidential election and Y = 0 if there is no public record of voting. The probability of voting is a function of the union outreach (U); ␤ are unbiased regression coefficients. The effect of the outreach on voting is estimated for Gore and Bush post-election supporters.

RESULTS Awareness of the Labor Endorsement Table 3 provides probit estimates for the correct identification of Al Gore as the presidential candidate endorsed by labor. Models 3.1 through 3.3 generate

Table 3. Probit Analyses of Awareness of UFCW Endorsement. Workplace (Model 3.1) Workplace Contact

Phone (Model 3.2)

0.591** (0.222)

Phone Contact

0.392 (0.280)

0.958*** (0.205) 0.101** (0.033) −0.523** (0.165)

0.895*** (0.205) 0.091** (0.033) −0.357* (0.148)

0.729*** (0.208) 0.852*** (0.207) 0.095** (0.033) −0.589*** (0.167)

204 103.62 55.14

204 106.30 49.79

204 101.02 60.34

Mail Contact Identify UFCW Seniority (years) Constant Observations −Log L Model ␹2

Mail (Model 3.3)

Standard errors in parentheses. ∗ ␳ < 0.05; ∗∗ ␳ < 0.01; ∗∗∗ ␳ < 0.001 (two tailed test).

All Outreach (Model 3.4) 0.629** (0.230) 0.720* (0.306) 0.919*** (0.225) 0.744** (0.217) 0.086* (0.034) −0.926*** (0.200) 204 94.00 74.38

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independent estimates for the effect of workplace, telephone, and mail contacts. Controlling for seniority and whether respondents correctly identified the UFCW as their union, Model 3.1 yields a positive and statistically significant parameter estimate for Workplace Contact (␤ = 0.591; ␳ < 0.01). Model 3.3 indicates that the association between Mail Contact and awareness of the labor endorsement is also statistically significant (␤ = 0.729; ␳ < 0.001). Telephone Contact, while positive, did not reach conventional levels of statistical significance in Model 3.2. As expected, seniority and respondent ability to identify their union is positively related to knowing the labor-endorsed candidate across all models. While Seniority and Identify UFCW are positively correlated (r = 0.32), both variables significantly improve the model fit. Model 3.4 provides conditional estimates for all three contact types. Consistent with the hypotheses, the three types of contact are positively associated with respondent awareness of the labor-endorsed candidate. After factoring out the effect of each outreach type, the coefficients for Workplace Contact (␤ = 0.629; ␳ < 0.01), Mail Contact (␤ = 0.919; ␳ < 0.001), and Phone Contact (␤ = 0.720; ␳ < 0.05) increase in magnitude and become statistically significant at conventional levels. There is, however, no indication from Model 3.4 that any of the three outreach types were a superior method of communicating the endorsed candidate. A Wald test of the null hypothesis that the coefficient magnitudes for Workplace Contact, Phone Contact, and Mail Contact are equal is not rejected. Predicted values for the effects of each outreach type on the probability of endorsement awareness were generated by imputing mean values for Identify UFCW and Seniority into Model 3.4 and calculating the change in probability for each independent outreach variable. The probability of knowing the laborendorsed candidate was 42.8% for those not receiving any form of outreach. Endorsement awareness increased by 18.9 percentage points for those workers exposed to workplace-level education, 20.4 percentage points for those contacted by telephone, and 24.5 percentage points for those who recalled receiving direct mail from the international union. Identification as a UFCW (or Local 1444) member at Survey 1 is associated with an increase of 24.5 percentage points, and one year of seniority is associated with a 2.8% increase in probability that respondents could identify the labor-endorsed candidate.

Preference for the Endorsed Candidate Table 4 provides estimates for the effect of union outreach on the strength of support for labor-endorsed presidential candidate Al Gore in Survey 2. Model 4.1 combines the three outreach types, Survey 1 candidate preference, and control variables

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Table 4. Ordered Probit Analyses of Candidate Preference. Full Panel (Model 4.1)

Workplace Contact Phone Contact Mail Contact Preference for Gore (Survey 1) Preference Undecided (Survey 1) Preference for Bush (Survey 1) Political Ideology Party Identification Constant ␮1 ␮2 ␮3 Observations −Log L Model ␹2

Grouped by Survey 1 Preference Favored Gore (Model 4.2)

Favored Bush (Model 4.3)

1.229** (0.429) 0.121 (0.309) −0.484 (0.299)

0.425 (0.363) −0.877 (0.541) −0.792* (0.353)

0.489* (0.203) −0.191 (0.223) −0.504** (0.185) 1.245*** (0.236) 0.575* (0.244) Omitted 0.054 (0.069) 0.661*** (0.107) 0.361 (0.221) 0.334 (0.092) 0.866 (0.129) 1.255 (0.143)

−0.124 (0.101) 0.642*** (0.169) 1.479 (0.313) 0.339 (0.187) 0.807 (0.239) 1.399 (0.263)

0.189 (0.124) 0.676*** (0.182) 0.459 (0.283) 0.326 (0.138) 0.516 (0.168) 0.716 (0.193)

204 206.05 128.13

106 81.85 26.49

61 56.34 29.45

Standard errors in parentheses. ∗ ␳ < 0.05; ∗∗ ␳ < 0.01; ∗∗∗ ␳ < 0.001 (two tailed test).

Political Ideology and Party Identification. With this full model, the coefficient for Workplace Contact is positive and statistically significant (␤ = 0.489; ␳ < 0.05), while Phone Contact is statistically insignificant. Contrary to expectations, Mail Contact is negative and statistically significant at conventional levels (␤ = −0.504; ␳ < 0.01). The positive and statistically significant coefficient for Preference for Gore (␤ = 1.245; ␳ < 0.001) and Preference Undecided (␤ = 0.575; ␳ < 0.05) was unsurprising, given that the omitted group are respondents stating an early preference for Bush. What this indicates is that political preferences are “stubborn”

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over relatively short time intervals, and the events leading up to the election tend to reinforce early preferences. Similarly, the strong positive coefficient for Party Identification (␤ = 0.661; ␳ < 0.001), is consistent with the social-psychological framework. The coefficient for Political Ideology, while positive, is statistically insignificant.8 Thus political party appears to be a more powerful symbol for formulating presidential preferences than political ideology. To further understand the outreach effects, Models 4.2 and 4.3 offer an analysis of post-outreach presidential preferences for respondents expressing pre-outreach support for Gore and Bush, respectively. The strong positive coefficient for Workplace Contact in Model 4.2 (␤ = 1.229; ␳ < 0.01) indicates that pre-outreach Gore supporters were more likely to favor Gore on Election Day if they were employed at one of the seven stores targeted for workplace mobilization activities. Visible gestures of support for a political candidate by union staff, local leaders, and co-workers appear to reinforce members’ proclivity for labor-endorsed candidates. Moreover, there is no evidence that workplace-level mobilization had unintended consequences for union members expressing an early preference for the labor-opposed candidate. The Workplace Contact coefficient for the pro-Bush group, Model 4.3, is positive and comparable in magnitude to the coefficient for Workplace Contact in Model 4.1. A failure to reach conventional levels of statistical significance could be due to a loss of statistical power, as reflected in the standard errors. Model coefficients for Mail Contact display a similar pattern. The negative and statistically significant coefficient for Mail Contact in Model 4.3 (␤ = −0.792; ␳ < 0.05) implies that early Bush supporters receiving union literature were more likely to favor Bush on Election Day. Recall bias may partially explain this counterintuitive finding. Since the variable “Mail Contact” was developed from Survey 2 responses, perhaps committed Bush supporters held a sharper recollection of the union literature criticizing their candidate. However, the negative coefficient for Mail Contact among early Gore supporters in Model 4.2 suggests otherwise: the data indicate a broad distaste for the direct mail political outreach program. Estimated coefficients from Model 4.1 were used to predict the effect workplace-level mobilization by imputing mean values for the variables and combining them with the appropriate m values. Table 5 offers predicted values for the post-outreach candidate preferences for respondents in the seven stores receiving workplace-level education compared with those in the remaining fourteen stores. As Table 5 indicates, exposure to workplace-level education was associated with a marked shift toward endorsed candidate Gore. Controlling for outreach types, political ideology, and party preference, 57% of those respondents located in the

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Table 5. Marginal Effects of Workplace Level Political Mobilization. Preference in Survey 2

Exposed to Workplace Level Education

Not Exposed to Workplace Level Education

Change

0.574 0.143 0.149 0.059 0.075

0.380 0.153 0.198 0.098 0.172

−19.4% 1.1% 4.9% 3.8% 9.6%

Strong Gore Not Strong Gore Undecided or No Preference Not Strong Bush Strong Bush

seven stores subjected to workplace-level education described their preference as strong for endorsed candidate Gore, compared with 38% for respondents in the other fourteen stores. Total support for Gore (strong and not strong categories combined) was approximately 72% for those exposed to workplace-level education, compared with 53% for others. The 19% shift toward Gore is primarily due to movement away from the response categories Undecided, Not Strong Bush, and Strong Bush.

Voting in the 2000 Election Table 6 presents the probit analysis of voter turnout. Model 6.1, the full panel of eligible voters (n = 190), indicates that only Phone Contact had a positive Table 6. Probit Analysis of Voter Turnout. Full Panel (Model 6.1)

Grouped by Survey 2 Preference Favor Gore (Model 6.2)

Workplace Contact Phone Contact Mail Contact Constant Observations −Log L Model ␹2 ∗

Favor Bush (Model 6.3)

−0.124 (0.196) 0.604∗∗ (0.220) 0.307 (0.188) −0.259 (0.164)

0.253 (0.257) 0.879∗∗ (0.288) 0.342 (0.243) −0.410 (0.219)

−0.422 (0.391) −0.008 (0.473) 0.263 (0.377) −0.148 (0.289)

190 126.91 9.58

116 74.79 10.93

53 35.42 1.71

␳ < 0.05; ∗∗ ␳ < 0.01 (two tailed test). Standard errors in parentheses.

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and statistically significant effect on voting (␤ = 0.604; ␳ < 0.01). For this group, imputing mean values into the equation for all contact types yields a 49% probability of voting. Voting increases to 67% for those union members receiving a get-out-the-vote telephone call, while the rate declines to 43% for those not receiving a telephone call. The separate group analyses in Models 6.2 and 6.3 suggest that the positive turnout effect came from union members that favored Gore just after the election. The coefficient for Phone Contact in the group that expressed a post-election preference for Gore was positive and statistically significant (␤ = 0.879; ␳ < 0.01). For this group, the estimated voter turnout rate is 76% for those receiving a telephone contact just before the election, and only 42% for those who were not contacted. By comparison, the voter turnout rate is estimated at 43% for the group favoring Bush (Model 6.3), and the telephone calls have no effect on this value.

DISCUSSION AND LIMITATIONS While prior research has associated unionized workers to preferences for laborendorsed candidates, few studies have examined the mechanisms employed by unions to shape the political preferences of members. This study measures the effect of three types of union political outreach administered during the 2000 presidential election: direct mail sent by an international union, telephone calls performed by a regional labor council, and workplace-level education and mobilization activities conducted by the union local. Combining quasi-experimental design and panel data collection, the study sought to minimize spurious associations due to common method correlation, selection, simultaneity, and omitted variable bias. Direct mail, telephone contacts, and workplace-level education were positively associated with the correct identification of Al Gore as the labor-endorsed presidential candidate, supporting Hypothesis 1. While the point estimate was greatest for direct mail, there was no statistical difference in the effect across outreach types. Formally, Hypothesis 2 is not supported. However, the finding of a positive association between member awareness of the labor-endorsed candidate and two crude measures of union instrumentality, seniority and the correct identification of the UFCW, does indirectly support the social-psychological view. Overall, the membership awareness analysis lends partial support for the social-psychological perspective. Results for union outreach effects on candidate preferences are less tidy. Consistent with the social-psychological perspective and Hypothesis 4, the outreach method involving direct contact between members and staff, workplace-level

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education and mobilization, yielded the greatest shift in preferences toward the labor-endorsed candidate. Controlling for pre-outreach candidate preferences, political ideology, and political party identity, support for the labor-endorsed candidate was approximately 19 percentage points higher for workers located in stores targeted for workplace-level activities. The positive association between the intensity of union-member interaction and member political attitudes is consistent with earlier studies (Berelson et al., 1954, Chap. 3; Verba & Nie, 1972, Chap. 11). Results from the separate group analyses imply that workplace level activities were a factor that sustained union members’ support for the labor-endorsed candidate through the election cycle. Overall these findings conform to the social-psychological view insofar that the political expressions and activities of co-workers shape the candidate preferences of their peers. Also consistent with the social-psychological framework is that union outreach becomes increasingly less effective as union-member interactions become impersonal. However, in contradiction to theory and Hypothesis 3, telephone calls have no effect on candidate preference. The non-effect from the telephone contacts is explainable by the fact that the primary purpose of the calls performed by the regional labor council was to encourage voter turnout; political persuasion was secondary. And indeed, the results on voter turnout do indicate that the telephone contacts by MCLC were positively associated with member turnout. The finding that telephone canvassing increases turnout, but has negligible effects on the preferences of voters, is consistent with research based in non-union settings (Adams & Smith, 1980). A notable extension to our understanding of the role of telephone canvassing is the differential effect on members according to their candidate preferences. Virtually all of the positive effect on voter turnout was for union members that favored the union-endorsed candidate. The data offer no evidence that telephone canvassing increases voter turnout for laboropposed candidates. Contrary to theory and intuition, the direct informational mailings sent by the UFCW international were associated with a preference shift toward the laboropposed candidate. Several factors may explain this finding. First, some union members may have misunderstood the literature and perceived the discussions of Bush as an indicator of support. This explanation, however, seems unlikely given the positive association between the mailings and awareness of the UFCW endorsement. Second, and more plausible, is that the negative association is due to recall bias. The UFCW attempted to send the mailings to all members, and perhaps committed Bush supporters, angered by the UFCW endorsement and support for Gore, were more likely to recall receiving the mailings. The separate group analysis of candidate preference does indicate a strong negative effect of the mailings for Local 144 members expressing an early preference for Bush.

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A third, equally probable explanation is that Local 1444 members rejected the literature and direct mail delivery method. A few Local 1444 members reportedly voiced criticism toward the UFCW for expending resources on the literature, some complaining that they received up to three pieces of literature in one day.9 Indeed, the separate group analysis of early Gore supporters provides no evidence that the mailings were a factor in sustaining support for Gore. Regardless of the cause for the negative parameter estimate, there is no indication that the direct mailings enhanced Local 1444’s political program. This finding contributes to the evidence that union members do not respond positively to political information sent to their homes by international unions or state AFL-CIO organizations (Zullo, 2002). These results need to be considered with respect to the study limitations. The limited sampling frame imposes unique contextual factors, such as geography, union type, local leadership style, and so forth, on the findings. External validity requires that the response by these Milwaukee grocery workers to their local’s political outreach represent the norm for union members. In particular, one might expect that the union outreach effects produced in this analysis would not be as strong for unions that begin with a politically active membership base. Another limitation of this research concerns the possibility of sample selection bias. Internal validity is compromised if the estimated effect of the union outreach is due to factors related to member accessibility and the willingness to complete a survey. This research sought to minimize the effect of sample selection bias associated with survey attrition by collecting panel data to control for pre-outreach respondent preferences. Finally, statistical power is a concern for models with small sample sizes. Assuming these results can be broadly generalized, then an important determinant of the strength of a union political program is whether national leaders can secure the concerted effort of local leaders and staff. Consequently, a major implication is that effective political action requires a decentralized approach and a concomitant delegation of authority and resources to the local level. Numerous organizational issues deter the transition to a decentralized model: variation in leadership and member responsiveness at the local level, concern over the disintegration of political unity, the risk of advancing an inconsistent union message, to name a few. Moreover, such a model runs counter to pressure to enhance administrative efficiency by communicating through a medium that lends itself to uniformity, such as a union newsletter or direct mail. But uniform, impersonal techniques have not proven effective, and organized labor will fail to realize its potential as a political agent if newsletters and direct mailing are the primary mechanisms for motivating union members to become politically active. Effective political action requires labor to engage in the demanding task of member mobilization.

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This point is not lost on union leaders, who celebrate the centrality of member activism to their political program (AFL-CIO, 2001). Yet several tactical elements of labor’s 2000 election program, including the widespread use of commercially produced literature, direct mail outreach methods, and the early endorsement of candidate Gore, belie such expressions of faith in volunteer activists. A political program based on member activism inherently conflicts with top-down endorsement practices, authoritarian policy formulation, and centralized resource control, because in return for their effort, volunteer activists generally demand ownership in crafting the political agenda. How the AFL-CIO affiliates resolve this tension, and whether labor can fully transition to a grassroots political strategy, remains to be seen. Offsetting the barriers to a decentralized approach is the implication that political activism and economic activism can be mutually reinforcing activities. The positive effect linked to workplace-level activities suggests that the process of mobilizing workers around an electoral goal is quite comparable to the internal mobilization that takes place when workers are building solidarity for contract negotiations, job actions, and representation rights. Once a system for mobilizing members is institutionalized, the same process can be invoked for political or economic ends. And when organized labor conceptualizes political and economic mobilization as complementary activities, it blurs the distinction between economic and political resource allocation. With a political program based on workplace-level mobilization, a dollar allocated for political outreach does not equate to a dollar deprived for economic mobilization.

NOTES 1. One example is the enactment of living-wage ordinances that impose upward pressure on the wages and benefits paid to workers employed by firms seeking contracts with municipal governments. A second example is the requirement of neutrality agreements on firms as a condition for achieving construction permits within municipal boundaries. 2. For this population, over 80% of workers are part-time, nearly 14% are high school aged (below 18 years), and over 27% have less than one year of seniority. 3. Response rate = CS/(S − WN); Completion Rate = (S − (NC + WN))/(S − WN); where CS = completed surveys, S = sample, WN = wrong number, and NC = no contact. 4. The Florida Secretary of State officially announced the winner of the 2000 presidential contest on November 26, a decision confirmed on December 13 by the U.S. Supreme Court. The administration of the second survey was completed by December. Since one suspected source of bias in political surveys is the tendency for respondents to favor the winner, the unusual circumstances surrounding the 2000 election may have aided this research. 5. The survey was designed to resemble a neutral poll, and therefore did not assume respondents were union members. An initial question asks: “Are you currently a member of a labor union?” Slightly over 19% of the panel (n = 39) responded in the negative.

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For these respondents, the interview skipped questions that asked for union identification. Affirmative responses were followed by “What is the name of the union?” Several responses to this open-ended question were accepted as correct, including Local 1444 and Food and Commercial Workers. Slightly less than 54% of members in the panel (n = 110) were able to identify their union. 6. As described in detail below, the UFCW international sent a series of direct mailings to members during the election cycle. It was not possible to incorporate the direct mail program into the quasi-experimental design or arrange to isolate respondents from the mailing. Thus, data on the receipt of the direct mailing is based on survey responses and may suffer from recall bias. 7. See note 5. 8. Political Ideology and Party Identification were positively correlated (r = 0.29). Excluding Party Identification from Model 4.1 (not displayed) increases the magnitude of the estimate for Political Ideology (␤ = 0.118; s.e. = 0.065; ␳ < 0.10). Thus, selfdescribed “Liberals” did tend to prefer Gore while “Conservatives” preferred Bush. The relatively weak effect of political ideology does imply that a considerable proportion of self-described “Conservatives” preferred Gore. 9. This information was obtained during post-research interviews with Local 1444 leadership.

ACKNOWLEDGMENTS An earlier version of this paper was presented at the Industrial Relations Research Association, section on Unions and Collective Bargaining, April, 2001. This work benefited from comments by Eileen Hoffman, Charles Jeszeck, Bruce Nissen, Paula Voos and several anonymous reviewers. Dan Welch of UFCW Local 1444 and John Goldstein of the MCLC provided access and resources for this project. Clint Newman provided invaluable research assistance.

REFERENCES Adams, W. C., & Smith, D. J. (1980). Effects of telephone canvassing on turnout and preferences: A field experiment. Public Opinion Quarterly, 44(3), 389–395. AFL-CIO (2001). People powered politics. Executive Council Report presented at the 2001 Convention, Las Vegas, NV. Posted on December 4 at: http://aflcio.org/convention01/ecreport ppp.htm America @ Work (2000). Member-to-member mobilization. Washington DC: AFL-CIO Public Affairs Department (October), 12–14. Apple, R. W. (2000). The 2000 Campaign: the game plan, dozen states seem too close to call in the final days. The New York Times (Sunday November 4), Section 1, 1, Column 6. Asher, H. B., Heberlig E. S., Ripley R. B., & Snyder, K. (2001). American labor unions in the electoral arena. Lanham, MD: Rowman & Littlefield Publishers. Berelson, B. R., Lazerfield P. F., & McPhee, W. N. (1954). Voting: A study of opinion formation in a presidential campaign. Chicago: University of Chicago Press.

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Bruno, R. (2000). Illinois labor and the return to class politics. WorkingUSA, 4(1), 92–126. Campbell, A., Converse, P. E., Miller W. E., & Stokes, D. E. (1960). The American voter. New York: John Wiley & Sons, Inc. Cornfield, D. B. (1989). Union decline and the political demands of labor. Work and Occupations, 16(3), 292–322. Delaney, J. T., Masters, M. F., & Schowchau, S. (1990). Union membership voting for COPE-endorsed candidates. Industrial and Labor Relations Review, 43(5), 621–635. Form, W. (1995). Segmented labor, fractured politics. New York: Plenum Press. Foster, J. C. (1975). The union politic: The CIO political action committee. Columbia, MO: University of Missouri Press. Gerber, R. (1999). Building to win, building to last: AFL-CIO COPE takes on the Republican congress. In: R. Biersack, P. S. Herrnson & C. Wilcox (Eds), After the Revolution. Boston: Allyn and Bacon. Greenberg, S. B. (1995). Middle class dreams: The politics and power of the new American majority. New York: Times Books. Greene, J. (1998). Pure and simple politics: The American federation of labor, 1881 to 1917. New York: Cambridge University Press. Greene, W. H. (2000). Econometric analysis (4th ed.). Upper Saddle River, NJ: Prentice Hall. Greenstein, F. I. (1969). Children and politics. New Haven, CT: Yale University Press. Hart, P. D., & Associates, Inc. (1995). A nationwide survey among union members and the general public on politics and legislation. Report to the AFL-CIO (May). Hess, R., & Torney, J. (1967). The development of political attitudes in children. Chicago: Aldine. Himmelweit, H. T., Humphreys, P., Jaeger, M., & Katz, M. (1981). How voters decide: A longitudinal study of political attitudes and voting extending over fifteen years. London: Academic Press. Hojnacki, M., & Baum, L. (1992). New style judicial campaigns and the voters: Economic issues and union members in Ohio. The Western Political Quarterly, 45, 921–948. Jennings, M. K., & Neimi, R. G. (1968). The transmission of political values from parent to child. The American Political Science Review, LXII(1), 169–184. Juravich, T., & Shergold, P. (1988). The impact of unions on the voting behavior of their members. Industrial and Labor Relations Review, 41(3), 374–385. Kornhauser, A., Sheppard, H. L., & Mayer, A. J. (1956). When labor votes: A study of auto workers. New York: University Books. Masters, M. F., & Delaney, J. T. (1987). Union political activities: A review of the empirical literature. Industrial and Labor Relations Review, 40(3), 336–353. Ness, I., & Eimer, S. (2001). Central labor councils and the revival of American unionism: Organizing for justice in our communities. Armonk, NY: M. E. Sharpe. Sears, D. O. (1993). Symbolic politics: A socio-psychological theory. In: S. Iyengar & W. J. McGuire (Eds), Explorations in Political Psychology. Durham, NC: Duke University Press. Sousa, D. J. (1993). Organized labor in the electorate. Political Research Quarterly, 46(December), 741–758. Teixeira, R., & Rogers, J. (2000). America’s forgotten majority. New York: Basic Books. Verba, S., & Nie, N. H. (1972). Participation in America: Political democracy and social equality. New York: Harper & Row. Wolfinger, R. E., & Rosenstone, S. J. (1980). Who votes? New Haven, CT: Yale University Press. Zullo, R. (2002). Revitalizing AFL-CIO political outreach: Can a direct informational campaign do the trick? Advances in Industrial and Labor Relations, 11, 123–144.

JOHN FITCH, DAVID BRODY AND THE CULTURE OF MANAGEMENT IN AMERICAN LABOR HISTORY Jonathan Rees INTRODUCTION John Andrews Fitch spent a year studying labor conditions in the steel industry around Pittsburgh during 1907 and 1908. The results of his research became The Steel Workers, one of six volumes in the Pittsburgh Survey, a groundbreaking 1910 analysis of conditions faced by working people in a modern industrial city. Introducing his discussion of common employment practices in the steel industry, Fitch declared, “A repressive regime . . . has served since the destruction of unionism, to keep the employers in the saddle.” He traced the origins of management’s arbitrary power to the Homestead lockout of 1892, when Carnegie Steel destroyed the last stronghold of organized labor in the mills of western Pennsylvania. During his stay in Pittsburgh, Fitch saw the results of fifteen years of management domination. “The steel worker,” he wrote, “sees on every side evidence of an irresistible power, baffling and intangible. It fixes the conditions of his employment; it tells him what wages he may expect to receive and where and when he must work. If he protests, he is either ignored or rebuked. If he talks it over with his fellow workmen, he is likely to be discharged” (Fitch, 1989, pp. 206, 232–233). Fitch’s work on the steel industry reflected the interests of his mentor at the University of Wisconsin, John Rogers Commons. Commons, who got Fitch his job working on the Pittsburgh Survey,1 founded what was then known as the

Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 197–222 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 0742-6186/PII: S0742618603120082

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Wisconsin or Commons School of labor history because nearly all the practitioners of this scholarship studied economics with him in Madison. Commons examined labor history in order to provide insight into the industrial relations problems of his time. Because he and his students believed that self-interested trade unions were the best tool to solve these problems, later historians have tended to see Commons and his students as having been interested in the creation, operation and demise of such unions and little else. For example, David Brody writes, labor economists “trained in the Wisconsin School of John R. Commons . . . defined their field as the study of trade unionism and collective bargaining, and these boundaries they applied to their historical work no less than to contemporary problems” (Brody, 1979, p. 111). Although this assessment might apply to the economists who practiced labor history in the 1950s, it does not capture the wide range of interests that Commons and most of his students held.2 Nevertheless, by giving the Commons School the label “The Old Labor History,” historians of Brody’s generation differentiated their new approach to this subject and made this misperception stick. Brody’s mischaracterization of the Wisconsin School undoubtedly stems in part from the reaction that established labor history scholars had to his first book, Steelworkers in America: The Non-union Era, first published in 1960. Because the book was not primarily about unions, the manuscript garnered negative reviews from the economists who read it before publication. Wedded to the study of institutions to a degree that the earlier Commons School was not, reviewers were unable to see what contribution Brody’s work made to their field (Brody, 1983, p. 142). Steelworkers is on the same industry that Fitch studied for the Pittsburgh Survey and includes the exact same time period. In the book, Brody describes how steel managers used repression and welfare capitalism to stabilize labor relations in the industry in the absence of collective bargaining. Although Steelworkers resembles the scholarship of the Commons School because of its discussion of management labor policy, it is more a book about labor than management. By shifting the focus of his narrative further away from labor institutions to groups of unorganized workers, Brody helped move labor history scholarship towards a new perspective. This perspective, now dubbed “The New Labor History,” focuses more on working class culture and worker influence on shopfloor conditions rather than adopting the industrial-relations centered perspective of the Commons School. In this paper, I will use Fitch’s The Steel Workers and Brody’s Steelworkers in America as representative works to demonstrate the strengths, and to a lesser extent, the weaknesses of their respective schools of labor history. I will also refute modern stereotypes about the so-called “old” labor history by demonstrating that members of the Wisconsin School considered not only the history of trade unions, but the role of management and social attitudes in general in their

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scholarship. John Fitch, for example, offers an informed, nuanced portrait of the steel industry’s motivation for opposing unions in large part because he is interested in both sides of the industrial relations equation. The strength in Brody’s book is his pioneering interest in how the culture of workers affected their solidarity. By combining Fitch’s interest in management motivation with the cultural analysis which Brody helped inspire later new labor historians to develop, a new, multi-cultural, multi-actor perspective emerges. This perspective reflects management’s impact on worker’s lives. Its newness derives from treating both sides of the industrial relations equation with equal theoretical sophistication. Too many practitioners of the new labor history treat management as robotic, profit-maximizing entities. While this may be true in theory, in reality this approach has many problems. Competition is never perfect. Firms themselves are not perfectly efficient. And in order to maximize profits an economic actor needs to have perfect information about his situation as well as about the consequences of his decision. Culture is a concept that can help bridge the gap between economic theory and reality. Culture is the framework through which individuals and groups interact with their society. That framework will always affect the path that an economic actor takes when faced with an economic decision to make. When new labor historians consider the culture of workers, they do so to help explain their economic decision making because they recognize that individual workers and groups of workers are interested in more than just money. Yet they refuse to attribute to management the same cultural complexity they attribute to labor. Even though the new labor history is now over forty years old, no “New, New” school of labor history has yet to emerge to take its place. Labor historians have continually been called upon to move beyond this scholarship and find a completely fresh perspective with which to approach this subject. For example, historian Elizabeth Faue suggests that the work of the first generation of new labor historians like David Brody and David Montgomery is too wedded to the supposed institutionalist legacy of the Commons School. “We have,” she writes “reached the limits of what the older understanding of labour history that we have inherited from the Progressive Era might teach us about class” (Faue, 2002, p. 110). I disagree. Even though Faue wants to lump Brody and Montgomery in with earlier labor historians, their work was a significant break with the industrial relations-based, multi-actor approach of the Commons School. And though early labor history has many flaws, there is much in the work of Commons and his associates that should be of interest to modern scholars, especially their approach to explaining the actions of management. The labor historians of the Wisconsin School did not have the same theoretical insights into culture as later scholars in this field, but scholars like Fitch did recognize that individual businessmen and even firms have cultures too. These cultures can help explain their decisions in

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the same way that working-class culture can serve as a tool to understand the actions of their employees. By understanding how management culture affected the course of labor-management relations, this concept can help scholars look at class in a new way. In the case of the steel industry in the non-union era, management culture was particularly important. Steel makers, like many other American businessmen, were determined to have control over the terms and conditions of employment no matter what the cost. Steel makers were also extremely paternalistic, creating elaborate and expensive welfare capitalist programs that reflected their cultural values as much if not more than their desire for profit. The leaders of the industry were also devoted to the idea that their employees should have the opportunity to have their job performance evaluated on the basis of their individual efforts. That way, the best men would rise to the top, just like many of steel company executives had. Scholars call this idea the ethos of individual achievement.3 All of these cultural concepts have roots in the quest for higher profits. However, the quest for higher profits cannot explain why the industry continued to pursue these cultural ideals when, in some cases, they proved to be extremely expensive and/or of limited effectiveness. Do not mistake this argument for cultural determinism. Culture is not the only factor that determined the steel industry’s labor policy, or even more important than economic factors. However, as this example from the steel industry will demonstrate, culture helped determine the nature of the industry’s labor policies. Steel firms would likely have been anti-union no matter what cultural factors influenced them but the particular cultures that influenced them helped determine which anti-union policies they followed. Faced with many potentially profitable labor policies, culture led firms towards some policies and away from others. It also shaped the intensity and manner in which these policies were implemented. Of all the steel industry’s labor policies, management’s cultural concerns had the greatest effect upon welfare capitalism. The United States Steel Corporation, the largest firm in the industry, had one of the largest welfare capitalist programs in America. Its largest and most expensive programs were its stock purchase plan, pension plan and safety program. Both Fitch and Brody tackle these efforts in depth. Therefore, this is a good subject to use as an example to contrast their approach to management motivation. Fitch uses both cultural and economic reasons to explain management’s motivations for these efforts. Brody’s explanation of management motivation is mostly economic. However, even Fitch does not develop the cultural motivations for these policies to the extent they deserve. To do that, it is necessary to look to the way labor historians writing after the publication of Steelworkers in America treat working-class culture and begin to apply those insights to management.

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THE OLD LABOR HISTORY AND THE NEW To establish a multi-causal model that can be used to explain welfare capitalism and other management policies, it is necessary to take the best parts of both schools of labor history. Only then can it be possible to explain the cultural and economic give and take which determined the success or failure of a wide range of labor policies. The division between the old labor history and the new labor history is a division between work in two different academic disciplines. Although informed by other disciplines, most notably sociology, the Wisconsin School began in the Economics Department at the University of Wisconsin – Madison in the late-Nineteenth Century when Richard Ely started to collect archival materials needed to begin scholarly studies of the American labor movement. When John Rogers Commons joined the faculty in 1904, he and his students produced the first comprehensive studies of American labor history, in particular the eleven-volume Documentary History of American Industrial Society (1910–1911) and the four-volume History of the Labour Movement in the United States (1918, 1935) (Schacht, 1994, pp. 7–8). What modern labor historians tend to forget is that the study of institutions such as labor unions is only one aspect of the Wisconsin’s School’s work. Over the course of his career, Commons tackled such diverse subjects as the role of unions in society, labor law, social insurance, personnel management and monetary stabilization (Kaufman, 2002, pp. 16–27). His work in labor history informed his proposals for contemporary reform and those reforms include important examples of Progressive Era and New Deal legislation. This work on the labor problems of his day focused on many other things besides unions. Industrial Goodwill, for example, dealt with topics such as problems with scientific management and the role of employee morale in productivity (Harter, 1962, pp. 74–75). Although this research was not history at the time it was written, it could easily be used to help interested scholars understand labor’s past. To dismiss all this work by calling it “old” is to discard an enormous amount of useful theoretical and empirical material, especially material dealing with management labor policy, simply because it does not fit a narrow conception of what labor history is. When considering the Wisconsin School in its entirety, it is immediately apparent that Commons’ students were responsible for most of the written material that might be described as traditional labor history. In the two multi-volume works mentioned above, Commons is merely the editor. His students did most of the writing. The Commons’ student who gets the most attention from modern scholars, perhaps because his perspective is so easy to characterize and dismiss, is Selig Perlman. His 1928 book, A Theory of the Labor Movement, is the most doctrinaire expression of union-centered scholarship coming out of the Wisconsin

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School. Perlman’s research for the History of Labour led him to conclude that “pure and simple” trade unionism was the natural end point to labor’s historical development. American workers, argued Perlman, were job conscious, more concerned with putting bread on the table than any particular political ideology. Socialism and other radical belief systems were the result of the so-called “intellectuals” who did not have labor’s best interests at heart. Perlman wrote that, “Labor’s own ‘home grown’ ideology is disclosed only through a study of the ‘working rules’ of labor’s own ‘institutions,’ ” namely trade unions (Perlman, 1970, pp. 5, 6). Not every member of the Wisconsin School took such a narrow view of labor history. For example, John Fitch does devote an inordinate amount of space in The Steel Workers to the politics of the virtually powerless Amalgamated Association of Iron, Steel and Tin Workers, but he also details the effect of management’s anti-labor policies on the work and home life of individual employees. These kinds of modern interests may explain why most of his work appeared in sociological journals like The Survey, rather than in economics publications. The new labor history developed inside the discipline of history rather than economics. Instead of building upon the work that came before, this new perspective developed in opposition to the old way of doing things. This was part of a tendency within all historical writing to overthrow the consensuses that dominated previous scholarship. Starting in the 1960s, younger historians began a concerted effort to explain history “from the bottom up.” In an attempt to explain the roots of the turmoil of that time, these radical scholars wanted to show how struggles by minority groups like African Americans and women had shaped American history long before the modern civil rights and feminist movements began. In the field of labor history, this new perspective meant getting beyond the perceived institutional bias of the Commons School. Adherents of the New Labor History believe that working people are subjects worthy of study in their own right, independent of their employers and their unions. Strongly influenced by the work of British historian E. P. Thompson, in particular, The Making of the English Working Class, these scholars analyzed the culture of workers in this country in order to show that class has been a fundamental element in the American experience. Even though the new labor history includes a wide range of fascinating work, the sheer diversity of its subject matter and the diversity of approaches which its practitioners took has left this sub-field increasingly fractured. For example, unlike Brody, who tackled an entire industry at once, much of the new labor history consists of detailed community studies that covered a single town or even plant. This is why it is very hard to make further characterizations about labor history scholarship beyond the division between the old labor history and the new. No new pattern or trend in this area of scholarship has come to dominate the field. Only general similarities with regard to approach exist.

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Perhaps the clearest division to make within the new labor history is between scholars influenced by the late Herbert Gutman who study working-class culture and those influenced by David Montgomery whose scholarship focuses on workers’ struggles to control conditions on the shop floor (Schacht, 1994, p. 14). In 1973, Gutman, published an essay entitled, “Work, Culture and Society in Industrializing America.” To Gutman, culture was “a kind of resource” which workers drew upon to establish their identity and society was “a kind of arena” where the struggle over identity and economic status took place.4 Following Thompson’s model, Gutman spends much of this article covering the pre-industrial culture of American workers in the United States and in the countries from which immigrant workers emigrated so as to suggest the resources they had when they confronted industrialization. Much of the Gutman-inspired work details work culture outside the workplace in the community. It has seldom been used to study management culture, even when this kind of cultural analysis stays on the shop floor.5 The David Montgomery-inspired work on shop floor struggles does consider management motivation in some cases. However, much of it resembles Harry Braverman’s Marxist analysis in Labor and Monopoly Capital where management is nothing but a relentless profit-making machine. Other labor scholars, most notably Daniel Nelson and Sanford Jacoby, offer more subtle portraits of management in their work,6 but this kind of scholarship is peripheral to academic labor history today. As John Schacht observes, race, gender and ethnicity are becoming increasingly important to labor history scholarship at the expense of class (Schacht, 1994, p. 18). The less attention historians pay to class, the less likely it is that management will get the consideration it deserves.

THE STEEL WORKERS AND STEELWORKERS IN AMERICA Most of the first new labor historians were too wedded to demonstrating that labor was an important subject for study in its own right in order to consider management in depth. But when considering the history of labor relations in the steel industry, a multi-actor analysis is absolutely essential because workers had so little power compared to their bosses. As James Holt argues, “The determination to resist the growth of trade unions by employers who possessed vast financial resources, who controlled a rapidly changing technology, and who were uninhibited by political constraints, may not have been the only reason for the collapse of unionism in the American steel industry, but it surely is the most important one” (Holt, 1977, p. 34). This explains why both John Fitch and David Brody consider management labor policy in great detail. To do otherwise would be to tell less than half the story.

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Because John Fitch and David Brody examine this same subject at essentially the same time period, comparing and contrasting their work is a good way to get at the strengths and weaknesses of the old labor history and the new. The contrast between how these two authors treat management is particularly striking. The Steel Workers is, in essence, a contemporary community study. Fitch writes about what he saw and heard about work, home life and politics in Homestead, but he also includes a great deal of historical context dating back to the 1870s. There are many aspects to The Steel Workers that would surprise someone who assumes that the old labor history is only useful for understanding trade unions. Near the beginning of the book, he explains, “The purpose of this study is . . . to discuss iron and steel, not in terms of ore, and tonnage, and machinery, but in terms of the working life” (Fitch, 1989, p. 3). According to one modern assessment, Fitch’s book: describes the steel production and finishing processes, working conditions, the rise, fall, and status of iron and steel unions, corporate labor policies, and the effects of each of these on families, the local community, political behavior and society as a whole. It is at once an economic inquiry, sociological study, historical work, and statistical survey. Anyone wishing to learn about the development of the iron and steel industry ought to start with this work (Hill & Cohen, 1984, p. 26).

In other words, Fitch’s interests do not conform with the stereotype of the Wisconsin School. As Paul Krause observes, The Steel Workers is “in many ways the model” for David Brody’s classic work, Steelworkers in America: The Non-union Era (Krause, 1998, p. 321).7 Brody’s book is, of course, entirely historical. It covers a slightly different period than Fitch, roughly from the Homestead lockout of 1892 to the granting of the eight-hour day for steel workers in 1923. Brody discusses labor/management relations in this industry, but he handles unions in a different manner than previous labor history scholarship. To Lizabeth Cohen, “Unions and industrial relations persist in Brody’s writing not for the sake of documenting the way workers fashioned their ‘bread-and-butter-unionism,’ as they had for the Commons School. Rather, they are sites of interaction, vehicles for exposing the way steelworkers . . . struggled to mediate between their own cultural inclinations and the multiple contexts in which they operated” (Cohen, 1997, p. 296). Today, Brody’s book is widely acknowledged as a classic transitional work between the old and the new labor history, if not the first example of this new genre. Fitch begins The Steel Workers by looking at what employees did on the job and the history of the Amalgamated Association. However, when he gets to the non-union period, the time at which time he was writing, he concludes that, “it is possible for him to speak with more assurance regarding their labor program.” Chapters subsequent to this comment cover topics like how changing technology,

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wages and hours affected workers. He even discusses the role of the church and the saloon in workers’ lives. But Fitch also explains why management fought organized labor so fiercely, thereby giving rise to the difficult conditions of labor which workers faced. Steelworkers in America begins where Fitch leaves off. Brody’s first chapter on “The Psychology and Method of Steelmaking” describes his take on the industry’s motives for its managerial decisions. To Brody, the men who ran the steel industry during the non-union era were relentless economizers, and little else. “The impulse for economy-shaped American steel manufacture,” he writes: It inspired the inventiveness that mechanized the production operations. It formed the calculating and objective mentality of the industry. It selected and hardened the managerial ranks. Its technological and psychological consequences, finally, defined the treatment of the steelworkers. Long hours, low wages, bleak conditions, anti-unionism, flowed alike from the economizing drive that made the American steel industry the wonder of the manufacturing world (Brody, 1998, p. 2).

Even Brody’s former student Lizabeth Cohen believes that “Brody’s fixed, simplistic” portrait of management psychology was “not adequate to his task” (Cohen, 1998, p. 298).8 Unfortunately, as Howell Harris explains, “Everything in Steelworkers rests on the grinding cost-consciousness Brody detects among steel company executives in the 1880s through 1900s . . .” (Harris, 1998, p. 311). Fitch, when considering the motivation for management’s labor policies, does not go that far. “The motive back of the destruction of unionism was desire for administrative control,” he writes (Fitch, 1989, p. 205). Administrative control may have led to lower costs and higher profit, but Fitch did not assume that all steel company policies were, in fact, successful. Therefore, there is a subtle but significant difference in how both men explain labor policies which they both cover in their work. Fitch and Brody both explain why management opposed unions, but Brody offers an entirely economic explanation. Fitch, by recognizing that the desire for administrative control may not be entirely rational, suggests the existence of cultural reasons for this stance. Consider the way that both men tackle the issue of welfare capitalism, especially the stock purchase plan, pension plan and safety efforts at the United States Steel Corporation. Over the first twenty-odd years after its founding in 1901, U.S. Steel created a huge welfare capitalist program which included everything from clubhouses and baseball teams for workers to gardens and civics classes. U.S. Steel’s extensive and well-publicized efforts along these lines put it near the forefront of what might be dubbed the welfare capitalist movement. Spurred on by groups like the National Civic Federation, welfare capitalism exploded onto the American economic scene around the turn of the century. National Cash Register, International Harvester, General Electric, H. J. Heinz and U.S. Steel were just a

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few of the large American corporations which created elaborate welfare programs between 1890 and 1910. Welfare capitalism expanded into nearly every sector of the American economy after World War I, but many firms severely curtailed or ended these activities during the Depression of the 1930s.9 U.S. Steel’s stock purchase plan was one of the first and best publicized of the firm’s welfare efforts. In 1902, the Steel Corporation offered its workers the chance to buy stock in the company at reduced prices. Management gave the stock to workers up front, then a little bit would be taken out of the worker’s paycheck each month to make up for the loan. After three years, the worker owned the stock outright. If worker-participants wished to sell his shares at any time over that period they could do so, but U.S. Steel offered an added incentive to encourage workers to hold on to the stock. Each worker who showed “a proper interest in the welfare and progress” of the company received an extra bonus of five dollars per share per year. At the end of the five year period, the five dollar payments that would have been given to workers who sold the stock early were divided up among on a per share basis among all workers who had bought the stock through this plan five years before (Fitch, 1989, p. 209). The purpose of the plan was to encourage loyalty to the firm as well as individual initiative since working hard would presumably increase the value of the stock employees owned. U.S. Steel’s pension plan, created in 1911, drew almost as much attention. The origins of the plan derive from the $4 million relief fund that Andrew Carnegie left for the workers at Carnegie Steel when he sold his firm to the Steel Corporation. U.S. Steel added $8 million to the fund and renamed it the United States Steel and Carnegie Pension Fund. Men who reached the age of seventy and had spent twenty years or longer in service to the firm had to retire. Men who had spent twenty years or longer in service to U.S. Steel and were sixty years or older could retire voluntarily. Those with twenty years of service who were “permanently totally incapacitated through no fault of their own” could also obtain pensions. As with the stock purchase plan, U.S. Steel hoped that workers would see the pension plan as another reason to remain loyal to the firm. If not, it could always be yanked away. “This Pension Plan is a purely voluntary provision for the benefit of employees superannuated or totally incapacitated after long and faithful service,” explained the fine print in the announcement, “and constitutes no contract and confers no legal rights upon any employee” (Fitch, 1989, pp. 336–339). The Steel Corporation’s championing of safety and accident prevention work in 1906 “marked a turning point in the history of the industrial accident situation in American industry” (Lescohier, 1935, p. 367). U.S. Steel Chairman Elbert Gary’s 1906 statement on safety marked the first time that a firm of this size tried to standardize safety activities in its disparate facilities. It read, in part:

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The United States Steel Corporation expects its subsidiary companies to make every effort practicable to prevent injury to employees. Much can be done by designing new construction and machinery with all practicable safeguards. Expenditures necessary for such purchases will be authorized. Nothing which will add to the protection of the workmen should be neglected. The safety and welfare of the workmen are of the greatest concern (Gary quoted in Close, 1926, p. 86).

By 1908, U.S. Steel’s safety bureaucracy was in place. At the top of the hierarchy, the company created a permanent Committee on Safety that consisted of a director of the Corporation and the presidents of five subsidiary companies. That committee appointed inspectors who traveled to all corporation facilities and made recommendations as to how unsafe conditions and practices would be changed. Each U.S. Steel facility had its own Plant Committee on safety, which included superintendents, assistant superintendents, master mechanics and safety inspectors. These bodies held weekly (or sometimes daily) meetings to discuss safety matters, and investigated all serious accidents which occurred in their jurisdiction. Workmen’s Committees had three members who came from the rank and file of the mill. These employees inspected their plants once or twice a month for defects in equipment or unsafe practices by workmen, and sent regular reports to the plant committees. Employees who served on these committees received their regular rate of pay while undertaking their duties (Close, 1913, pp. 26–29). Despite the potential benefit for workers, Fitch and Brody condemn both the stock purchase and pension programs because of what they perceived as management’s ulterior motives. Fitch argues that the stock purchase plan was demeaning because of its paternalism and dangerous because “it brings those employees who invest in stock more surely under the domination of the Corporation.” With regard to the pension plan, he offers a similar critique: “A man will think twice before giving up a job with a pension attachment for something immediately better; he will be loath especially as he gets along in service, to risk discharge; he will not join a union, offhand at least, if joining means discharge. These administrative advantages have, no doubt, had their weight in the inauguration of the pension scheme . . .” (Fitch, 1989, p. 198). However, trying to see matters through management’s eyes, Fitch also writes that, “Efforts to encourage loyalty,” like the stock purchase plan, “may make for the smooth running of a plant, for increased productivity and better return for stockholders and men” (Fitch, 1989, pp. 212–213). The operative word here is “may.” U.S. Steel did not know that the stock purchase plan would pay off in the long run, but Fitch implies that the leaders of the Steel Corporation believed it would, otherwise they would not have implemented it. However, Fitch also argues that the negative effects of other labor policies, like spying on employees, canceled whatever good effects these policies might have had. According Fitch, steel workers saw their employers “giving with

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one hand and taking away with the other and connect the two in their minds . . .” (Fitch, 1989, p. 211). In other words, Fitch recognizes that these contradictory policies embody different imperatives. Even if they all have the same ultimate goal of preventing unionization, doing them at the same time could lead to the result that makes both policies ineffective. Brody considers the stock purchase plan and the pension plan as part of a series of efforts “to insure against continuing discontent and a union resurgence” (Brody, 1998, p. 80). He does not recognize the possible contradiction here because he does not recognize management’s conflicting motivations. The safety program, however, is handled differently by each author. Fitch praises the program. “No large corporation,” he writes “is manifesting a more intelligent determination in regard to accidents than the United States Steel Corporation” (Fitch, 1989, p. 69). Brody is more circumspect. U.S. Steel’s success at accident prevention probably made it the only clearly profitable program in its welfare capitalist repertoire because fewer accidents meant fewer lost man hours and state workmen’s compensation meant the safer the workplace, the lower a firm’s contribution to a state workman’s compensation fund.10 Nevertheless, Brody emphasizes the role of public pressure in the creation of the safety program rather than the potential cost savings. “Progress was made first to reduce the high accident rate,” he writes, because it was “the prime target, significantly, of public attack” (Brody, 1998, p. 165). Succumbing to public pressure is a cultural, not an economic motive. Therefore, when discussing a program that probably cut costs in the long run, Brody contradicts his own over-arching argument about economizing. This is tacit acknowledgement that his economizing argument cannot take in all of management’s motives. The most important difference between these two authors with regard to this subject is that Brody, unlike Fitch, assumes welfare capitalism worked. According to Brody, welfare capitalism in general “added the measure of betterment needed to win the steelworker’s consent to the terms of his employment. It insured the stability of the labor system that had developed along with the industry” (Brody, 1998, p. 179). This assumption will be challenged below. However, even if welfare capitalism did work, Brody’s analysis of welfare capitalism does not square with his portrait of steel makers as relentless economizers. Between 1912 and the end of 1925, the stock purchase program cost U.S. Steel $22,564,858 (United States Steel Corporation, 1926, n.p.). The Steel Corporation’s pension plan got so expensive that it had to continually tighten eligibility requirements so as to limit payouts to the increasing number of workers who qualified (Rees, 1997, pp. 173–176). The executive in charge of welfare capitalism at the company put the whole bill for this policy at $71,651,731.89 for the years 1912 to 1920 (Close, 1920,

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p. 86). Payment of these kinds of expenses was hardly the action of a relentless economizer. If U.S. Steel intended for welfare capitalism to pay for itself by bringing labor peace, these programs clearly failed. As Brody explains, “Notwithstanding its liabilities, the labor movement after 1909 (when the Amalgamated Association essentially disappeared from the industry) posed a continuing, real threat to the steel manufacturers” (Brody, 1998, p. 146). Despite the collapse of the union, there were fourteen strikes in the iron and steel industry in 1914, thirty in 1915, seventy-two in 1916 and fifty-six in 1917 (Bing, 1921, p. 295). The most noteworthy example of the continuing threat to the industry occurred in 1919. Approximately 250,000 workers, approximately half the industry’s total workforce, joined what has come to be known as the Great Steel Strike on September 22nd of that year. U.S. Steel’s plants were hit particularly hard that day. The mills at Gary, Indiana, “were silent, or nearly so.” In the Pittsburgh District, the results of the strike were mixed. Rioting broke out and arrests began the night before the strike began. This would explain why results there were only partial. Some mills, like the one in Donora closed down entirely, while the Duquesne Works had enough workers to keep running despite the strike (Brody, 1987, pp. 112–113; Warren, 2001, p. 116). The ramifications of this labor turmoil for understanding U.S. Steel’s motivation for its labor policies are profound. Writing in 1922, the journalist Horace Drury explained why the unrest in 1919 had occurred: The Steel Corporation has of its own accord, though perhaps not always fully consciously, been developing a labor policy, which both contains a lot of substantial and practical benefit to the worker in the way of earnings and conditions, and, in part at least, has back of it a very rich idea of extending the corporate organization so as to consolidate the interests of stockholders, managers and workers . . . The trouble is no such unity has developed. Though some of the ideas have promise, and though much attention and expense have been devoted to special phases of the betterment program, the Corporation edifice, on the whole, is more like a house of sand than of stones solidly cemented together . . . The weakness in the present system is, therefore, in the failure actually to reach the men (Drury, 1922, pp. 46–48).

Schemes like the stock purchase and pension plans were discretionary expenses. If Brody is right about the industry’s concern for economy, U.S. Steel’s decision to stick with these programs into the 1930s does not make sense. Why then did U.S. Steel keep welfare capitalism when they knew it was not working? Because it had other motives besides economic ones for creating, implementing and sticking with these programs. These non-economic motives were manifold, but they can all be categorized as cultural influences.

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CULTURAL INFLUENCES ON ECONOMIC DECISION-MAKING Another student of John R. Commons, Sumner Slichter, examined welfare capitalism across industries in the May 1929 issue of the Quarterly Journal of Economics. The number of firms who implemented various welfare capitalism programs had picked up greatly during World War I when labor shortages and the need for high productivity had convinced many employers that they could no longer ignore workers concerns about the terms and conditions of their employment. Yet, Slichter noted, the circumstances that had given rise to these programs disappeared after the war ended. Management once again had the upper-hand over labor as jobs dwindled and trade unions lost power and members, but it did not abandon these welfare programs. “In short,” wrote Slichter: Every aspect of the post-war labor situation might be expected to cause employers to abandon their newly-acquired interest in labor’s good will and to revert to pre-war labor policies. And yet, except in a few cases, this has not happened. On the contrary, the efforts to gain labor’s good will have steadily grown (Slichter, 1929, pp. 396–397).11 Slichter attributes the persistence of these programs mostly to employer recognition that high employee morale improves productivity. The steel industry did not buck this trend. More steel firms started welfare capitalism during the 1920s than ever before (Rees, 1997, p. 186). This does not jibe with Brody’s picture of steel firms as being relentless economizers because these programs were often very expensive. However, if the steel firms stuck with these policies in the hopes of greater profits in the longer-term, did their attitudes really change? No, their goal of higher profits remained the same throughout this period. But why didn’t steel firms pursue one set of policies in search of profitability before the war and another after since economic conditions changed so much? This is where recognizing the existence of management culture can be useful. Steel executives held strong beliefs about the need for management control, their paternal responsibility towards employees and the need to promote individual achievement before the war and after. As external conditions changed, these cultural beliefs helped shape the manner in which they responded to the economic environment. In the case of welfare capitalism, their cultural beliefs were so strong that management bent its perception of economic reality in order to conform with these ideas. Brody’s explanation of welfare capitalism is ultimately materialist. He assumes these programs must have worked otherwise management would not have implemented them. Fitch, by considering the possibility that they might have failed, recognizes that other non-economic factors were at work behind these programs.

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To Fitch, “employees’ benefit policies” like the pension or stock purchase plans existed “entirely apart from unionism or non-unionism” (Fitch, 1989, p. 192). If the motives are non-material, then management might be behaving irrationally (in the classical economic sense) by implementing and sticking with them. Other than noting the industry’s desire for “administrative control,” Fitch did not try to assess the impact of management culture on specific policies. But by applying the kind of cultural analysis developed by a later generation of labor historians to steel management, a new understanding of these policies emerges. Instead of viewing industrial relations as a struggle between labor and heartless capitalists, it becomes possible to see the give and take between labor and management that did so much to determine the success or failure of particular labor policies. For example, the stock purchase plan at U.S. Steel was the perfect embodiment of the ethos of individual achievement. Employees could only participate in the program on an individual basis. The kind of employees management wanted to reward would benefit from the stock subscription program because it encouraged thrift. Unworthy employees would not participate. If profit through heightened employee effort was the sole goal behind this program, then the inability of most employees to invest significant amounts of money undoubtedly undercut its effectiveness severely. As one woman interviewed by Margaret Byington for the Pittsburgh Survey pointed out, the 20% reduction in wages they had experienced over fifteen years of marriage to a U.S. Steel employees greatly overshadowed the small dividend provided by her husband’s shares (Byington, 1969, p. 177). Employees, in essence, voted with their feet. Worker participation rates never topped 26% before 1920 (and were generally ten to twenty percentage points lower) (Rees, 1997, p. 166). This was hardly enough to “win the steelworker’s consent to the terms of his employment” as Brody suggests they did. The same thing can be said about the pension plan. The number of pensioners as a percentage of employees never topped 0.016 before 1919 (Rees, 1997, p. 174). This led workers to undervalue the plan. One fifty year-old worker voiced to an interviewer in 1920 that he noted that he would have to work twenty more years with U.S. Steel to be eligible for a pension but “What does a pension amount to?,” he asked. “$40 or $50 in my case. How could I live on it? People think these big corporations are very kind with their pensions, etc., but they are dead wrong” (Fitch, 1920, n.p.). Why stick with these programs then? Such sentiments suggest that these programs had a greater effect on management’s feelings of noblesse oblige than they did on individual employees. Nevertheless, management believed they would be profitable in the long run because that is what its cultural values suggested. As Elbert Gary once explained to his Board of Directors, “From the standpoint of making the most money for the Corporation there might be one answer and from the standpoint of doing the right thing

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there might be another . . . If you are sure of your morals, good policy follows . . . (From minutes of the Presidents Meeting, 1910, n.p.). To Gary and others in his position, morality and economic interest were inexorably intertwined. Even the manner in which U.S. Steel implemented its safety program embodied its culture. Rather than consult with workers about how best to promote safety, steel makers tended to blame their workers for accidents. U.S. Steel’s employees were bombarded with messages like, “You are responsible for the safety of others as well as yourself”; and “The prevention of accidents and injuries, by all possible means, is a personal duty which EVERYONE owes not to himself alone but also to his fellow workers” (United States Steel Corporation, 1911, cover; United States Steel Corporation, 1913, p. 6). If the Steel Corporation cared only about profits, it would not have created a policy that tried to absolve the company from all blame (It would have found the reason for an accident, whatever the cause, and fixed the problem so as to avoid expensive accidents in the future). The Steel Corporation’s insistence on maintaining the twelve-hour day, despite its effect on safety, is perhaps the best example available from this industry of cultural values obscuring the most potentially profitable policy choice. Long hours promoted accidents. “Sometimes a chain breaks and a ladder tips over,” remarked one steelworker to a reporter from McClure’s Magazine. “If everything is working all smooth, a man watches out and everything is alright. But you take it after they’ve been on duty twelve hours without sleep and running like hell and everybody’s tired and it’s all a different story” (McClure’s Magazine quoted in Nash, 1982, p. 105). The United States Commissioner of Labor found a strong correlation between accidents and the long turn, the period when steelworkers were most tired, thereby providing proof for these kinds of anecdotes (United States Commissioner of Labor, 1913, p. 151). Nevertheless, U.S. Steel and much of the rest of the steel industry did not eliminate the twelve-hour day until 1923, making it the last major industry in America to do so. Had it understood the best way to maximize profits, the industry would have done so sooner. Steel makers often cited the cost of shorter hours in higher wages as an important reason to maintain long hours since workers who wanted to go from working twelve to eight hours a day did not want a one-third cut in pay. But why follow that route and not employ the long-term thinking that Slichter suggests led to the persistence of welfare capitalism in many American industries? The answer to this question is culture, specifically the ethos of individual achievement. “It is hard work and long hours that has built up the west and America,” declared the President of U.S. Steel’s Illinois Steel subsidiary, E. J. Buffington, in an interview with Horace Drury. Buffington went on to tell Drury that he was “raised on a farm, and has himself worked twelve hours, and still works hard.” In summary, he argued, “The important thing in the world is achievement. America is in danger of being

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ruined by prosperity and relaxation. Many nations have been ruined that way” (Drury & Cooke, 1921, n.p.). A commission investigating the 1919 strike reported testimony from two other U.S. Steel subsidiary presidents on the hours question this way: Mr. H. D. Williams, president of the Carnegie Steel Company, said that he had worked fourteen hours a day and did not feel he was any worse for it. Mr. W. B. Schiller, president of the National Tube Company, said that he had worked the twelve-hour day when young and that it never did him any harm (Interchurch World Movement, 1920, p. 59).

Ironically, this kind of sentiment blinded industry executives to a financial benefit of shorter hours. By 1919, at least nineteen steel firms had already switched to the eight-hour day. For many of them, including Commonwealth Steel and Colorado Fuel and Iron, productivity increases more than compensated for the increased cost of labor (Rees, 1997, pp. 209–210). Nevertheless, U.S. Steel and many other firms did not follow this lead. Their belief in the ethos of individual achievement can help explain an economically irrational policy. The assumptions of the new labor historians with regard to steel labor policy make no room for considering culture when assessing management motivation. For example, David Montgomery, discussing the steel industry near the beginning of his classic work, The Fall of the House of Labor, argues that management’s efforts “to cut the taproot of nineteenth century workers’ power by dispossessing the craftsmen of their accumulated skill and knowledge” came about as a result of a “quest for greater and more secure profits” (Montgomery, 1987, p. 46).12 The rest of the book goes on to describe workers’ collective resistance to these kinds of efforts, much of which was based on a shared cultural heritage. Montgomery’s explanation of management behavior reflects a belief that the motive for its labor policy is ultimately material. For this reason, Montgomery’s assumption about management lacks the complexity that he attributes to the motives of workers. Brody does the same thing in Steelworkers in America. By adopting the classical economic view of firm motivation, Brody vastly oversimplifies the situation which management faced. He assumes that steel managers are basing their policies on the rational basis of profit maximization and cost minimization. “Unencumbered by unions,” he writes, “the steelmaster could base his labor decisions on the objective criteria of what minimized his cost and maximized his profit. He could with impunity manipulate the wage rate, step up the work, and extend the twelve-hour day and the seven-day week” (Brody, 1998, p. 78). The assumption behind this reasoning is that the more employers kept labor costs down, the more profit would be left for them. However, determining what

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minimized costs and maximized profits was much more complicated than Brody suggested. As William Lazonick argues in his critique of Brody’s book, To recognise that industrial relations remains an issue after such a thorough defeat of collective bargaining is to recognise that there are no objective criteria of cost minimisation and profit maximisation. The capitalist cannot manipulate wage rates and work loads with impunity precisely because he still has to deal with a labour force, whether unionised or not. He has to get his workers to work for the company (Lazonick, 1983, p. 117).

Fitch recognized this, writing at the end of The Steel Workers, “if the treatment that the steel companies are now employing toward their workmen be indefinitely prolonged, it will be hard to predict the ultimate action of the workers.” In fact, Fitch believed that harsh anti-union policies were the most likely thing that might lead to significant change in the industry (Fitch, 1989, p. 243).

BACK TO THE FUTURE Labor historians writing over the last thirty or forty years have done much to illustrate the significance of working-class culture, but have done very little with regard to the culture of management. Brian Greenberg writes that Steelworkers in America “is a significant portrait of managerial culture and managerial control” (Greenberg, 1998, p. 291), but the fact that he can write this about what is essentially a one-dimensional depiction of management culture is an indication of just how much labor historians take their conception of employer motivation for granted. “In my experience,” writes William Sewell: Labor historians are too easily satisfied by explanations that identify a material cause – say, declining control over the process of production – but are highly skeptical about explanations that identify cultural causes – say, shifts in political or religious discourse – no matter how well-documented or tightly argued the cultural explanation may be. The normal response of labor historians to cultural explanations is to argue that the supposed cultural cause is less important than some alternative material cause or that the proposed cultural cause is itself the effect of “deeper-lying” material factors (Sewell, 1993, p. 17).

Sewell’s argument is in reference to labor historians who study culture because it motivates workers in their fight for a bigger slice of the pie. However, his point is even more apt with respect to the impetus of management, a class whose underlying purposes are seldom given close attention because their motives are assumed to be economic almost by definition. This is certainly the case with Steelworkers in America. Historians of Brody’s generation tended to only pay attention to the culture of the working-class because this was a reaction to what they believed to be the Wisconsin School’s almost exclusive focus on trade unions and industrial relations. To treat employers in depth would have taken away from

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the freshness of this new approach. Furthermore, since the primary interest of the new labor historians was the process of class formation, and the capitalist class had already formed, management held little interest for them. Nevertheless, these labor historians have offered the best potential theoretical framework for understanding how culture has affected management labor policy, even though that framework has to be employed differently than it has in the past for it to be useful. To E. P. Thompson, the scholar who originated the idea of working-class culture, “. . . class entails the notion of a historical relationship” and class-consciousness in England came about when “most English working people came to feel an identity of interests as between themselves, and as against their rulers and their employers” (Thompson, 1963, pp. 9–11). In other words, the story of one social stratum is intricately linked to that of others because as the position of one class rises or falls, that of the other class will change too. According to Bryan Palmer, “Thompson stressed that the gentry and the manufacturers coalesced as the working class would come together against them, at the time of class threats and struggles . . . Thus, class formation, whether at the top or at the bottom, was a process in which mutuality was colored by relationships of resentment, antagonism and struggle” (Palmer, 1981, p. 76). Culture is one factor in Thompson’s work that makes class formation possible, and if the culture of the classes differ class warfare becomes possible. This explains why The Making of the English Working Class includes so much material on employers and the state. This struggle between labor and its foes in early industrial England was often fought on the political plane. However, by not taking management culture seriously, Herbert Gutman, David Brody and other new labor historians have absorbed only half of Thompson’s lesson. In Gutman’s writings, for example, the dialectic between labor and capital is much less important because he conceives of working-class culture as something completely independent of the dominant culture. “Indeed,” argues Lawrence T. McDonnell, “he (Gutman) never discusses the relation of the capitalist class to the working class. They represent in Gutman’s work two civilizations which sometimes squabble but never embrace, as brothers or as deadly enemies” (McDonnell, 1984, pp. 636–637). Indeed, employers are largely absent from Gutman’s work since the root of the cultural clashes he investigates derive from the culture at-large, rather than a culture unique to capitalists. Gutman’s failure to explore both sides of the class relationship has had enormous consequences for the study of American labor history. According to Alan Dawley, Gutman’s emphasis on culture at the expense of power meant his “attempt to center American history on subordinate classes was doomed from the start, for the same reason the elite history was: both laid hands on only part of the elephant, so both were incapable of solving the problems of parts and wholes” (Dawley, 1988, p. 368). With so many labor historians following Gutman’s theoretical example, an enormous

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amount of intriguing information about American working-class culture has been uncovered over the last twenty-five or thirty years, but the sub-discipline has also become increasingly fractured. Because the working class is so diverse, studies of isolated groups of workers in isolated communities make integrating the results of a field of research into a manageable narrative nearly impossible. In recent years, some labor history scholars have begun to end that isolation. For example, the plural title of Susan Porter Benson’s Counter Cultures, her study of the rise study of managing workers and customers in early department stores, indicates this trend. With regard to managers, she describes their attempts to make department stores efficient places yet still enticing to customers as well as good places at which to work. She quotes one observer of the industry who argued against the idea “that a business can be divided into two parts – the economic aim on the one side and the social obligation on the other when as a matter of fact, these are merely two aspects of one whole . . . You cannot separate them without killing both” (Benson, 1986, p. 38). In Modern Manors, Sanford Jacoby writes about welfare capitalism after the New Deal primarily from management’s perspective. With regard to the origins of this policy he considers not only of its financial benefits but of the “moral impulse” behind it. “Self-made business owners,” he explains, “felt a sense of stewardship and paternal obligation to their employees” (Jacoby, 1997, p. 4). Even as times changed and other firms abandoned or scaled back their programs, the three companies which Jacoby follows (Kodak, Sears and Thompson Products) continue to practice welfare capitalism, albeit in changing forms, because of the persistence of their paternalist notions. It is possible to cite works of many other scholars along these lines, but one can still safely assume that this kind of work still constitutes a minority of labor history scholarship.13 A comparable trend to the study of management culture has taken place in the study of American slavery. In Roll, Jordan, Roll, Eugene Genovese pioneered the idea that class was the central basis of the master-slave relationship. Striking and unionization were, of course, impossible for slaves, but in Genovese’s conception slaves were not powerless. Running away, sabotaging supplies and stealing were all ways to improve their work life and carve out a world of their own. Genovese also writes in great detail about the ideology of the planter class.14 Recent historians of slavery have begun to follow up on this work and look at the ideas that motivated slaveholder behavior more closely. For example, in Soul by Soul, Walter Johnson, as part of his larger analysis, examines how culture influenced slave traders and masters in the New Orleans slave market. “This book,” he explains, “began with the idea that the history of any struggle, no matter how one-sided its initial appearance, is incomplete until told from the perspectives of all those whose agency shaped the outcome” (Johnson, 1999, p. 8). Edward E. Baptist, writing in the Journal of American History, considers how ideas about

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slavery, rape and commerce affected the actions of the slave trader Isaac Franklin and his partners. If the relationship between slaves and masters is comparable to that of workers and managers, then management culture can tell you much about what happened since slaves, like non-union steelworkers at the turn of the century, had little power compared to the other party in this relationship. Unfortunately, slavery does not fit neatly into most models for the history of industrial relations. Jonathan Zeitlin calls for labor history to be reconceived “as the history of industrial relations, understood broadly as the changing relationship between workers, trade unions, employers and the state” (Zeitlin, 1987, p. 159). This framework closely resembles the economist John T. Dunlop’s conception of an industrial relations system. Dunlop defines an industrial relations system as being comprised of workers and their organizations, managers and their organizations, and government agencies concerned with the work place and work community. These groups interact within a specified environment comprised of three interrelated contexts: the technology, the market of budgetary constraints, and the power relations in the larger community and the derived status of the actors. An industrial relations system creates an ideology or a commonly shared body of ideas and beliefs regarding the interaction and the roles of the actors which helps to bind the system together.

Dunlop also suggests that, “The concept of an industrial relations system is used most fruitfully as a tool of analysis when a specific system is examined in its historical context, and changes in the system are studied through time” (Dunlop, 1958, pp. 383–388). Contrary to modern stereotypes, the historians of the Commons School adopted an even broader conceptualization of what to study than Zeitlin’s or Dunlop’s. For example, the Documentary History of Industrial Society includes slavery. The first two volumes discuss the industrial society of the Old South, including material on slaves, slavery and plantation management. Volumes five through ten, which are labeled “the labor movement,” include not only documents relating to unions, but material on employer associations and the political activity of wage earners. Other subjects tackled include immigration, Farmers’ Associations, Prison Labor and the Race Problem. In his introduction to The History of Labour, Commons explained, “These volumes deal mainly with the history of labour conditions, of labour philosophies and of labour movements – not primarily with the structure or policies of labour unions, nor with the history of individual unions . . .” (Commons, 1918, p. 3). In fact, Commons specifically rejected the title “History of the Labour Movement in the United States” because the study was “broader than the labor movement” (Commons, 1917, n.p.). In The Steel Workers, Fitch too went beyond the confines of an industrial relations system. Fitch, like Zeitlin and Dunlop, includes more than just labor and

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capital in his conception of labor history. He made room for the influence of the state by considering the role that the public could play in encouraging reform. Furthermore, Fitch also evaluated the result of the industrial relations struggle he described against the ethical standards of the time (Hill & Cohen, 1984, p. 27). “A proper economic policy from the standpoint of the individual,” he writes, “may be absolutely uneconomic from the standpoint of society. Such men as have plundered our forests and wasted our coal deposits have followed an economic policy individually sound, but that policy is today denounced as at enmity with the public good. If the man who wastes and destroys natural resources is a public enemy, what of the corporations that exploit human resources?” (Fitch, 1989, p. 206). In doing this Fitch is breaking not just with conventions about what to study, but with classical economic theory which tends to be value-neutral. E. P. Thompson, in The Making of the English Working Class, makes this same break. “Values,” to Thompson, “are not ‘imponderables’ which the historian may safely dismiss with the reflection that, since they are not amenable to measurement, anyone’s opinion is as good as anyone else’s. They are, on the contrary, those questions of human satisfaction, and of the direction of social change, which the historian ought to ponder if history is to claim a position among the significant humanities” (Thompson, 1963, p. 444). Thompson’s masterwork examines the values of both labor and management alike. The values which management had closely mirrored those of the rest of British society apart from the emerging working-class. Therefore, they illustrate the cultural dimension of class conflict. I do not mean to suggest that the work of the Commons School is somehow more useful than that of the new labor historians or that Fitch was “right” and Brody “wrong” about the history of labor relations in the steel industry. What I do mean to suggest is that by mixing Fitch’s interest in management with modern cultural analysis one gets a better idea of all the forces that affected American labor history because all the actors that have shaped this history would get the sophisticated consideration they deserve. This approach might also help solve what labor historians call “the problem of synthesis,” namely how to integrate all this disparate information about the American working class and working-class culture together.15 If class is a relationship between labor and management, adopting a two-sided multi-cultural approach to labor history would could put that relationship at the center of our understanding of how labor history changed over time. A two-sided, “multi-cultural” approach to American labor history would follow similar efforts to integrate new scholarship into other areas of social history. In the same way that the experiences of blacks and whites must be considered together in order to understand the history of American race relations, the same way that the experiences of men and women must be considered together in

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order to understand American social history, the history of both labor and management should be considered together in order to understand the development of American capitalism. The interesting thing about this connection between branches of social history is the direction of the comparison. Practitioners of African American history and women’s history have gotten their work integrated into mainstream historical curricula and in the process have done much to improve teaching and scholarship. In the case of labor history, adding part of mainstream historical curricula, business or economic history, would do much to improve our understanding of this important sub-field. If labor historians will not do this, those in the field of industrial relations should follow the lead of their illustrious forbearers from the Wisconsin School and do it for them.

NOTES 1. For biographical information on John Fitch, see (Hill & Cohen, 1984, pp. 7–32). 2. Commons’ two-volume Institutional Economics (1934) might explain this mistake but the term that became the title of that book proved to be so fluid that nobody, not even Commons, could settle on a definition for it. See (Harter, 1962, pp. 242–243). 3. For example, see (Jacoby, 1991, p. 185). 4. Gutman borrowed these definitions from the anthropologist Sydney Mintz. See (Gutman, “Work, Culture and Society,” pp. 16–17). 5. Gutman did explore the process of applying the same kind of cultural analysis to management that he did to labor in an article on the labor policies of Standard Oil originally published in the mid-1960s. By doing this he was able to suggest the clash of cultures which gave rise to labor-management conflict there, but this was his only foray into this kind of research (Gutman, 1987, pp. 213–254). 6. See, for example (Jacoby, 1985; Nelson, 1980). 7. For more on the historiographic significance of Steelworkers in America, see “Symposium on David Brody, Steelworkers in America: The Non-union Era, and the Beginnings of the New Labor History,” Labor History, 34 (Fall, 1993, pp. 457–514). The University of Illinois Press reprinted the entire symposium at the end of its edition of Steelworkers in America. When quoting from the symposium in what follows, I have used the titles and page numbers from that book. 8. She says the same thing about Brody’s portrait of worker motivation. 9. On the history of welfare capitalism across industries, see (Brandes, 1976; Brody, 1993, pp. 48–81; Gitelman, 1992; Nelson, 1975, pp. 101–121; Tone, 1997). 10. On the success of U.S. Steel’s safety efforts, see (Aldrich, 1997, pp. 310–311). 11. Emphasis in original. Thanks to Bruce Kaufman for bringing this article to my attention. 12. Also see the Frederick Taylor quotation on page 56. 13. A non-exhaustive list of other works in this category might include: (Braverman, 1974; Gitelman, 1988; Meyer, 1981; Schatz, 1983; Zahavi, 1988). An important collection of essays along these lines is Masters to Managers (Sanford, Jacoby (Ed.), 1991).

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14. It is perhaps no coincidence that the chief contemporary opponent of Genovese’s framework for the study of slavery was Herbert Gutman. See (Berlin, 1987, pp. 46–51). 15. See Brody (1979, p. 122).

ACKNOWLEDGMENTS I would like to thank Steve McIntyre for suggesting some of the historiographic references I have used and Bruce Kaufman for his insightful comments on earlier versions of this essay.

REFERENCES Aldrich, M. (1997). Safety first. Baltimore: Johns Hopkins University Press. Baptist, E. E. (2001). Cuffy, fancy maids, and one-eyed men, rape, commodification, and the domestic slave trade in the United States. American Historical Review, 106, 1619–1650. Benson, S. P. (1986). Counter cultures: Saleswomen, managers, and customers in American department stores (1890–1940). Urbana: University of Illinois Press. Berlin, I. (1987). Herbert G. Gutman and the American working class. In: I. Berlin (Ed.), Power & Culture (pp. 3–69). New York: New Press. Bing, A. M. (1921). War-time strikes and their adjustment. New York: E. P. Dutton & Company. Brandes, S. D. (1976). American welfare capitalism. Chicago: University Press. Braverman, H. (1974). Labor and monopoly capital. New York: Monthly Review Press. Brody, D. (1979). The old labor history and the new. Labor History, 20, 111–121. Brody, D. (1983). Workers and work in America: The new labor history. In: J. B. Gardner & G. R. Adams (Eds), Ordinary People and Everyday Life (pp. 139–157). Nashville: American Society for State and Local History. Brody, D. (1987, originally published in 1965). Labor in crisis. Champagne: University of Illinois Press. Brody, D. (1993). The rise and decline of welfare capitalism. Workers in Industrial America (2nd ed., pp. 48–81). New York: Oxford University Press. Brody, D. (1998, originally published in 1960). Steelworkers in America: The nonunion era. Champagne: University of Illinois Press. Byington, M. (1969, originally published in 1910). Homestead: The households of a mill town. New York: Arno & The New York Times. Close, C. L. (January, 1913). The committees on safety and sanitation of the United States Steel Corporation. Monthly Bulletin of the American Iron and Steel Institute, 1, 26–31. Close, C. L. (1920). Welfare work in the steel industry. Year Book of the American Iron and Steel Institute, 35–87. Close, C. L. (1926). Safety in the steel industry. The Annals of the American Academy of Political and Social Science, 123, 86–92. Cohen, L. (1998, originally published in 1993). Commentary. In: D. Brody (Ed.), Steelworkers in America: The Non-union Era (pp. 295–299). Champagne: University of Illinois Press.

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Commons, J. R. (1917). April 17 letter to Henry Farnham. Madison, WI: State Historical Society of Wisconsin. Commons, J. R. (1918). Introduction. History of Labour in the United States (Vol. 1, pp. 3–21). New York: Macmillan. Commons, J. R., et al. (1910). A documentary history of American industrial society, 10. Cleveland: The Arthur H. Clark Co. Dawley, A. (1988). A preface to synthesis. Labor History, 29, 363–377. Drury, H., & Cooke, M. L. (10 January, 1921). Morris L. Cooke Papers. Box 179. Franklin D. Roosevelt Library, Hyde Park, NY. Drury, H. to Cooke, M. L. (1922). The technique of changing from the two-shift to the three-shift system in the steel industry. Boston: Report to the Cabot Fund. Dunlop, J. T. (1958). Industrial relations systems. New York: Holt. Faue, E. (2002). Retooling the class factory: United States labour history after Marx, Montgomery and postmodernism. Labour History, 82 (Australia), 109–123. Fitch, J. A. (1920). Interview with Lodeman. David J. Saposs papers, box 26. Madison, WI: State Historical Society of Wisconsin. Fitch, J. A. (1989, originally published in 1910). The steel workers. Pittsburgh: University of Pittsburgh Press. From minutes of Presidents Meeting (1910). William Brown Dickson Papers. Box 7, Historical Collections & Labor Archives, Pattee Library, Pennsylvania State University, State College: PA (February 25th). Genovese, E. (1974). Roll, Jordan, roll: The world the slaves made. New York: Random House. Gitelman, H. M. (1988). Legacy of the Ludlow massacre: A chapter in American industrial relations. Philadelphia: University of Pennsylvania Press. Gitelman, H. M. (1992). Welfare capitalism reconsidered. Labor History, 33, 5–31. Greenberg, B. (1998). What David Brody wrought: The impact of steelworkers in America: The non-union era. In: D. Brody (Ed.), Steelworkers in America (pp. 279–294). Champagne: University of Illinois Press. Gutman, H. (1987). The labor policies of the large corporation in the guilded age: The case of the standard oil company. In: I. Berlin (Ed.), Power & Culture (pp. 213–254). New York: Pantheon Books. Harris, H. J. (1998, originally published in 1993). Commentary. In: D. Brody (Ed.), Steelworkers in America: The Non-union Era (pp. 306–317). Champagne: University of Illinois Press. Harter, L. G. (1962). John R. Commons: His assault on Laissez-Faire. Corvallis: Oregon State University Press. Hill, C., & Cohen, S. (1984). John A. Fitch and the Pittsburgh survey. Western Pennsylvania Historical Magazine, 67, 7–32. Holt, J. (1977). Trade unionism in the British and U.S. steel industries, 1880–1914: A comparative study. Labor History, 18, 5–35. Interchurch World Movement (1920). Report on the steel strike of 1919. New York: Harcourt, Brace and Howe. Jacoby, S. (1985). Employing bureaucracy. New York: Columbia University Press. Jacoby, S. (1991). American exceptionalism revisited. In: S. Jacoby (Ed.), Masters to Managers (pp. 173–201). New York: Columbia University Press. Jacoby, S. (1997). Modern manors. Princeton: Princeton University Press. Johnson, W. (1999). Soul by soul: Life inside the antebellum slave market. Cambridge: Harvard University Press.

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Kaufman, B. (2002). John R. Commons and the Wisconsin School of Industrial Relations Strategy and Policy. Unpublished manuscript in possession of author. Krause, P. (1998, originally published in 1993). Commentary. In: D. Brody (Ed.), Steelworkers in America: The Non-union Era (pp. 317–329). Champagne: University of Illinois Press. Lazonick, W. H. (1983). Technological changes and the control of work: The development of capital-labour relations in U.S. mass production industries. In: C. R. Littler & H. F. Gospel (Eds), Managerial Strategies and Industrial Relations: An Historical and Comparative Study (pp. 11–36). London: Heinemann Educational Books. Lescohier, D. D. (1935). Working conditions. In: History of labor in the United States, 3, 3–396. New York: Macmillan. McDonnell, L. T. (1984). You are too sentimental: Problems and suggestions for a new labor history. Journal of Social History, 17, 363–377. Meyer, S. (1981). The five-dollar day. Albany: State University of New York Press. Montgomery, D. (1987). The fall of the house of labor. New York: Cambridge University Press. Nash, M. (1982). Conflict and accomodation. Westport, CT: Greenwood Press. Nelson, D. (1975). Managers and workers: Origins of the new factory system in the United States 1880–1920. Madison: University of Wisconsin Press. Nelson, D. (1980). Frederick W. Taylor and the rise of scientific management. Madison: University of Wisconsin Press. Palmer, B. (1981). The making of E. P. Thompson. Toronto: New Hogtown Press. Perlman, S. (1970, originally published in 1928). A theory of the labor movement. New York: Augustus M. Kelley. Rees, J. (1997). Managing the mills: Labor policy in the American steel industry, 1892–1937, unpublished Ph.D. dissertation. Madison: University of Wisconsin. Schacht, J. (1994). Labor history in the academy: A layman’s guide to a century of scholarship. Labor’s Heritage, 5(3), 4–21. Schatz, R. (1983). The electrical workers. Urbana: University of Illinois Press. Sewell, W. H., Jr. (1993). Toward a post-materialist rhetoric for labor history. In: L. H. Berlanstein (Ed.), Rethinking Labor History (pp. 15–38). Urbana: University of Illinois Press. Slichter, S. (1929). The current labor policies of American industries. The Quarterly Journal of Economics, 43, 393–435. Thompson, E. P. (1963). The making of the English working class, 9, 11. New York: Pantheon. Tone, A. (1997). The business of benevolence. Ithaca: Cornell University Press. United States Commissioner of Labor (1913). Report on Conditions of Employment in the Iron and Steel Industry in the United States, 3. Senate Document No. 110, 62nd Congress, 1st Sess. United States Steel Corporation (1911). Committee of Safety Bulletin, 2. United States Steel Corporation (1913). Bureau of Safety, Relief, Sanitation and Welfare Bulletin, 4. United States Steel Corporation (1926). Twenty-fifth Anniversary, Bulletin, 11. Warren, K. (2001). Big steel. Pittsburgh: University of Pittsburgh Press. Zahavi, G. (1988). Workers, managers and welfare capitalism: The shoeworkers and tanners of Endicott Johnson, 1890–1950. Urbana: University of Illinois Press. Zeitlin, J. (1987). From labour history to the history of industrial relations. Economic History Review, 40, 159–184.

SUMNER SLICHTER ON PERSONNEL MANAGEMENT AND EMPLOYEE REPRESENTATION BEFORE THE NEW DEAL Bruce E. Kaufman INTRODUCTION The employment practices of major American companies underwent a marked transformation in the fifteen-year period dating roughly from the beginning of World War I to the oncoming of the Great Depression in late 1929 (Jacoby, 1985; Lescohier, 1935). At the start of World War I, the practice of personnel management was unknown in American industry. Instead, employment practices were largely informal, unscientific and administered in a decentralized, often heavy-handed and capricious manner by foremen and gang bosses. Labor was typically viewed as a commodity to be bought for as little possible and used for only as long as needed, leading to an employment relationship that was short-term and insecure. The prevailing methods of management were also highly autocratic and arbitrary, with workers expected to obey whatever orders were given and at risk of being fired for any offense real or imagined. Over the next fifteen years a new model of labor management was pioneered by progressive employers and adopted by many of the nation’s leading companies. Often referred to today as Welfare Capitalism, this new model had several objectives (Jacoby, 1997; Kaufman, 2001). One was gaining competitive advantage by fostering cooperation, loyalty, and hard work through a mutual-gain strategy that Advances in Industrial and Labor Relations Advances in Industrial and Labor Relations, Volume 12, 223–269 © 2003 Published by Elsevier Science Ltd. ISSN: 0742-6186/PII: S0742618603120094

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emphasized above-market wages and benefits, job security, fair treatment, and a measure of employee voice in workforce governance. Other motives were also present, however, such as keeping unions and government out of the workplace and preserving management’s control over labor. The Welfare Capitalism model rested on four new employment practices: personnel management, human relations (e.g. foremen training in handling employees), employee welfare benefits, and employee representation. Of these four, personnel management and employee representation were the most revolutionary and wide-reaching in their impact (Leiserson, 1929). Both personnel management and employee representation were unknown to American industry before World War I, but were subsequently adopted by several hundred firms over the next fifteen years. Personnel management introduced into the workplace a new management staff function charged with managing the firms’ human resources in a more centralized, professional, and equitable manner; the employee representation plan provided a formal mechanism for two-way communication, employee participation, and the resolution of workplace disputes. Considerable consensus exists among current-day scholars that the Welfare Capitalism movement of the 1920s represented a major transition in the practice of industrial relations in this nation. Less agreed-upon, however, are the relative weights to be given to the various motives that animated companies to adopt Welfare Capitalism, and its actual record of accomplishment in the workplace (Bernstein, 1960; Brody, 1968; Gittelman, 1992; Kaufman, 2000). Particularly contentious in this regard is the record of the employee representation movement. Especially valuable in assessing the performance of Welfare Capitalism are accounts of expert observers from that period. One such observer was economist and Harvard Business School professor Sumner Slichter. Slichter, a former student of famed labor investigator John R. Commons, was widely regarded in the 1920s as one of the most astute and knowledgeable academic writers on industrial relations practices. Early in his university career, he published a landmark book on employee turnover in industry (Slichter, 1919a), followed quickly by articles in leading journals on the new practice of personnel management and the emergence of the Welfare Capitalism movement (Slichter, 1919b, 1920). Then, at the end of the 1920s, he published (Slichter, 1929) in the Quarterly Journal of Economics an authoritative, in-depth review of the trends and developments in labor management over the 1920s. These works are well-known and frequently cited in the historical literature on Welfare Capitalism. Fortuitously, I recently discovered at Harvard University previously uncited writings by Slichter that provide additional evidence on his views concerning the motives and accomplishments of the Welfare Capitalism movement in American industry. In the fall of 1932, Slichter taught Economics

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36, “Industrial Relations.” A verbatim copy of his lectures, apparently transcribed by a person in the class, is contained in the Slichter papers in the Harvard Archives. I have reproduced below a portion of his lectures, believing that they are a valuable part of the historical record on Welfare Capitalism and, thus, deserve wider access. The portion of the lecture notes presented here deals with Slichter’s commentary on two aspects of Welfare Capitalism, the development of personnel management and the purposes and accomplishments of employee representation. These materials account for roughly one-third of the lecture notes. Omitted are several lectures on other aspects of employers’ industrial relations practices, such as pensions, stock ownership plans, and group insurance, and the second half of the course on trade unionism. I have reproduced the lecture notes nearly verbatim, except for correction of obvious spelling and factual errors. The reader of these lecture notes will come away impressed with the breadth and depth of Slichter’s experience in the real world of industrial relations. Sprinkled throughout the lectures are references to companies recently visited, one-on-one conversations with company executives and shop floor workers, and personal observations on the strengths and shortcomings of specific personnel programs and employee representation plans. Clearly his opinions and conclusions are grounded on fact and first-hand experience, giving them an extra measure of credibility. In his lectures, Slichter paints a multi-dimensional picture of personnel management and employee representation. On the less flattering side, he notes that early-on (the late 1910s) both were in many cases adopted by employers as a largely defensive measure to combat the evils of excessive employee turnover, radical unionism, and government intrusion in company management of industrial relations. He also provides caustic comments about the faddishness of these new management developments and the large amount of “hot air” that was expended by their early proponents. Looking at the situation in the late 1920s and early 1930s, he also observes that one-half or more of the employee representation plans were largely inactive and that many had accomplished relatively little over their life span. But there is also a more positive side. Slichter describes the personnel management and employee representation movements as a “tremendously ambitious and tremendously significant thing” since they sought to transform the employment relationship from a class struggle to a cooperative enterprise marked by unity of purpose. He also notes that, even after the “scare” of radical unionism and labor turnover had largely subsided by the mid-1920s, most employers that had adopted the Welfare Capitalism model stayed with it, and for more positive reasons. Due to the ongoing fall in the price level during the 1920s, employers had no choice but to maintain profitability through cost savings and productivity improvements, and to accomplish these they needed labor’s cooperation and goodwill. A quest

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for improved efficiency thus replaced avoidance of unionism and turnover as the principal motive force behind Welfare Capitalism. Finally, Slichter also relates that while many employee representation plans had withered and accomplished little, those companies genuinely committed to the process of joint consultation and participation experienced significant results, while the workers through a process of “nibbling” gained better wages and conditions than many unions could provide. In reading Slichter’s lecture notes, I was reminded of the observation made several years earlier by Slichter’s friend and former classmate William Leiserson (1928), who stated: “almost anything that may be said of employee representation will be true.” In this spirit, people seeking support for a negative assessment of personnel management and employee representation in the pre-New Deal years will find considerable evidence in Slichter’s lecture notes, but people seeking a positive assessment will also find an equal amount of supportive evidence. The record of Welfare Capitalism thus has to be judged as mixed on its own terms, but clearly far superior to the employment model it replaced. At least this reader of the lecture notes is also impressed that even in the depths of the Great Depression some companies valiantly tried to stay the course with the Welfare Capitalism model, even when the economic environment was so adverse to a mutual gain approach. In closing, I point out one other feature of the lecture notes that deserves comment. Slichter was a product of the Wisconsin program and had Commons as a teacher. When one reads the first page of Lecture I, the general point of view and use of key terms such as “industrial government” and “going concern” are clearly evocative of central ideas contained in Commons’ Legal Foundations of Capitalism (1924) and the soon-to-be published Institutional Economics (1934). Slichter had moved beyond the Wisconsin School in the 1920s, taking a more analytic and conventional approach to economic theory, but clearly the institutional point of view still provided his basic frame of reference.

LECTURE I Industrial relations in the United States today, I mean since 1920 – has become so integrated and complicated that it is not susceptible to the simple automatic control which classical economics contemplates. Economics tends more and more to merge with political science. I could say the same thing if I were a political scientist. We see that perhaps most plainly in dealing with industrial relations. The central problem of industrial relations is substantially the same as the central problem of political science, namely, the reconciliation of order with liberty. But there are more variables in industrial relations and the problem is more complicated and difficult, because it is not only a reconciliation of order with liberty, but order

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with efficiency and order with adaptability. You have a going concern which must be kept going efficiently. Efficiency may mean very different things. More or less unconsciously we accept the definition based on the pecuniary calculus. You would be surprised, I think, to discover the wage earner’s notion of efficiency, and yet, perhaps they possess as much validity as the managers’. They do not, however, run in pecuniary terms, so we have the problem of the reconciliation of order with several kinds of efficiency. I said we have the problem of reconciliation of order with adaptability; I mean by that the kind of controls which are created must be the kind which change with change. Changes come faster and with much greater frequency in a world of industry than in a world of government. The industrial controls alone must be more adaptable and more flexible than governmental controls, and, at the same time, they must be controls that represent government rather than anarchy. The purpose then in studying the period 1920–1932 in industrial relations is not to write a history, to gather a collection of facts, but to obtain some light on the central problem of industrial relations. How can we construct a government within industry which will give effect to various kinds of efficiency and will not interfere with various kinds of valid efficiency; which will preserve the maximum kind of efficiency for both men and management; and which will possess the capacity to change with the rapid changes in industry itself? You will find it worthwhile to bear some of these considerations in mind in considering the discussions of industrial planning which have recently become the rage and which run very largely in static terms. This raises the question of adaptability or flexibility to a less extent, I think, than the problem of reconciling liberty with order. Of course, in times like these emphasis falls upon order. Extreme depression pushes from our attention the importance of psychological study. Well, so much for the bullseye at which we are aiming. The thing behind specific inquiry is the central problem on which we are seeking light. Now this period is one of the most interesting in American history; it is one of paradoxes and contradictions. No one could ever predict, no economist would ever dare predict such great prosperity in a period of such rapidly falling prices. It was not only a period of record-breaking profits when the corporate net income reached new highs, but it was also the period of record-breaking failures. The number of failures in manufacturing in 1923, 1924, 1925 and in 1926 was greater than even in 1921, the year of severe depression. Side by side when we were breaking records in profits, we were breaking records in failures. It was a period of highly restricted immigration and chronic unemployment. No one would have predicted that the Immigration Act of 1922, I believe it was, would have been followed by chronic unemployment, and most manufacturers felt that exactly the opposite would happen. They greatly feared a labor shortage. The period really was a new era and in whatever sense

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you care to take it, there was a definite bend in the change of long-time trend lines. The most important bend, the most important change, is the wholesale price line between 1920 and 1929. Wholesale prices dropped, roughly, one-third. Of course, they are now down to about one-half the 1920 level. I say that is the most important line. The generation of rising prices ended in 1920. What went with that bend in the price line? I don’t how whether industrial change has occurred more rapidly since 1920 than before because other things have changed. The same is true of the stimulating factors, the natural resources, the huge river of labor in Europe, etc. They have been less important since 1920 than before, but I should say that slowly falling prices tend to stimulate change. But most particularly they tend to make it more painful and tend to make adjustments more difficult, so where change is more or less rapid, we become more conscious of these difficulties. The rising prices were a subsidy to inefficiency; they were a subsidy to oldness. A man could make money not by change but by rising prices. If he were slow in deciding his managerial policies, or if he did not know what to do and were inclined to drift in managing his business, he came out better than if he acted rapidly. The depreciation rate, the obsolescence rate was reduced by rising prices. Falling prices are a subsidy to newness just as rising prices are a subsidy to oldness. Men were not only able to choose the up-to-date location and to put in the new machinery and processes, but they were able to take advantage of the innovations in technique. I think that this will shed a good deal of light on the remark I made a few minutes ago that side by side record-breaking profits go with record-breaking failures. Herein I think we will find most of the explanation of technological unemployment. If prices had been rising, men would not have been crowded out faster than if they had been falling. An additional factor comes in – labor is a sluggish price both in its upward movements and its downward movements. There are a number of reasons for this which have never had a proper explanation in economic literature, to my knowledge. They arise out of the peculiarity of the labor contract. Later on, I shall discuss them, I think, but the fact that labor becomes relatively more expensive at a rapid rate is a tremendous incentive to economize. When men were squeezed out, the same process made it hard for them to slip in at other places. One reason why profits were so large in this time of falling prices is to be found in the generation of rising prices which preceded it. So many inefficiencies and so many wastes had time to grow up in thirty years of rising prices, particularly in the last six years, when the price level nearly doubled, that there were simply opportunities to cut costs by eliminating wastes. It is amazing even today how many enterprises are getting rid of wastes which crept in during the war period. Methods of handling salesmen, methods of handling their drawing allowance, their traveling expenses, customs which grew up during the war, and only now in the

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pinch of this depression are being eliminated. Rising prices, I think, are half of that story. There is another half. Rising prices concealed the wastes because they kept profits rising in spite of them, but the six years, or the five years from 1915 to 1920, in particular, created an enormous number of wastes because the demand increased so suddenly. It is not only an increase, but in many industries it was the change, a demand for new products. But in every instance, in the essence, time was more important than price. Things were done more quickly. So you might say that enterprises entered this period of falling prices with an immense reserve of wastes upon which to draw. By eliminating them, they could keep up their profits and once they got accustomed to look at the matter of wastes by falling prices they found perfectly astounding opportunities to economize. But many of these wastes are very difficult to eliminate. Not long ago I was talking with the manager at the largest sugar refinery in the world. He said: “We have many department heads who are not what they should be. We should like to displace men who were promoted or men who were acquired during the war when men were hard to find. They are far less effective than they should be, far less effective than other men who we could get today.” And yet this concern, like many other concerns, is unwilling to have a wholesale housecleaning of department heads. They are very glad when one resigns. It took quite a load of inefficiency under the stress of necessity. It takes a long time to get rid of that load. Now in the field of labor, rising prices are a subsidy to inefficiency among labor leaders just as they are among business managers. Organized labor entered this period with a generation of labor leaders who had “got away” with it satisfactorily as long as prices were rising. About all they did was to demand wage increases commensurate with increases in the cost of living. Labor leaders did not have to bother meeting the competition of non-union plants to the same extent in the period of rising prices. Labor in plants usually takes some time to organize. There is a tendency for labor organizations to be stronger among less efficient plants. You can readily see that. The man who is inefficient at running his plant is also inefficient in keeping down production costs and in selling goods. The same lack of imagination hinders him in keeping out labor organizations. That does not necessarily mean that a good manager cannot make use of a labor organization. But most managers would prefer not to have them and the more efficient the management the less likely it is to have labor organization. But in a period of rising prices these inefficient concerns burdened with labor organizations are subsidized with an advance in prices. You can see how difficult their position becomes once prices start to fall. Subsidy is transferred from them to other new, up-to-date competitors. That means that the official of the labor organization will suddenly find out how to adapt his organization to these conditions. If he is exceedingly skillful and has outstanding ability, he will succeed. The only complete success I know of is that of Mr. Hillman

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of the Amalgamated Clothing Workers. If the official of the labor organization is not skillful, if he ties his hands by playing politics, if he makes certain issues sacrilegious for political purposes, then he may practically destroy his organization. Mr. Lewis created the slogan: “Not one cent off of wages.” At any rate, he played politics to become the champion, he tried to become the hero, and he made sacred the issue to obtain more wages and destroyed his organization in a large part of the field. But those are the two extremes. Perhaps the principal problem of labor leaders at this time has been how to sugar coat pills. But why raise the problem of sugar coating ours because it probably will not be necessary to take pills. It was not only a matter of wages; it was a matter of great union rules which reduced the competitive power of the organized plants. Some of these rules had been permitted to become sacred. It was heresy to question them. To consider them on the plane of expediency was considered heresy. They were just a matter of religion. Now, I don’t want you to get the wrong impression. I don’t want to say that in a scornful fashion. If you were to acquire it in years of struggle and persist in getting a rule, you will easily see why the rule becomes a sacred thing. It is a tremendous victory. Or it might fight for a uniform starting time rule in a railroad and finally get it. Or it will get a little closer to it, a series of steps perhaps, one compromise after another. And then for the organization after years and years to get it, for the leader to say, “Well boys, we will have to give this up.” The rank and file cannot understand it. That is exactly the kind of problem which falling prices inflict upon labor leaders and why falling prices make it necessary that labor leaders think more intelligently than when prices are going up. Then, in this period of falling prices the technological problem of machine displacement becomes a matter of major concern to many labor organizations. We shall go into that in some little detail later on. We shall make a comparative study of five or six labor organizations’ machine problems, organizations such as the Commercial Telegraphers or the Printing Pressmen and several others which have had machine problems through encountering the hampering influence of political life. If an organization starts out by fighting the machine, it becomes exceedingly difficult from the political point of view to change the organization’s policy to one of control. And the machine becomes identified as a political thing in the minds of the members. They are not prepared, after being drilled in a policy of fighting, to start a policy of control. Falling prices mean a decrease in the number of factories in the United States. The number of factories in the United States has been growing. Now, for the first time, we find a drop of about 17,000 between 1919 and 1927, and the rise in factory output going up very rapidly. That is the first reason why I say this is a new era. Now the second is the cessation of immigration, or practically the cessation of immigration. I do not think the importance of this has been felt and yet it must go

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down as a turning point in American history. Its importance has been matched by several things. It happens to coincide with a major revolution in agriculture which meant a shift of much agricultural labor to factories. Agricultural horsepower is produced in factories now rather than on the farm. Then the falling prices had about the same effect in agriculture in stimulating efficiency and crowding out the rising costs. Of course, there has always been a flow from agriculture to the cities. But the flow during this decade has been large enough entirely to counteract the drop in immigration. The net flow, I believe, in one year was over a million. In 1926, it was estimated at slightly above 1,000,000. In the preceding year, 800,000. It had four years together in which the total net flow was about 3,000,000. That more than made up for the drop in immigration. It was possible, of course, because we had been storing up large resources of labor in the United States. In the Southeast we had been storing up large quantities of labor, and when the electrical methods of manufacture caused factories to spurt in large numbers, they were in a position to draw on part of this reservoir. To a less extent, this has been happening in the Middle West. The automobile industry had been growing rapidly and it also had an immense reservoir of agricultural labor. It was easy for manufacturers to call on this reservoir when prices were falling. We are dealing with these accidental conjunctions which are so important in economics. It was accidental that Great Britain stabilized the pound at too high a price and France stabilized the franc at too low a price. It was accidental that the largest recipient of reparations happened to be a nation which stabilized its currency too low. If the thing had been different, how different would have been the effect upon the world’s credit system. In the field of industrial relations, the course of events is again and again substantially influenced by accidental conjunctions. The third reason for regarding this as a new era is the rise of personnel administration. Personnel administration during this time became part of personnel management. Business was aroused during the war by two main things in the labor field: (1) Radical unions such as it had never known before; and (2) labor turnover. Unionism affected the strongholds of the open shop. It succeeded in organizing the steel corporations temporarily. It invaded the sacred Altoona shops of the Pennsylvania Railroad. In the General Electric Company it had been confined almost entirely to Schenectady. It began to spread into other plants of the General Electric and when it did it received aid and comfort from Schenectady. General Electric decided it would have to get rid of unionism in Schenectady. The packers were organized and were compelled to submit to a regular plan of arbitration. Judge Alschuler in Chicago for a year or two was the arbitrator in the packing industry. The International Harvester Company was not actually organized, but it had big walkouts in a number of its plants. To my knowledge no continuing organization interested itself in the International Harvester Company.

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Crane had a large strike. They did not have a continuing organization. One could go on and name other concerns which made the open shop an essential policy and when they found employees temporarily, at least, willing to strike and join organizations they determined to protect themselves in the future from any repetition. They determined that unionism shall never show itself in the plant and the method was to develop personnel administration and to place it in charge of skilled administrators. In another lecture we will discuss the effect of labor turnover upon personnel administration. The main skeleton, of course, will be first an examination of personnel administration under these conditions and under these periods. This era of personnel administration and the control of policies was in the hands of personnel administrators. They had very great opportunities and what did they do with it and what can we judge of the future possibilities of personnel administration?

LECTURE II At the preceding meeting I was pointing out some of the reasons for regarding the last period as a new era as far as industrial relations are concerned. I directed your attention to the significance of changes in the trend line, particularly the price line, to a cessation of immigration, and I was discussing the rise of personnel administration. I called attention to the fact that there are two principal causes underlying the rise of personnel administration – one, the threat, the unprecedented threat, of labor organizations during the war period, and the other, which I have not discussed, labor turnover. I suppose things might have drifted over another decade before managers became much bothered about labor turnover if the war and labor shortage had not intervened. It was really a discovery of the war, but like some of the mathematical discoveries, it was beginning to be discovered before the war. But those discoveries take time to attract attention. It was in the winter of 1913–1914 that I began the study of turnover. The first, I believe, in the academic field, although simultaneously, Magnus Alexander was doing the same thing. Neither one of us knew until 1915 what the other was doing, but when I went over to the International Harvester plant in Milwaukee and spent a large part of the winter on their records, we had no word to describe what we now term turnover, and I called it labor mobility. Later that was dropped. It has been resurrected recently. It was dropped because it was felt to resemble the fluidity of labor in economic theory. But it was a new thing, an acute labor threat during the war, and before the war in some of the labor industries, particularly in Detroit. It interested some of the employers and they acquired exaggerated notions of the

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cost of turnover and men who had service to sell were interested in the implicated exaggerated notions of cost. The personnel administration took because of this great fear of labor organizations and the discovery of labor turnover. When you consider that it meant in many plants the creation of a new vice president, the opening up of an entirely new field of administration, you can see that it was a major development in managerial practice. Well, the vicissitudes of personnel administration during the 10 years following the war will command more than one-third of our attention during these lectures. I think these three developments are sufficient to justify regarding the period as a new era. Before leaving this part of the discussion, I wish to make a few remarks about organized labor. That, of course, is an old element and a large part of our attention will be directed to studying its attempts, the attempts of this old movement with its traditions and time-worn practices to adjust itself to these new conditions. Of course, the fact that it was old and learned to do things in certain ways was a handicap. But it attempted some new policies which I shall simply refer to here. One of the first was workers’ education and that appears to have been a result of the difficulties of union leadership. Unionists began to realize how necessary it was in order to be a successful leader. It was soon discovered that workers’ education was a great menace to the men in power and its principal survival has been outside the labor movement. The Workers’ Education Bureau was taken over by the American Federation of Labor and promptly rendered innocuous. I believe in Denver there still remains some educational work within the union itself. To my knowledge that is the sole instance. With the cost of living going down, labor attempted a new wage policy. It never thought very much about a philosophy to justify a wage increase. If it wanted a wage increase, it would demand it simply by referring to the cost of living. Now it has abandoned the cost of living argument during a time of falling prices. This attempt has been called the A. F. of L. wage policy and sometimes the A. F. of L. new wage policy. It was conceived almost exclusively in the mind of a man who did not dare submit it at the Atlantic City Convention for fear they would misunderstand it and smother it. This man was John P. Frey, who had for many years been Chairman of the Resolution Committee. He decided what the Committee should have an opportunity to vote on and when, because many things are reserved until the last day or so when many of the delegates have gone broke and home. But Mr. Frey was not Chairman of the Resolution Committee this year. He got the policy through as an amendment to the resolution which had already been referred to the Committee. His amendment proposed that wages should keep pace with the increase in productivity of labor. Of course, introducing productivity into the labor convention was a very daring thing to do and many of the labor leaders were shocked and alarmed at this action. Mr. Lynch of the Typographical

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Union succeeded in getting the resolution and the amendment referred back to the Committee, but finally with the addition of some words concerning the shortening of hours – “Not only should wages go up, but the hours should be shorter” – the resolution was passed. And it was taken up and made a great deal of later on, although the Convention little realized what it was doing and those who thought they knew were rather reluctant to do it. The thing had been brought out in the open and they did not quite dare turn it down. The wage policy is worth a little attention and later on we shall look into it somewhat. Organized labor also adopted what may be regarded as a policy of respectability. I suspect that may be as temporary as the new wage policy. Of course, all of these philosophies are rationalization of action. The policy of respectability reminds one of the British labor movement in the late sixties. But here you had a world in revolution. Russia had a revolution, Australia, Germany and Italy had several. Of course, Germany had had several attempts subsequent to its main revolution and the labor party was in and out of office in Great Britain. The Chinese were having a revolution. Unrest was quite conspicuous in India and Egypt. Turkey had a revolution and I don’t know how many of the smaller countries. At the same time capitalism in American was prospering. It seemed more solid than ever. But the alarm and fear aroused by this European upheaval touched many Americans in quite the same way as the French revolution influenced the British at the time of birth. And so American conservatism was more self-conscious, more militant, and fearful than ever before. That is part of it. During the war organized labor had obtained seats in many councils. It had been consulted on national matters, it had been represented on various types of war boards, and it was very anxious to retain this recognition. And so the temper of the country being what it was, organized labor was highly respected. There are various manifestations of this policy of respectability. Most conspicuous was the policy of union-management cooperation. That must not be misunderstood. We shall give a good deal of attention to this subject later. It was somewhat circumscribed in its operation. It never penetrated the building trades very much; it never penetrated the typographical unions, although it did the pressmen’s union. But it was an entirely new thing. No one in 1900 or even in 1910 would have predicted it. No student of labor would have predicted it any more than we could predict today what policies of labor will be pursued ten or fifteen years from now. Among other things it meant a revolution in the relations between the Taylor Society group of engineers and organized labor. Foundations for that had been laid before the war and we find Mr. Green appearing before the Taylor Society Annual Meeting and we find the Taylor Society engineers in and out of the A. F. of L. building in Washington almost continuously. There was a time when one could not go into the building without meeting Morris Cooke, Taylor Society

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engineer, and others. And we find, beside Mr. Green, many others including B. M. Jewell, O’Connell from up here in Salem, appearing at the Annual Meeting of the Taylor Society. It meant that the Taylor Society abandoned the notion that there is one best way of fixing the wages. They said: “We don’t know what the best way is. It depends upon conditions.” But Cook said: “The collective bargaining way is the best way.” When the House Committee was hearing the witnesses of the Taylor Society Committee in the Watertown Arsenal, who would have ever predicted that one of Taylor’s closest followers would have said that the “Way to fix wages is by collective bargaining. In order to get the team work which scientific management must have there must be an organization.” That may be right or it may be wrong, but the point is the suddenness and completeness of the change, and since this suddenness and completeness occurred, a very different change might also occur. It has been a period of administrative reforms in management. The fact that survival has been more difficult is largely responsible, I think. The most drastic constitutional reorganization has been in the electrical workers’ reorganization. There have been many other changes. Unions found themselves with bankrupt benefit plans and pension plans in particular, and to liquidate these they formed an insurance company of their own. That insurance company is headed by Mr. Woll and being a president of a large insurance Company of his own, he is closely connected with Mr. Herbert, who is an attorney for insurance companies. But the terms of the officers have been lengthened. More power has been given to conventions. There have been a few cases where a referendum has been eliminated from the constitution. It has been found that the rank and file cannot assert itself quickly enough, cannot learn soon enough to make decisions and, therefore, indirect government must be the government. During the last four or five years the great bugaboo in the minds of labor organization has been unemployment and they have been wrestling with an unemployment program. They have had no difficulty in agreeing upon the shorter day or week. It has been self-evident to all of them that unemployment might be converted into machines by that process. An examination of the matter has not been particularly discriminating. It has been a rather easy thing to get and, of course, a man who comes up for re-election quite frequently likes to have accomplishments to be pointed to and if he can point to the five-day week so much the better regardless of whether the five-day week makes it bad for the very reasons he said makes it good and good for the very reasons he said makes it bad. The organization most successful in meeting the five-day week has been the building trade organization. The five-day week is likely to increase unemployment instead of decreasing it in the building trades, because of the peculiarity of the institution. Nevertheless, it is a big part of the unemployment program, regardless of its soundness or unsoundness, which the labor organizations have succeeded in

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agreeing upon without difficulty. Many of them thought they would get people to buy more labor if they charged more for it and the way to reduce unemployment is to raise wages. The only kind of a dollar which represents the purchasing power is the dollar which goes into the purchasing of a pair of overalls. Their opinion of that is rather pitiful, I think, and rather disturbing to one who believes that we must find a way of representing differences instead of introducing balance into the economic system by representing different interests through an organization of their own. Whether reserves against unemployment or unemployment insurance, to use a less accurate term, should be supported has been quite a subject of controversy. The A. F. of L., contrary to popular opinion, has never condemned the reserve notion. It has refused twice to endorse it, but it will endorse it at the next convention. It will be a little late in getting on the band wagon. It was only by the most heroic effort at the Vancouver Convention that the dismissal wage was introduced. I am not sure the A. F. of L. realizes what it has done, but it cannot endorse the dismissal wage without endorsing complete unemployment reserves and this is practically endorsing the dismissal wage. Well, so much for the impact of some of these conditions upon labor policies. All of these subjects will be matters of more specific inquiry in their turn. Now, with this preliminary analysis, I wish to turn specifically to the general topic of personnel administration. Just what does personnel administration mean? Just what has it attempted to do? The analysis which most employers seem to have made at the beginning of the period was something like this. There are two things which we must do, perhaps three things which we must do to keep our men contented. First, we must not let the costs of living run away from us. We must keep track of them. And the employers said, what the workman wishes most of all is security. If we can give him some assurance that he will have a steady job and that he will be taken care of in his old age, he will think our plan is better than the ordinary plan. And the other thing which he wishes is an opportunity to discuss his grievances. If he has a grievance, he wishes to have a chance to talk it over with someone and get action on it. Now, let us forget about the wages and the cost of living matter for the time being. If you keep these two main purposes in mind, you can crowd practically everything which was done in them. The attempt to stabilize employment resulted in a very substantial reduction in the lay-off rate. How much of a reduction it is difficult to say, because the figures do not provide a very adequate pre-war base. The most conservative prewar figures are those of the United States Bureau of Labor Statistics. That is the reason I regard them as undoubtedly the best survey. They represent a lay-off rate of about 13% of the average force per year. My own figures which are a little earlier than the government figures are much higher and, in my judgment, too high to be representative – about 36%, if my memory is correct. But somewhere between 13

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and 35% would be a more or less representative pre-war figure. It has been reduced in the returns of the Metropolitan Life Insurance statistics and the United States Bureau of Labor statistics to 6 or 7%. That is usually accomplished in the main in two ways – avoiding taking on people for just a little work, for a few days or several weeks, and reducing the seasonal swings. The market has accentuated the seasonal swings, but, in the main, employers have succeeded in reducing them. Pension plans and group insurance plans represent another aspect of this attempt to provide security. One of the first things done was to limit the foreman’s right to make discharges. That should not be misunderstood. Technically the arrangement is likely to be something like this. A foreman has authority to discharge from his department, but not from the company’s employ. To discharge a man, the dismissal must be approved by the central executive, the employment manager or the branch manager. That I think is a written constitution. What that means in practice is that the foreman is backed up; invariably he is backed up 99.4% when he actually discharges a man. If he thinks a man ought to be transferred, he will go to the personnel manager and tell him there is a man in his department whom he would like to have transferred and asks if they can find something for him somewhere else. The concern really tries to avoid discharges and that is the way the restraint occurs. The second part of the personnel policy is represented mainly by employee representation schemes, attempts to give a man an opportunity to tell someone what is wrong and perhaps to get an adjustment. Now many companies have had experience which led them to see the importance of this. Not every company set up this arrangement as a result of the experience. I happened to be involved in a strike in the summer of 1919 in Chicago, which is a good illustration. The company is the Crane Company, the world’s largest manufacturer of valves and valve fittings. They have a big plant on the southwest side where at that time they were employing about 8,000 men, and in the fifty odd years of existence I believe the company had one strike back in the hard times of the nineties. About three or four days after I got my job there, we struck and the company had rather good personnel policies, and had for many years a remarkably low turnover. Now the reasons the strike occurred was because the company had failed to increase wages fast enough. The post-war boom had come on and labor was scarce. The cost of living was rising rapidly, but the management felt that prices would soon go down and it wished very much to avoid making wage cuts. So to avoid the subsequent necessity for a wage cut, it was not raising wages, but was going out into the market and hiring new men for many of the old employees who were leaving and it had little knowledge and appreciation of the effect that that was creating upon the old employees. I went in there at 2 cents an hour more than the man who showed me how to run the machine which I operated. He spent two or three hours showing me how to set it up. He had been running his machine for several years and I got two or three cents an hour

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more than he got. That was going on throughout the plant. New men were getting more then the old ones. Many companies had this experience. They were vitally impressed with the fact that they did not know what reaction among their men their managerial policies were bringing. Of course, these schemes of employee representation had been invented before. Rockefeller put one in the Colorado Fuel and Iron Company in 1913 when trouble started there. They ceased spreading in 1925. They were a product of scare and since then, I know of no new instances. It will be necessary to break up this lecture rather abruptly because of another matter, but before plunging into personnel policies, I wish to point out some of the unforeseen results of these personnel policies. Companies did not realize what they were getting into, how far they were committing themselves, that when they were doing one thing, they were doing three or four. If they established pension plans, they could not side-step dismissal wages. You cannot do one without the other. Of course, that is always true in managerial policies, but I think that the newness of the field has made it particularly true in personnel administration. There has been a very inadequate realization of what these commitments mean and they were surprised to find how deeply they got themselves involved.

LECTURE III I suggested at the last lecture that you refer to Mr. Leiserson’s article in the Wertheim papers of several years ago. Along the same line, you may find it desirable to refer to an article by W. J. Donald, “Trends in Personnel Administration” in the Harvard Business Review for January 1929. That is a suggestion solely. Donald is a pretty good man. He is the Managing Director of the American Management Association, I think, and a Canadian. He got his doctorate from Chicago about ten or fifteen years ago, and although he is not in scientific work, he has something of a scientific point of view. His article is not a strikingly first-class article, but it is very difficult to find anything which is, in the field of personnel administration. The amount of hot air or the proportion of hot air is pretty large, although it is not so bad today as ten years ago. Personnel administration is really a tremendously ambitious and tremendously significant thing. It is nothing less than an attempt to control the effect of modern industrial development upon men’s minds, an attempt to control men’s minds, the minds of millions of men. It is surely no less ambitious than the attempt of churches in the past ages or even today to control men’s minds. Karl Marx said that the organization of industry, the process of making a living created a class struggle. The conception was that such classes existed and their position was such that they were necessarily in conflict. There is a great deal of truth in the Marxian

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analysis, although most economists I believe, I am one of them, feel that there are many more classes than Marx distinguished and individuals instead of belonging to one class belong to many, and they fight on one side and fight against one another part of the time. But be that as it may, personnel administration has the ambition, the objective of preventing a class struggle, building up a very different kind of psychology, creating content with one’s situation and faith and loyalty, faith in employers, a particular employer, and loyalty to a particular employer. It tries to inculcate a faith just as much as a religion tries to inculcate a faith, inculcate loyalty just as much as a religion does. It is an exceedingly ambitious movement. If you were to say these things to most personnel managers, they would probably be surprised. I don’t think they view their own activities in quite the terms that I have suggested, but I am confident that the more philosophical of them and the more candid of them, after a little reflection, would agree with what I have just said. I am trying to describe the movement in very general and more or less ultimate terms. A personnel administrator, who is an administrator in an enterprise, is, of course, thinking in terms of problems which must be solved today or next week or within a month or two, and his mind is running in terms of very specific and very concrete situations which he expects to bring about. So he has to take the step of translating the specific things he is doing into more general and ultimate terms. But if you bear these remarks in mind as we discuss the details of personnel administration, you will have a chance to test them and make up your mind whether this description is or is not justified. I said that personnel administration and personnel activities grew rather rapidly during the war. There was quite a deflation in 1921, and many students of industrial relations thought that personnel administration had seen its day and gone, thought it was having but a temporary flare-up. It is quite a tribute to American business management that that did not prove to be so. Many of the most versed men in personnel work were not the best type of executives. I don’t know that that was their fault. Here was an entirely new sort of position which had to be filled. There were no facilities to establish the type of man who was needed. There were not many men to go to for suggestions when a vacancy had to be filled. There were practically no understudies or subordinates to be promoted. The best production men were, of course, not released, the better a man was in a production job at this time, the more careful the enterprise was to keep him there. In some cases they transferred second-rate men to personnel work or went outside for them. But, at any rate, when companies were caught and they were badly caught, when inventories of cash were large, and when inventories of commodities were small, it was quite the reverse. They had large inventories of debts in 1921 (and there were certainly large inventories of commodities), and apparently they were taking an inventory loss. Just as in this depression we hear the expression “fundamentally sound” or

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“strong cash position.” Well, companies had to economize quickly and drastically and they began laying off part of the personnel staff. At that time I was doing a good deal of field work and knew many of these men as a result of other studies and turnover inquiries I had made, and conversation usually opened on who had lost his job during the last week or month. They were anxious to pick up information from me and they usually had some to give. But it came back. I did not think it would, but business managers had had experiences which they were determined to avoid. They decided that the management of labor could not be neglected. So, from 1922 on, they came back very strongly. There is no adequate survey of the extent of personnel programs at the present time. I have a few figures here which are the best in existence. They are not very good at that. There is a survey by the National Industrial Conference Board taken from a book called, “Plant Industrial Relations’ Program” or something of that sort, published about 1931. At any rate, 302 companies have been questioned according to the number of employees. Among 76 with 500 or less, separate industrial relations departments are found in 5, which is about 6%. Then, if you step up in the 500 to 1,000 class, 18 out of 62 have industrial relations departments. If you step up in the class of 1,000 to 2,000, 19 out of 56 have industrial relations departments. Then, in the class of 2,000 to 5,000 employees, 23 out of 52 or 44%. Then, in the class of 5,000 to 10,000 17 out of 29 or nearly 59%, and 14 out of 27 companies with 10,000 or more. Now the specific figures here are not the important thing. I should say the important thing is that you have to get up to the 1,000 mark before you get one-third of the companies with industrial relations departments. You have to get up to about the 5,000 mark before you get more than half of them. The outstanding fact is that as rapid as has been the growth of personnel administration, it has not yet touched perhaps half of the employees in industry. Now, of course, that statement is open to certain exceptions. We are talking here about companies having separate personnel departments of some sort under a personnel executive. There are a certain number of companies among these, I don’t know how many, with more or less definite personnel programs. But that program is likely to be carried on in a rather spasmodic fashion, if it is not under the direction of an independent personnel executive. Now, it is perhaps worthwhile to note the sort of things which are done. You will find in the figures on American labor policies which I suggested that you go over some figures on the growth of such things as group insurance, pension plans, employee representation plans, and so on. A survey was made recently by S. B. Matthewson of the Personnel Department of Antioch College of the personnel activities of 195 concerns. Mr. Matthewson sent out an elaborate questionnaire of over 200 questions, which meant, of course, that he only received responses from concerns which had independent personnel departments and were doing a good

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deal and were quite interested in personnel work and were willing to fill out this elaborate questionnaire. They knew that when they did it they were deliberately attempting to find out what was being done by those concerns which are doing the most. That then is the element of bias in these statistics. Eighty-six out of 195 had pension plans; five gave no answer – slightly less than half. One hundred and thirty out of 184 had insurance plans. Thirty-five out of 187 had employee representation plans. Sixty-five out of 187 had stop acquisition plans. Let us turn to the hiring procedure and promotion procedure. Twenty-four out of 187 used trade tests. Seventy-four out of 190 used job analyses. One hundred twenty-three out of 195 used medical examinations on hiring. It is surprising that only 154 out of 187 had turnover records. Sixty-eight out of 183 used rating scales. In discussing personnel administration, the movement has been changing that emphasis first here and now there during this 12-year period. I think that possibly the first thing which should be said is regarding the adjustment or adaptation of the personnel department to the rest of the organization. The first thing which was necessary was for the personnel department to find its place. It started out with much greater ambitions in the organization, at any rate, than it subsequently insisted upon. I have talked about this with a good many personnel men and am not satisfied yet. I cannot formulate what has happened in terms that seem to me to be satisfactory. I will do the best I can and maybe later on I will get an illumination. To a substantial extent the change could be described possibly by saying that the personnel departments shifted from line departments (I am using military terminology now), and frankly become staff departments. Now a line department is a department which makes decisions and gives orders and conducts operations. A staff department is a service department which gives information, advice, and which helps the line do its job. One reason why I am not satisfied with this way of expressing it is because I got an unfavorable reaction so often from personnel men when I expressed it that way. I am not sure whether they are sensitive or whether it is a matter of pride with them. Perhaps I am wrong and perhaps you can work out a much better description of the change in the status of the personnel department. This is rather worth bearing in mind, because the question naturally arises what would be the status of the personnel department in case unionism would become a serious threat. At the beginning, personnel departments were strong on authority. They regarded their work as coordinate with Production. Theirs was the job of determining how labor should be handled, determining the labor policies of the plant and they invented a vice president in charge of personnel. Of course, there might be a vice president in charge of personnel administration on a staff basis. There are quite a number of those men, but they are more likely to be in railroads where unions are being dealt with than in plants where unions are not recognized. But the personnel

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men were not able to sustain this position, and they found that in order to live they had to get on to the production department. Cost of production became suddenly of great importance. After 1922 or 1923 there was no immediate labor scare. They did feel themselves sitting on a ledge which might blow off until the period of wage reduction had passed, but with 1922, the latter part of 1922, wages began to go up and there was no urgency, no imperative necessity of doing something quickly to make a quick decision by an expert in the labor situation. On the other hand, the problems of production under a slowly falling price level remained quite urgent. Now, if you break these generalizations down into specific functions, this is what I think you will find: The personnel department retained pretty completely the control of hiring. It is out of the question for the foremen to do that, but people in the personnel department did not resent cutting down or get so excited if the foreman rejected someone sent to them by the employment office. Time was when that was regarded as almost an insult. There was a question whether anyone outside the department could hire. If they found they could, they were not so sensitive. But with respect to dismissals the personnel department backed down a great deal. It became quite evident that the foreman had to have, in most plants, at any rate, considerable freedom in dismissals. Nevertheless, I was in a plant not long ago, within the last two weeks, where the foreman does not have power enough to dismiss from his own department. And no one seems to feel that he needed that and should have it in order to maintain discipline. The idea of transferring rather than discharging has survived and that has meant that foreman A may dismiss a man because he is not good and the personnel department may force foremen B to take the man. There is some restraint to that in many plants by the foremen, but that is broken down pretty completely. The whole management from the top down is committed to the policy of transferring and each department realizes that he must go along with it. The policy is likely to be a joint affair with the personnel department participating. It was always a joint affair, but I think neither the foreman nor the personnel department are so sensitive on matters of authority. The foreman is more likely to ask for help and, on the other hand, the personnel departments are more likely to be willing to pass the buck and have the foreman assume responsibility if he is willing to do it. In other words, the desire to be the one who makes the decision has become quite weak. If another man thinks he can solve the problem either the foreman or the personnel department is delighted. In the field of policies the first part of the period is concerned with security and let us say tranquility in avoiding labor trouble. In the latter part of the period, enterprises have been concerned with keeping down the cost of giving security. Never before in the history of America has such a determined attempt been made to provide security as during the last decade. Security almost became as much

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of a rage as did liberty a hundred years ago, but not quite. Interest in security, of course, was much broader than in the personnel management movement. It extended to a great variety of economic activities, affected businessmen in their relations to one another. You find it in the labor unions too, great national interest in the idea of security. I think stabilization was perhaps the word more frequently used. That is what stabilization meant – an attempt to make economic life a little less of a gamble. It is somewhat paradoxical that we were embarking upon the greatest gambling spree in our history. In the case of personnel administration they found that security was costing much more than was anticipated. And step by step, enterprises got themselves into a position which they had not foreseen. They began with an attack upon labor turnover. They said: “We must not have this labor turnover.” “We must encourage steady employment.” All kinds of rewards and privileges were based on duration of service; vacations with pay would occur perhaps at the end of two years’ service, and perhaps at the end of five years’ service an extra week would be granted. They established veterans’ clubs for men of perhaps 25 years’ service. They also presented buttons according to length of service, say, a bronze button for five years’ service, silver for 10 years, and gold for 23 years. They also issued a house organ which featured the pictures of the older employees on their anniversaries. They went into these things hard and then found the necessity for economizing. They found opportunities to introduce labor saving devices and to create technological unemployment. Yet they permitted themselves to take care of long service employees and to encourage long service. I recall a statement by a friend of mine who is the personnel manager of a company in Milwaukee. He happened to be at the meeting of the American Economic Association that year and came up and said something to this effect: “We have a lot of old employees we have to get rid of. I guess we will have to put in a pension plan.” Now that sounds cynical and perhaps it is, but, nevertheless, it describes the problem which is confronting many enterprises. They found things held back by older employees and they had to get rid of them and had to get rid of them in a decent way or in a way that seemed decent anyway. Possibly 15 years before they would have just more or less accidentally lost some of those employees during a seasonal slump, but they were not willing to do that at this stage. I doubt whether it would have been good management to do it and I don’t know their motive and I don’t suppose they knew themselves. At any rate they were in a frame of mind to do it. And yet conditions were created. First the policy of encouraging continuity of service kept them there, and second, it put the management in a position where it had to be decent; third, it made the management prefer to be decent; and in the fourth place, the pressure of falling prices and the stationary or even rising wages made it necessary to squeeze out men faster than it had been doing. So they embarked on pension plans, in many cases often not realizing that there is

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such a thing as group liability. If my memory is correct, the Standard Oil of New Jersey has a reserve of $50,000,000 for group liability. Some of these pension plans are very large things in a financial way. We shall come to that a little later when we study industrial relations during this depression which is one of the most fascinating inquiries I know of. Because it has been necessary to economize and follow a conceived pension plan, they both created the necessity and the opportunity for economizing. Well, pension plans increased very rapidly, but the emphasis has gradually shifted, I think, from providing security to cutting down the cost of security. Now, I said at the beginning that another major aspect of personnel policies during the early part of the period was to insure tranquility and avoid labor trouble. That necessarily died out after 1924 and 1925. If you studied the strike line you would see it was down to a surprisingly low level. You will find the figures quoted in my paper on current labor policies and you can bring them down to date with the figures of the Monthly Labor Review which are published from time to time. Business enterprises lost their fear of being organized, a dominating factor in personnel administration. They lost their fear of strikes and many of them were quick to allow the employee representation plans to lapse as far as new plans were concerned. It may be possible to collect some reliable information on that. The National Industrial Conference Board figures do not distinguish properly between live plans and dead ones. I will begin on Friday with a discussion of the thing which replaced the desire to avoid labor trouble – a more positive movement called employee stock purchase plans, a rather significant and interesting step in personnel policy.

LECTURE IV I pointed out that during the early part of the decade personnel administration was stimulated primarily by the desire to avoid labor trouble and to control labor turnover. But as strikes dropped off, as the period of wage cuts passed, and, consequently, the resistance to them passed, union membership declined and union fighting spirit declined even more. Labor turnover got well under control, particularly the part of labor turnover which, at the beginning, employers did not distinguish as carefully as they might have. They did not distinguish between the quits which mattered and those which did not. But they began to do that and pay much less attention to quits of short-term employees. A new factor of considerable importance grew up. Although wage cuts occurred more promptly and on a more drastic scale in 1921 than in 1930 or 1931, wages did not drop in proportion to other prices. They dropped, I do not know

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exactly how much, but to take the best measure of wage rates, which are hourly earnings, they dropped a little less than 20%. There were a number of reasons why wages did not drop more. I think I pointed them out in my paper, “The Current Labor Policies of American Industries,” to which I referred you and, therefore, shall not dwell upon them. The most important, in my opinion, was the fact that enterprises dared not risk labor trouble. They did not dare take too many chances of labor trouble. The explanation is to be found in their financial situation. This whole period is a very illuminating one to any one interested in how wages are made, what various conditions unite to fix the wage rate. But not only did wages fail to drop in proportion to other prices, they dropped just about as much as the cost of living; that is, the cost of living figures. The cost of living never drops as much as the cost of living figures, of course, because of the overhead in the cost of living. If I were to buy a house for $10,000 in 1920, that is fixed in my cost of living and I couldn’t get rid of it simply because a new house would cost only $8,000 this year. The same would be true if one bought furniture, my cost of living does not go down simply because the cost of furniture goes down. There was a rebound in wages in 1923. There was a lag, a rather brisk recovery, which is plainly reflected in the figures. I believe I quoted the figures in my paper to which I referred you, “Market Shifts, Price Movements, and Employment,” but you will find all the key figures of the unfilled orders going up, the labor market figures giving brisk competition for men. The wages in the building trade have a peculiar significance in the wage system. One reason is that their hourly rates can push publicity and you can’t get publicity for piece rates, and it is often very difficult to increase piece rates, or even to decrease them. They depend a good deal upon the industry. Of course, piece rates in railroads can be rather steadily increased. Well, wages for various reasons in this boom, in general, and the boom in real estate, in particular, rebounded in 1923 and recovered a large part of the loss. Now what happens when wages become too high? That is a very interesting question in economic theory which no one has ever investigated, as far as I know. It has been speculated, but not investigated. What happened in the United States during this period was not what happened in Great Britain. From the standpoint of personnel administration, however, it meant a new objective. Labor had to be made more efficient. Hiring tightened up. Shifting men within the force to place misfits properly was stimulated. There was a great increase in the incentive system. The proportion of men increased. An engineering firm, like the Bedaux firm, which sold this kind of service, reaped a harvest, and group piecework came in rather rapidly. That means that every workman stimulates the other members of the group and any one who hangs back is punished by the group. But all this pumped a lot of life into personnel administration. I do not know what the history of personnel

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administration would have been if wages had followed a different course or if the price level had followed a different course, or if the rising prices followed a slightly different course. It made personnel administration necessary because it created a lot of problems in handling for which a personnel manager was needed. Of course, it made the objective efficiency of labor rather than avoiding personnel problems. One of the two original objectives, controlling labor turnover, remained because that was really nothing but an aspect of labor efficiency. So you find in this latter period, personnel administration did a lot with hiring, promotion, etc., but the technique of those things developed rating scales, job analysis, etc. High wages were a great stimulus to managerial practice in this direction because it was easier to make men more efficient under the circumstances than it was to cut wages. [At this point Slichter digresses into a discussion of pensions, group insurance and employee stock ownership. Seeing no great historical value to this material, I omit it and resume on p. 7 of Lecture VI where he begins to discuss employee representation.]

LECTURE VI (CONTINUED) Now, I wish to pass on to the second major part of the personnel policy during the last decade, namely, employee representation. There were employee representation plans before the war. There was the Filene plan which was possibly the earliest. I suspect if I said it was the earliest some one would dispute the statement. There was the Philadelphia Traction plan which began in 1911, and which was not intended to be an employee representation plan as I understood it. Mr. Mitton went into Philadelphia intending to settle the strike and deal with the unions, but the unions did not know how to behave, so he put in this plan which dates from 1911. Then, there is the Colorado Fuel and Iron plan which dates from about 1914 or 1915. It followed a very bitter coal strike made famous by the Ludlow Massacre. But most of the plans and there are several hundred of them now, I believe, date from the war period. During the war they originated in two ways – first, at the initiative of the government and second, at the initiative of the employers. The government forced many concerns which were selling war material to install machinery for adjusting complaints or to insure continuity of work to protect the government against strikes or interruptions of any kind. There is record of the survival of the plans and you will find that the mortality among the government’s initiative plans was very, very high. But the record of company-initiated plans is quite different. They increased until 1925 or 1926 – how much, I do not know.

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Here are the Industrial Conference Board’s figures for employee representation plans. For two or three years the National Industrial Conference Board has made a big survey of employee representation plans. Now, that figure, I should say, is reliable. At that time there were nearly 5,000,000 trade unionists in the country. In 1922 there were 690,000 employees under these plans. Probably that figure is reliable. In 1924, there were 1,241,000 employees under these plans. I should say that figure contains a good many paper plans, plans which ceased to amount too much. In 1926, it found another increase, 1,369,000. I have not the slightest idea how important the paper plan is. I should say probably the figure would be nearer 1,000,000 than 1,369,000. Now, as for the way the increase comes about, or has come about – there are very little increases between 1924 and 1926. There was quite a large increase between 1922 and 1924. The reason was the shopmen’s strike. But as the period of labor trouble has died down, the tendency to start plans has weakened and very few plans have been started since 1925 or 1926. There has not been the dread of trouble which is necessary to give birth to these plans. But they have spread because some companies have acquired other properties. When they do, they extend their standard personnel practices. When the Bethlehem Steel Corporation acquired the Lackawanna plant it put in the Bethlehem plan. Just within the last year Bethlehem put in 14 new employee representation plans. That meant 14 new employee representation committees. It was quite a job to go around to all these plants and explain the idea to the management. There has been all kinds of increases, but to what extent there has been a falling off, it is difficult to say. Now, I have not the slightest idea how many plans there are. I was looking through the figures of the General Electric Company in Lynn. I think they had 75 plans in a plant of 1500 employees. When I went down to Danville a year or a year and a half ago at the time of the strike I found their employee representation plan record was very active, but it finally dropped until they ceased to keep record of it. However, they still continue to have their meetings. The men on the committees still receive their salaries. But the meetings have become entertainment instead of a conference for discussing business. There was a little stove company in Cleveland I used to visit where the assistant manager, who was in charge of the factory, started a plan because the company across the street had one. He made a very fine thing of it until he was promoted and made manager of another plant. The new assistant manager had no interest in the plan, but he did not wish to abolish a plan which some one else made so successful, so they still painfully go through their meetings. We will continue the discussion of employee representation plans at the next lecture.

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LECTURE VII I pointed out that the employee representation movement has been almost dead since about 1925 or 1926, that is, it has shown no signs of growth, although I cited an instance of 14 new committees established last year by the Bethlehem Steel Company, and a short time before new committees by the same company when it took over the Lackawanna. But there has been little of that sort of growth through the expansion of concerns which have an established policy and which have installed committees where they have acquired plants without them. The National Industrial Conference Board’s increase of about 10% in employees between 1924 and 1926 may well be at least halved; it simply represents a change in the business situation between those two years. In analyzing these committees, there are about four principal things to look for. The A. F. of L. uses the standard expression “company union” for all of them. As a matter of fact, the majority of the employee representation plans are not company unions. Strictly speaking, I should say a company union is an organization with a constitution, with officers, with representatives, and the agreements can be divided into mere committees and into the company unions. Now, on many railroads there are company unions – the Union Pacific, the Santa Fe. Southern Pacific, Great Northern, etc. These are organizations of certain crafts. They have members, the members pay dues and some of them publish papers and journals. They have full paid officers; they are continuing organizations which deal with the company. It is true that in some instances the organizations were suggested by detectives employed by the company, as in the case of the New Haven. The new president cleared it up. When Pelley came, he made some changes. It is also true that company unions have offices in the general office building of the company. They, however, are to be distinguished from the mere committee agreements. We will take the Bethlehem plant, because that is the freshest in my mind. They have an election each year and representatives are selected for plant committees, which meet with the management to take up such things as they like – the ice water not cold enough in the summer time, and the shop not properly heated in the winter, etc. But there is no association; there are no independent officers, and so there is not necessarily very much continuity. Men like to get the job of being representative, that is, certain men do, not all of them. It gives them a little time off from their regular work at the regular rate of pay, and men who do not mind the responsibility like to get the job. And so there is a tendency to pass it around unless a man is good. The same sort of situation exists in the Standard Oil Company and the International Harvester Company, and in most of the employee representation schemes. But it is not true of the railroads. I think in several instances on the railroads there

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are genuine company unions. We do not get the publications here, as we should, although I do happen to get the publication of the Maintenance of Waymen on the Santa Fe Railroad and the editorials and the reprints in it are somewhat interesting. Whenever Mr. Green gives a talk in favor of high wages, they reprint part of it. They are strong for high wages and it is surprising to me, at any rate, what a large amount of A. F. of L. propaganda, you might say, gets into this paper. This is particularly interesting because the Santa Fe has the name of having a very self-sufficient organization. It is a little inclined to play a low band just as the Pennsylvania does in working with other railroads or refusing to work with it, possibly, I should say. Several years ago when the shopmen won the award on the New York Central, the question arose whether that award should be applied to other roads, The Baltimore & Ohio, the chief union competitor of the Pennsylvania in the East, and the Pennsylvania, the chief non-union competitor, promptly applied the New York Central award to their properties. Now, the western roads were poorer and did not intend to go the limit. The union roads in the West gave the New York Central award to the journeymen, if I remember correctly, but not to the helpers and laborers. They gave part of the award to the helpers and laborers. But the company union roads, which include all the Hill system, the Southern Pacific, Santa Fe, etc., held a meeting in Chicago to determine whether or not they would apply the New York Central award to their shops and the Santa Fe at that meeting served a notice that it intended to apply the entire award to their road, and the others did not. We have an interesting example of the only road in the West which gave the New York Central award to everyone. It was the Santa Fe which led Mr. Jewell of the Railroad Employees Department to say: “I think the Santa Fe will hang on to its company union longer than any other road. They are determined to keep their men satisfied.” Now, there are a few plants outside the railroads which have genuine company unions and which did appoint a business agent. The Shoe Company in Milwaukee had at one time, and possibly still have, a representation plan which provided for a full time business agent paid by the employees. There was a business agent in one of the shoe workers union, I do not know which one, whether the United or the International, who really was fighting cases and had a chance to become expert in handling them. Now that is point number one. Is it merely a representation plan or is it a company union? Point number two – in the event that the company has a number of plants, is there a company organization as well as a plant organization? All these plans do not seem to have paid much attention to this point for some reason or other. In fact, they do not seem to have made the first distinction which I have emphasized. The Bethlehem Company has a number of large plants, including the Lackawanna, McClintic Marshall, etc., and a number of small plants and in each of these there

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is a plant committee, but there is no organization to represent all of the employees of the Bethlehem Steel Corporation in dealing with that corporation. This is also true of the Standard Oil Company of New Jersey. There are plant committees, and the committees in contiguous plants will hold a banquet together, but there is no company representation for the employees. I believe it has been customary or was customary at one stage, and may be it still is, in the case of Armour & Company and Swift & Company, also, for an annual meeting of representatives to occur. Now, the significance of this is fairly obvious. It means, of course, that the general wage question is excluded from consideration. You can talk about wages. There is no general organization in the General Electric and the rule is they cannot talk about hours. That must be done on a company basis rather than a plant basis. Last week I made the suggestion to one or two representatives of the Bethlehem Steel Corporation that there ought to be company organization so that all of the men in the company could deal with the management on company matters, and I was rather interested to see that I had touched a sensitive point. They were very alert to see exactly what that might mean, and made the reply: “Well, that would cause us a lot of trouble.” The third point to look for is whether or not there is an agreement between the company and the representatives of the men, so that they could negotiate rules and regulations. Where there is a company union in the strict sense, there is usually an agreement and where there is not a company union, there is usually not an agreement. That is, roughly, true. Nearly all the railroad company unions, for example, have printed schedules which are quite similar to the union agreements. Nearly all they did was to take agreements and strike out a few obnoxious phrases. And generally they put in a few words. The seniority rule contains two or four words to give the management greater freedom in making promotions, and the division of craft jurisdiction will put more work in the hands of repairmen and put less work in the hands of mechanics. But the agreement means that the men have acquired rather definite rights and they have clauses to apply that could arouse the question: “Does this action violate this or that clause?” There is a basis for making complaints which does not exist when there is no agreement. Then there is mere equity. Each case must be taken up, and if it does not seem very important and if the representative does not have much nerve, perhaps he does not take it up, but if you know a rule which has been very definitely violated, the case is more likely to be handled. The fourth point is possibly not so very important, but it is worth mentioning. In the event of deadlock, what is the solution? Who is the final judge? The agreement of the Standard Oil Company of New Jersey provides that the Board of Directors of the company is the final judge. The plan up in Lynn in the General Electric Company provides that the works manager is the final judge. The plan of the Bethlehem Steel

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Corporation provides that the management is the final judge. Nevertheless, there are plans which provide for outside arbitration. Now, I hesitate to emphasize this because outside arbitration rarely happens. There are a few very scattered instances which I cannot cite off-hand. The International Harvester Company plan provides for reference to outside arbitration. It goes up to the president of the company and if the employees do not like his decision, then outside arbitration is provided for. So also does the Colorado Fuel and Iron Company plan, and the plan of the Milwaukee Electric Rail Company provides for outside arbitration. There are others also which I cannot cite off-hand. As a rule, outside arbitration is not provided. I doubt whether you would find it in more than one-fourth of the plans. And I do not know that it really makes a great deal of difference, but it is possible that if company plans were to acquire more vitality they would be more important. Now, so much for what we may call a structural sketch. I am particularly interested in how they function and what they do. There are two ways of looking at the plans. They may be regarded as devices by which the management influence the men or as devices by which the men influence the management. There is no doubt that as devices by which the management influence the men they have been successful in many cases. Not in all, because if the plan loses vitality, if the meetings become amusement meetings rather than business meetings, the plan does not help the management or influence the men very much. But in the Bethlehem Steel Corporation each monthly meeting is opened by the works manager explaining the business situation. He may talk at some length and give a good many figures. Many of these men have been deeply impressed with how difficult it is for the company to make money. They are likely to go from one extreme to the other. They start out by thinking that the company has tremendous sums which they acquired rather easily. I suppose that three out of four workmen in big companies have that notion – the company has millions and it ought to be divided up more generously. But these men are not prepared to digest in a discriminating fashion the information which they receive, and, of course, the management is likely to stress the contracts on which it is not making enough money. There is no doubt, I think, that the committees have proved useful in many cases in paving the way for wage cuts. In fact, that expression was used by a personnel manager. You find a man getting up and saying: “We are surprised this cut did not come sooner.” They have proved useful in putting over other things also. The Bethlehem Steel Corporation, for example, found a lot of antiquated relief plans in its plants. These had grown up when the plant was under separate management. Naturally, there was no uniformity among them. The men were paying a good deal for what they got and they were badly neglected, the company felt. Well, this was a kind of momentary affair. The men did demand better relief plans. They felt the whole relief problem should be scrapped. The management felt the same

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way about it. The company representatives were quite useful in selling it, so do speak – in putting it across to the men. They understood it and they could explain it more effectively than the foreman or any representative of the management. They explained it every now and then, particularly during the meeting this year. “We pay too much for relief.” “Relief programs should be financed during periods of slack work.” Some of the men felt the company should take care of the payments. That may or may not be a good idea, but it is a wholesome sign that it comes up for discussion. What are they going to do about financing relief during the depression? That is pretty largely an unsolved problem. The International Harvester Company has instituted campaigns in different plants – campaigns against tool breakage or spoilage of materials or against miscellaneous overhead. They brought facts and figures into the committee meetings. They brought pictures into the committee meetings; they tried to get the committees behind the drive to save expense. They felt quite enthusiastic about the results. Nevertheless, I think one must sum up the usefulness to the company by saying that most, I am not sure whether I should say management or personnel, departments have not had enough imagination, enough vision, to see possibilities, from the management’s point of view, in these regular monthly contacts with the men. And they have not put the committees at work to the extent that they might. In all of the literature on employee representation, and there is a mass of it, I know of no discussion of the technique of handling these committees and getting the most out of them. The discussions are all so many words which say practically nothing. They talk about good feeling, how valuable it is, and so on. Now, let us shift and discuss what have the men got. What is the usefulness of the committees in getting the men to help the management? The management has explained to the workmen through these committees what overhead is. They talk about overhead. They impress the men what an enormous, terrible thing overhead is, but I don’t know of any committee which has even tried to educate the management in regard to the workmen’s overhead. The men, of course, are at a great disadvantage because, whereas they may be trained machinists, they are not trained in industrial economics, accounting, or corporation finance. They are quite eager to learn, many of them, and they do learn something from listening. They are a little out of touch with thought on industrial relations. Occasionally one encounters a representative who knows about this or that company’s plan or practice and who can discuss the difference. I ran into one such man in Bethlehem who could tell me all about the Pennsylvania Railroad’s plan and several others, and he apparently could see some had plans which their company did not have. But there is no publication by which they can get that. A man must have unusual initiative and unusual interest, and possibly unusual faith, in order to get it. Then, the representatives are changing so much. One man has

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had a plum and the men in the department think it ought to be handed around to some one else. Now, that is invariably true. In some instances the man is so good he is recalled every year. There is a machine representative in Bethlehem who has been re-elected for 13 years. And there are one or two other men of that sort. Occasionally those men are so good that they are made foremen. One man who was quite a dominating man at the plant was chairman and had become the safety supervisor of the plant. He was regarded as good at talking with the men. Whether or not the company wanted to get him out of the position of leading the men or not I do not know. Possibly it did, but there is no doubt that the man had the qualifications for the staff supervisor’s position. He was a natural leader and was particularly good at talking with the men. And yet his committee was carrying on its meetings. It was meeting demands of a kind which no other committee in the whole corporation was meeting. For example, when the 12-hour day was abolished in the steel industry, some plants were put on a 10-hour day and others on an eighthour day. This committee at that time initiated the demand for 10 hours pay for eight hours work. That was the way they put it. They wanted the shift in every instance to be to eight hours, but they wished the pay to be 10 hours. That was the compromise. Well, the company rejected that, but did this committee drop the matter? It followed a rather unique practice of putting that as unfinished business. It has been carried over seven years and every time the meetings are held this unfinished business is brought up. There were other matters which were considered unfinished business. This, of course, is gradually growing into the form of demands. Now, that man who seems to have been responsible, who is the strong man, became the staff supervisor. That is a technique which I think might be adopted. But I think it rarely is. I think the first thing which should come up is to find out whether or not the foreman has succeeded in stopping the plan. Where you find it is dead, it is quite likely to be because of the foreman. I am not sure it is unfair to blame the foreman entirely, because if the central management is sufficiently interested, it can prevent the foreman from killing the plan. The men in the shops cannot very well do it. Now, what does the foreman do? Well, he makes it unpleasant for the representative, who is too aggressive, who discriminates or threatens to discriminate with the result that grievances are not taken up. The men are threatened and to a less extent the representatives are threatened. The men do not have confidence in the ability of the representative to protect them against the foreman. It is not discharge they fear, the company provides that no man be fired for making a complaint, but if the job is piece work, the foreman can give the man poor paying jobs, or give him time allowance jobs. His hourly rate is always less than piece rates. If a man has to wait two hours for material and if, in order to give him something else to do, the foreman starts him on a new machine, he may spend most of that two hours setting

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up a machine and make only one hour’s pay instead of two. The foreman may be stingy or liberal. He may give him one and one-half hours’ pay or two hours’ pay. At the next lecture I will conclude by discussing this problem a little more and give some examples of things which these plans have obtained in some plants and also some of the things which they have not obtained. I will read some extracts from minutes which will help make them more real.

LECTURE VIII I discussed a few of the more technical aspects of employee representation plans, and I pointed out that they might be viewed in two ways, either as a method by which the men communicate with the management or a method by which the management communicates with the men. I want to go back and add a few more technical points and illustrate how the men communicate with the management. Finally, I will discuss how the management uses these devices to communicate with the men. I mentioned the distinction between company unions and employee representation plans. The Westinghouse has something which might be betwixt and between. They have an executive committee, a works committee they call it, which is elected by the other representatives. Eighty men elect about 10 or 12. The significance of that is that a few of the strong men year after year are put on the small group; they have a better chance of re-election in that group. There seems to be about four men at the Westinghouse who are responsible for rather remarkable vitality of the plan, and I think they get beyond this because of this executive committee. They get an opportunity to work in a small group rather then being submerged in a large group which cannot function. And this small group does business with the management. Another feature which they have at the Westinghouse which struck me as of considerable interest is that they have printed minutes which are given to every man in the plant. They are placed beside the time clock and each man takes one as he goes by. This one is taken from the Works Joint Conference Committee on December 31, 1931 (Mr. Slichter referred here to certain minutes which he selected from his folder). I talked with two of these foremen and I asked them how they explained the vitality of the plan, and at the time one of the minutes was lying on the table. He said, “that is the reason” (pointing to the minutes). “It gives them a chance to know what is going on; it gives them a chance to check up on us. They take the minutes and see if we have taken up what they asked us to and what action was taken on it.” One of my students at Cornell wrote a master’s dissertation on employee representation plans. I am going to have you read it sooner or later as it is the

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only good thing which has been written on that point. It was published in the Electrical Workers Journal. This girl lived in Schenectady and she did the job during vacation. At first the company at Schenectady said they did not keep minutes and that is what they told the men, while the men told Miss Meyers they thought the company was lying, so she told the company they did have the minutes and would like to see them. She finally persuaded them to let her see them. I merely say that to show the contrast between the General Electric Company and the Westinghouse Company. The General Electric told the men they did not keep minutes, whereas at East Pittsburgh the Westinghouse goes to considerable expense to put a rather detailed copy into the hands of the men. You will find these minutes printed word for word with the congressional record. I think these men exaggerated the importance of the minutes, but they must be regarded as one of two major factors in helping the scheme retain its vitality. At the Goodyear plant every rate change by the Efficiency Department is communicated to the employee representative in the department and the foreman. The employee representative is told in advance of every rate change in order to give him an opportunity to protest and to invite his criticism. He is not confronted with an accomplished fact But the gesture is made in such a way as to invite his scrutiny. That has quite an important psychological effect in bringing rate changes within the criticism of the plant. Now, the same procedure is followed with respect to lay offs. The list of men to be laid off is sent in duplicate to the foreman and the employee representative. If the employee representative wishes to take up any case he knows it in advance. Now, at the Westinghouse they have a semi-annual review of every rate change in the plant by a subcommittee. You see the technique is not to depend too much upon the initiative of the representative who may be timid. The Westinghouse has one of the most interesting systems in the country, and if we were studying rate structures, that would be one which would command our attention. Briefly it is this: Jobs are rated as an A, B, C, D, or E job. There are five classifications for men, I think, and three for women, although I am not certain of this latter point. What is an A job? For each job there are about five classifications. These classifications are men classifications. If a man is working on an A job, he is entitled to an A rate, which varies from 70 cents to 78 cents an hour. When he first goes on, he starts at 70 cents. If he is good, they give him 72 cents and so on. But he must get one of the A rates, if he is on A work. The rate he gets depends on his own individual ability. Now, what happens is this: A man will say “This is really A work and I should be getting so much an hour, and it should not be classified as B work. In the course of 12 years they have been getting individual rate changes and they got the departments pretty well into line. They say there is still a substantial amount to be done, but they have done most of it and have

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done it through these semi-annual reviews. Well, those are a few little wrinkles in technique.” Now, I want to read you some of the minutes to get you into the spirit of some of these schemes. Let us take the special meeting at Sparrows Point in the Bethlehem Steel Corporation on September 25, 1931. There was a meeting on September 23rd when newspapers announced a wage cut in the steel industry and this special meeting was called at Sparrows Point to explain the cut to the men. The general manager explained the circumstances necessitating a change in wage rates in the steel and coke industry. They tried to sugar coat the wage cut as best they could, but did not have very much sugar in this case, because the steel corporation came out and Bethlehem had to follow suit: When the International Harvester Company cut wages they increased the hours of work. They said “to help you get through the winter we are going to guarantee so many hours work, but we will have to cut wages.” Goodyear did the same thing. They had been operating about 18 hours a week and dividing the work. Business almost always increased in the spring on account of the replacement business, so Goodyear said “We will take a chance on building up inventories in order to give our people 36 hours a week during the winter,” which meant a great deal to many of the employees, but the company felt a wage cut was needed so it said at the same time: “We will cut wages,” and so they did. Things went along very satisfactorily because they have rather substantially sugar coated the wage cut, but Mr. Ford throws the business world into confusion by bringing out his new car several months after the other new cars. A promising burst of car buying is punctured and the steel industry expects to drop below 20% in operation as a result of Mr. Ford’s new car. That hits the railroads; they are not able to carry out the promises they made. They are scared to death because coal and steel are way down and, of course, it hits the tire companies. So, Goodyear has had to cut down to below 36 hours after keeping it up for about six weeks. I am not criticizing Mr. Ford, you understand, I am just pointing out some of the repercussions coming at this time. Perhaps it is our salvation. Perhaps it will enable us to hit the bottom! That is, to get a revival is all that is needed – to get an air of pessimism. So Mr. Ford may enable us to get a sufficient air of pessimism to start us going up. It is important, I think, from the standpoint of business cycles for an air of pessimism to come and the earlier it comes the better. The people have to spend, when they decide that prices are on too pessimistic a basis. Now that is a very strong argument in favor of drastic wage cuts; instead of holding off so that you do not get an air of pessimism until everyone is broke and then you get a very slow recovery. They feel that prices are on an unstable basis. The kind of air you ought to prevent is the air of optimism. We need an air of pessimism and need it to come early. Mr. Ford may at least be giving us that, although the resources have been greatly reduced in the case of corporations.

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Now, I wish to digress from the policy of wage cuts to employee representation. At the special meeting at Sparrows Point on September 25, 1931 the following points were taken up. One representative asked why the press had been given the news before the employee representatives. Explained that after the United States Steel had given the press the news, this company was compelled to announce it also. Representative Brown asked if 10% would be taken from every man on salaries. The General Manager replied, “yes, with the exception of Tin Mill employees who are under Amalgamated scale and have already been reduced.” Representative Franz asked if his department could be assured full wage scale after it returned to a normal average. The General Manager said no favorites could be made and full scale could not be placed back in any one department. Representative Brown stated he expected a great demand for a reduction in rent at Sparrows Point and does not see how the company considers the Sparrows Point property the liability it claims. Representative Schuman pointed out that houses had been bought in good times and payment of $9 per $1,000 plus interest now seems excessive. General Manager said company urges employees to keep their home and has reduced and deferred payments in many cases. Representative Schuman said payments would accumulate until interest ate up principal. Would like to see a reduction of payments so debt accumulated in depression would not amount to a sum that could not be met. Representative Weaver asked for a reduction in cost of sewerage service in Dunkirk. The General Manager said he would go into the matter. At another meeting on October 6, 1931, Representative Kruger stated that he was sorry to have been absent at the special meeting of September 25th, but wished to say the following: “He feels that those responsible for the 10% reduction in wages have: (1) Broken faith with the President of the United States; (2) Broken faith with the employees; and (3) Broken faith with the stockholders. He cannot see how they expect to be their brothers’ keeper on one hand if they take bread from the table of the worker on the other. Now the wage cut stirred that up and they began to nibble. There is always a nibbling process. You will find that in union agreements also. Here is the special joint meeting of October 21st. Representative Kelley of the Tin Mill Mechanical Department presented a written complaint of employees of that department who contend they are now working on an eight-hour day with a ten-hour rate. Their hours were cut, first from 10 to 9.5, then to 9 hours. They ask an eight-hour day with an eight-hour rate. Mr. O’Brien, Manager of the Sheet and Tin Division, and Mr. Coffen, General Master Mechanic,

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stated it was impossible to operate in normal times on an eight-hour basis. They stated that the present working time is due to part time working schedule and a return to the nine-hour day will be made as soon as work demanded it. In closing, the item, Mr. O’Brien stated the work of the machinists is still a nine-hour job and men will be returned from the present part-time schedule of eight-hours when work demands it. In this case, due to the slackness of work, the hours were greatly reduced from 10 to 8, and since there were such standard rates as a 10-hour rate and an eight-hour rate, this, of course, cropped up as a result of it. The men said as there was a regular eight-hour rate, they should have it, which was higher than the 10-hour rate, but the management said “no.” The chairman called on Representative Weaver to present the petition of the Locomotive Cranemen in the Transportation Department. Mr. Wrightson pointed out that was referred to the conference committee. These men had been working eight hours, at an eight-hour rate, but they had been doing a good deal of overtime and so last August the company, looking for ways to economize, said: “This is really a 10-hour job; we will make the job 10 hours and reduce the rate to eight hours.” Well, that was all right until the general wage cut. The men said: “Here, you are cutting us twice.” This is a 10-hour job and we should have an eight-hour rate. In the meantime much of the overtime disappeared. I wish to explain that the mills down at Sparrows Point had had far more work than the other mill and felt the depression less, due to the tin plating department. So it was not until quite late that the agreement got down to reduction. They said: “We have all split 50–50,” and the thing went to the Conference Committee, but the men lost the case. Under other business conditions, the management might have conceded the point, but the management is out everywhere to find ways of economizing and little things which the men might get under ordinary conditions, they do not get now. There were a number of squabbles down there in connection with company-made work. The company felt that when they cut down to 25%, they had to have more work, so they decided to give them some made work, but it put in the low scale of 25 cents an hour on the made work and proportionately lower on other jobs. Then the question arose what is made work? To what extent does the 25-cent rate apply against made work. It is work which the management would not have done otherwise. Apparently, a ruling was made down at Sparrows Point that all construction work was made work, so some unfinished construction jobs were suddenly shifted to the 25-cent rate. I do not happen to have those minutes here this morning, but it apparently was a rather sore point. Well, here are a few extracts from the proceedings of the meeting of the executives of the Westinghouse Company on May 22, 1931. The company has tried to find ways of economizing. and it is proposing that certain special rates which are

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outside the classification be reduced to the classification. They call the classification the key sheet. Now the top rate in the A class may be 78 cents an hour, but a few special men may be getting 83 cents. One of the proposals was to reduce all those a rates to the key sheet rate. As regard to the matter of special rates, individual rates outside the key sheet or so-called special rates, which have been granted previously for various reasons and which are not in accordance with the job classification and key sheet, will be brought to within 10% in excess of the rate allowed by the job classification and key sheet. In other words, the men say instead of putting these rates down to the key sheet rate, let them remain at 10% above it. Now, the management is in an embarrassing position because it promised no rates would ever be changed, so the works manager said: “The foregoing changes have in no way affected our wage scale as represented by our classification plan and key sheet. The policy of the management is averse to any change in our base wage scale. While the management has been very reluctant to propose these changes, it wishes to express its appreciation of the spirit of fairmindedness in which they have been received by the employees. The assurance is given that the whole situation will be reviewed as soon as improvement in business conditions warrant, and, in any case, not later than December 15.” Well, they go on and talk about this. The manager says the loss to the men will not be very much and one of the men said: “Do you think 1% is enough to justify this action?” The works manager said: “It will not be a very large number. I think we have gone a little wild in creating special rates and I think we all recognize this.” Well, they finally passed the resolution accepting the men’s position. In other words, the works manager consented to set a reduction of 10% above the key sheet rate. They proposed to make the men take some vacation without pay in the clerical department, and one of the men said: “I think the monthly men have been hit pretty hard.” Mr. Law said: “I think the clerical force has been given a real jolt.” Mr. Hoffman said: If you figure it up, you will find that the salary of the average clerk has been reduced about 35%. Mr. Bush said: Is there any possibility of getting these cuts back? The men say they have been 20 years getting these vacations, and now they lose them with one stroke of the pen. Mr. Hipple, the Works Manager, said: We have promised to review the whole matter in December, but cannot predict what conditions will be at that time. However, we shall certainly be willing to review the matter and, if conditions are such as to warrant it, every consideration will be given the men. Mr. Bush: That is all I want to know – will they be given back if conditions warrant? Mr. Hipple: If conditions warrant, they certainly will.

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BRUCE E. KAUFMAN Mr. Gettens: I don’t like this expression, “that we have lost everything with one stroke of the pen, in fact I don’t agree with it. If this is so, then the committee is no good. Mr. McGivern: The big thing is the vacations. If conditions warrant, will they be restored? Mr. Hipple: If conditions warrant it, they will certainly be re-established. Mr. Law: This committee has been called a bunch of bums. The workmen get the information before we do. I think we should be careful about this. There was a matter which had not been handled through the committee. The men had not been given a proper opportunity to bid for this change in vacations.

Bonus payments for overtime (overtime bonus) will be paid only after an employee has worked forty-eight hours in any calendar week, except that time worked on Sundays and legal holidays will continue to be paid for at the double rate, regardless of other time worked during the week. They are having a fight in the reduction of overtime. The company wanted to operate four days a week, that would be more economical than starting up five or six times and working only a few hours. Now where you have strong men for any reason whatever there may be some real kick back and some real resistance. That is all I am trying to illustrate with these minutes. I am sorry I have not the minutes of the Steelton plant. They are put down in the most minute detail and with all the profanity, no word is left out. I cannot read them here completely, but it was quite refreshing to read some of the things which had been said. And when I mentioned it to my A. F. of L. friends they were quite astounded. They do not know a single thing about company unions. Outside of people in the railroads who know the situation on the other railroads thoroughly, I do not believe the American Federation of Labor people know anything about company unions. I was talking with Moran, the men’s representative at Westinghouse and after I got through they wanted to ask me some questions. They were very much interested in the pension plans and very much dissatisfied with their pension plans. But certainly they are far better informed about the British and German plans than anyone in the American Federation of Labor. By way of illustrating how little the American Federation of Labor people outside of a few unions know about what is going on in the world, I might refer to a conversation that I had with Mr. McGrath, who is one of the vice presidents of the Street Railway Unions with headquarters in Pittsburgh. I dropped in on him. I had not been there for a number of years. We got to talking and he made the remark that about 70% of the cars in Pittsburgh were one-man cars. He mentioned the one-man issue in Chicago. The one man car has been a big problem of the street railway unions ever since 1920, and it has been trying to get a differential

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for one-man operation as against the two-men operation. Well, I spoke of the dismissal wage and he looked up and said: “What is that you said?” I said: “You don’t know any companies around Pittsburgh which pay a dismissal wage?” He said: “No, I don’t know any companies which pay it?” So here we have an international vice president in an organization which has been badly hit by technological unemployment who never heard of the dismissal wage. I will give you a list on Wednesday of some of the important things which the men have accomplished in these employee representation plans – the use of them by the management, which is more important than their use by the men. Then I will point out one or two of the problems which arise in operating it. I think I will finish the discussion of employee representation plans on Wednesday and go on Friday to the stock ownership movement.

LECTURE IX One of my purposes in reading from the minutes was partly to give you the atmosphere of some of the better plans and partly to show that men are not necessarily afraid to speak up. Some of the trade union people have the idea that no one dare say anything in these employee representation meetings. They are afraid they may not get action; they may not get much beyond the stage of talking in many instances, but we will inquire into that in a moment. I am going to start reading the minutes because I found something which might interest you and I thought I would pass it on. This is one of the meetings down at Sparrows Point following the wage cut – the meeting of October 6th. Representative Briggs asked when new wage rates would be known. Mr. Clark, Assistant General Manager, said they were in Bethlehem and would be in Baltimore shortly. Representative Stamn stated he understood the cut would be 10%, and in many cases 12%. Mr. Clark stated that Mr. Cort had explained at the meeting on September 25th that 10% was the minimum and that no fractions were carried. Representative Weaver said many men thought this method unfair to the employees. Chairman referred the item to No. 2 Committee on Wages. Representative Stamn stated employees were of the understanding that the former price of coke was not to be changed. Believes those who bought it during past summer are entitled to a credit on the new price announced by Mr. Cort. On September 26 Mr. Cort said present wage cut could not be foreseen at time former price was set – does not feel any adjustment should be made. You will recall I read you Monday that simultaneous with the wage cut was a cut in the price of coal which the company sells to the employees at considerably

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under the market price. Many employees bought coal in the summer before the cut went into effect and now they want the cut made retroactive. Mr. Clarke said the cut could not be foreseen at the time the price of coal was made. Well, so much for that I made the remark that, in my judgment, the employee representation plans which have vitality are more significant as methods by which the management communicates with the men, that is, by methods with which the men communicate with the management. I will amplify that briefly. It is customary in all of these plans that I have studied carefully (I am selecting, you understand, the best ones) for the works manager to appear before some meetings regularly. The tendency has been to introduce the committee system. Usually he does not appear before the special committees, but he appears before the general body which comprises all representatives. These committees make their reports to the general body, but talks to the general body. In other words, the general body tends to be not so much a working body as a report hearing body of the work done in the committees. And the plant manager gives his talk to the general body. Now, it usually relates to business conditions; one might say he invariably covers business conditions and presents a great many figures on earnings, unfilled orders, business competition, the time the annual statement appears, that is explained in some detail, item by item, and the men get quite a vivid impression of what a difficult thing it is for the company to make any money. Certain men have said that this is a plan for paving the way for wage cuts. A factory manager said “those men know when a wage cut is coming as soon as we do.” It takes all the mystery out of wage cuts. They understand that it is necessary for us to cut wages. There seems to be no doubt that the managements which believe in these plans and really attempt to use them, which have the imagination and courage to go before the employees and discuss the company, regard them as exceedingly convenient things and they are quite positive that it makes the wage cut much easier to handle. I may get a chance later in discussing industrial relations during this depression to give a brief analysis of the technique of wage cutting – how it is done. This is one way, the preparation is made gradually through explaining the financial difficulties of the corporation, the nature of the competitive situation and so on. Other changes in company policies are explained. You will recall that Westinghouse wished to get rid of overtime under certain conditions. It went before the committee and put it before the members. And when it wished to get special rates down to the key sheet, it did the same thing. It gives the company a much better opportunity to have its acts understood. Of course, don’t get the impression that the company always succeeds in getting understood. My own impression is that it often succeeds in getting understood too well. It puts over things which it should not, because these men don’t know what questions to ask, but sometimes it is not able to convince the men of good faith even where good

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faith is certainly present. A pretty good example of that occurred at the Goodyear plant last week. I am not sure whether I discussed it or not. I think I did point out that the Goodyear followed the familiar practice of combining a wage cut with an increase in employment at the beginning of the winter. It went up to 36 hours from 18 and started to build up inventories. It was compelled to discontinue that practice by the slump in the automobile business created by the new Ford. But when the step was taken, the employee representatives asked that the wage cut be not applied to any men not regularly working the minimum of 36 hours a week. And that was agreed to by the company as a fair proposition and things went on in that way for in the neighborhood of six weeks or two months and then the company felt unable to give anyone as much as 36 hours. And so the management said since those who have been cut are now receiving less than 36 hours of work, the men who originally escaped the cut because they were not working as much as 36 hours should be cut with the rest. And that was done. But all of last Monday afternoon and all of last Tuesday afternoon, the Assistant Works Manager stood before the combined house and senate, as they call it out there, of about 100 men and tried to explain this action and answer questions and reply to arguments. He is not sure the men have been convinced of the company’s good faith. That illustrates the difficulty you get into from having a plan and from the usefulness of the plan in affording an opportunity for the company to explain its action. If there had not been a plan, the cut would have hit everyone at the beginning and there would have been no flare-back of bad faith. As a result of the plan the company made a concession which it felt unable to keep up and so it has encountered the problem of convincing the men that they have not been double-crossed. I don’t suppose anyone knows whether the management has succeeded in doing that or not. The men who are most friendly to the plans are the higher-ups, executives who are anxious to be in touch with the rank and file and who do not have the opportunity without these plans. The foreman is not a satisfactory medium of communication. The men who are skeptical about the plans are foremen who do not have a method of communication and are subjected to a check if the plan has not vitality. Now, as to some of the things which have been accomplished, some of the most important accomplishments cannot be specifically indicated, I suppose. No doubt these plans introduce more responsible thinking on the part of many executives. The mere existence of a plan, the mere fact that there is a chance to demand an explanation, to ask questions, to argue in the face of the men who has ordered this or that, the mere fact that all this exists makes the decision makers ponder more carefully before deciding what to do. It makes for reflective action or more careful planning of alternatives, and more discrimination, more self-criticism. No doubt it would be wholesome if we could get the works manager of the United States, our great stationary engineer, before Congress and ask questions and demand an explanation.

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It would avoid a great deal of window dressing and evasiveness, which I do not think is peculiar of this depression. Now as to the specific accomplishments. Let us take a few of the things at the Westinghouse to begin with. They seem to feel that their biggest accomplishment has been the work of job classification. They have had that put in because of the method of wage payment which is the company’s method, not the men’s, it is not even a joint product. They have done a great deal both sides admit. The men have done a great deal to shift work from one classification to another, as well as to get men moved up within the differentials applied to the work. One man put it in this way. “Here is what happens in every shop – if you are the brother-in-law of the boss, you get a good job. The men doing good work are not paid accordingly. We went through the shop and classified the men and foremen. They paid certain rates to certain men. Why is a man receiving Class B rate when you admit this is a Class A job.” The reason why the process has been far more effective, I suspect, is because it has been a nibbling process. It is hard to get very much at a time. Under these plans you cannot get a 10% wage increase or even a 5% wage increase, but if you get a chance to nibble you get a great deal by keeping at it. This chap, I forget whether it was Moran or Law said: “But we got the supervision coming to us; asking our advice. They want to know about classification so they will not get in bad, so they will keep away from trouble.” If a new machine or process came in which required a new classification of jobs, many of the men are so good, that the foreman voluntarily consults with the committeemen. They make out a classification together. Some of these committeemen are better than the foremen. Little things require watching. There are a great many ways in which a man tries to keep down the cost in a department. The job classification may be proper and yet the men on the job may not be properly rated. For example, suppose it is a group job (and they have a great many group rates in the Westinghouse, in fact, the growth of the group rate has been a noteworthy feature of the wage structure in the last 10 years) and the group requires an A, B and C man, but the foreman moves the A men to some other job where he is needed, so they replace him with a D man. Then there is a B, C and D man, while under the official classification he is expected to have an A, B and C man. If the committeeman sees that, he has to change them, but if he can get away with it, his cost is so much less. But the committees are on the alert to see these things done right. The men at the Westinghouse prevented the rate from being put below the key sheet. They succeeded in getting vacations with pay for the 10-year men. Now that is not particularly generous and many vacation plans in plants which have no employee representation schemes are more generous. Nevertheless, it seems true that this would not have come until later – at any rate at Westinghouse – if the men had not brought it up at the committee meetings. They got a new pension

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plan which is much better than the old one, but with which they are not at all satisfied. As pension plans go, it is pretty good, but the thing which bothers the men is quite naturally the fact that they cannot carry the pension plan with them if they leave the employ of the company. They have been studying the European pension plans and are quite well posted on both the British and German schemes, more so than the American Federation of Labor. During the war they got a housing plan. They induced the company to build and sell on a time payment plan. The company charges them 10% more than cost which is remitted at the end of five years. Of course, it is much more difficult to get things today than under ordinary business conditions. I asked one of the chaps at Westinghouse how he thought the plan might be improved, what he thought ought to be done about it. He didn’t have much to say about it, but he said, “For an open shop we got everything we can get. I don’t think there is an open shop in the country that is better organized than we are. The only thing we could do to improve it is a closed shop. We would like a closed shop.” Of course, the foremen are very much better controlled everywhere. One of these men at the Westinghouse said: “The foremen don’t want you to take something from their district to the manager of works. They guarantee to make no major move in their district without taking it up with you first. When they are going to make a change that will affect men they generally call on committee men first to see what the rebound of the men, will be and what the attitude of the men will be.” That, of course, is a strong committee; not all the foremen will behave that way. At the Goodyear one could list many of the accomplishments, but one of the most important is the advance notification of all rate changes. But rate changes, as I mentioned on Monday, are communicated to the committee at the same time that they are communicated to the foremen, that is, three days before the rate goes into effect. That also applies to the notification of suspensions. This notification gives a man an opportunity to plan beforehand. If a man has been tardy or if he shows up late one morning or shows up late after being out a few days without notifying the foreman, he may be laid off for three days. But he takes the three days not beginning that day, but the next day. Of course, this gives the committee a chance to keep in touch with the personnel department and if they think the man should be given warning, he has a chance to do something about it. The men at Goodyear got a saving plan by which deductions are made from their pay and the company handles the bookkeeping and makes the deposits. The company did not want to be bothered with that. The men had to bring it up three or four times before they got it. It means one full-time clerk. Of course, if you are going to save $1 or $2 a week, you do not like to go to the bank to do it. It makes saving relatively painless. It is like some of the indirect taxes. Some of

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those are not quite so painless as they are supposed to be, like the politicians say they don’t hurt, but the dentists tell you that too. Well, Goodyear had a cut last spring. This was the second cut. They already had a vacation with pay plan. The cut came just before the summer and so the men brought out “how are you going to pay for vacations?” We earned these vacations at the old scale and ought to be paid on the old scale and so the company agreed to pay them the old scale for vacations for that one year. That I think is a pretty good illustration of the nibbling process – if you have a pretty good argument and do not try to get too much at one time. The technique is to go after little things. Well, another rather small thing is the sale of gas to the men. The company has a garage for its own trucks, which bring a good deal of freight down from Cleveland by truck, and the executives had been buying their gas at the garage at much below the market. The men said: “Why should not we do that also. We are employees also?” They succeeded in getting it for the 10-year men and now they are trying to get it for the five-year men. They are very sensitive about notifications at Goodyear. They also succeeded in getting them for lay-offs. Now, I don’t have a satisfactory list of accomplishments at the Bethlehem. I am convinced that I don’t know very much of what has been accomplished at the Bethlehem plant, and the reason for that is, I think, that I went to Bethlehem where the plan does not seem to have the vitality that it does in some other plants of the same company. I believe that at the Sparrows Point and Steelton plan one could get a very much better list. I could give you a pretty good list of the things that they have failed to get at the Bethlehem. They did get a new relief plan. This company had a lot of old relief plans, which came with the plants when they bought them, most of which were poorly designed and inadequate. Now the Bethlehem Steel Corporation would have devised a new relief plan anyway, but the men asked for it and it came sooner and they had a voice in getting it. From the standpoint of the company it gained a very important advantage, I think, the men are always sensitive on relief. They are paying something for it and they always wondered whether they were paying too much. You can’t get rid of that feeling entirely, but there is undoubtedly a substantial advantage in having the plan intimately understood by a few men throughout the plant who can answer questions. And the thing is constantly under discussion. They have three classes and the question comes up whether this class or that class is not paying too much. And I think the class which is paying $1 a month is not paying its own way. Don’t get the understanding that there is not a problem there, but I think it is less serious than if this type of communication were not in existence. A great many rates have been adjusted at Bethlehem, and a good many bad working conditions have been fixed up. But it is difficult to get things now. The men are paid twice a month and they are very anxious to be paid every two weeks instead of twice a month.

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They have been asking for that without success so far because the company’s cost accounting is on a monthly basis and if the pay per did not coincide with the cost accounting it involves considerable work. There was an interesting request (I don’t think I mentioned this) at Steelton some time ago, that the company not pay in $50 bills and they got that request. If a man drew $60 every two weeks, he might get a $50 bill and a $10. There were so many of them that the merchants were charging the men to change them. That is not a problem at the present time, as operations are now down to 25%. The men at the Bethlehem plant tried to get the company to sell them common stock. The company said “No.” They felt common stock was too speculative. I should mention that the relief plan at the Westinghouse, the unemployment relief plan was instituted by the men and put into effect last fall. They were working three or four days a week and had one or two wage cuts there. They are down to three or four days now. In fact one of the officers who has been cut 30% said: “the men are catching it worse than we, because they are getting so little work.” They are contributing a larger percentage of their earnings to unemployment relief than the faculty at Harvard has been asked to contribute to the Unemployment Relief in Cambridge. They are contributing 1% for six months, while the Harvard faculty has been asked to contribute 1% for four months and we have not been put on part time and no cuts have been made. When the men proposed this the company felt they were doing a pretty decent thing. They said: “All right, go ahead and we will match your contribution.” So the company is matching contributions, and they are taking care of a great many people. Men, in fact, who have not worked for the company as far back as two years and even longer. It is a desperate situation in the steel territory. Yesterday they expected to exhaust the last of the Pittsburgh fund and were trying to find out how to get some more money. I should say one or two things about problems connected with these plans. Very few of them have met the union problem. There was a labor union started four years ago and it got some of the assemblymen to join. Some of the assemblymen were discharged. The company denies it discriminated against them because of union membership. It said they were taking time from their work to solicit membership from other employees and they were discharged for not attending to business in the plant. I encountered that same explanation down at Danville. “We are not scheming against any one for union membership, but everyone who was discharged was discharged because he was taking time from work.” It is a pretty standard excuse. The companies feel pretty well satisfied with the kind of representation they got. I have some figures on the Bethlehem representatives showing a large fraction of them are home owners. The men are inclined to recognize a strong representative and keep him. Of course, there are a good many departments where there are no men who would make good representatives. But if they find someone who is

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willing to speak up to the foreman and try to get results, he is likely to be kept in. And you will find in every one of these plants a few old stand-bys. There are four men who have been at Westinghouse for more than 10 years and that is true of the Bethlehem plant also. But there are not enough men of that kind to provide that sort of representation for every department. The Goodyear Company has a little experience with outside activities of its committees. The men at Bethlehem also had experience of that sort. There a committee was sent down to appear before Congress. On several occasions the Goodyear has asked its committees to pass this or that resolution and, as a matter of fact, the committee has shown a little initiative in trying to get things itself from the city or street railway companies. For example, the company wished the new dirigible to be named the Akron, so it got the men to pass a resolution asking Congress to name it the Akron. The men got the resolution passed and so they decided to ask Congress to declare a six-hour day. So they went down there and requested it. This also appeared in the Congressional Record of a month or two ago. They thought it would be good to have electric light rates cut and decided to appear before the City Council and ask to have them cut down. But the company did not like that so well because they had just had an agreement from a local tire company to supply the company tires. So they ordered the men not to go down to the City Council as a Goodyear group. The men said: “We passed the Akron proposition for you, why not this?” They are good as individuals, but the company will not ask the men to pass any more company resolutions. That is a policy of the past. I ought to end up this discussion of the future possibilities of employee representation. But I think it would be a good plan to leave that to you. Perhaps later on I may have something of that sort to discuss. At least half of the plans are dead. In many instances their vitality depends upon the personnel. As one of the men at the Westinghouse said the company could kill the plan if it wants to. If one side loses interest, the other side loses interest too. The reason these plans are functioning is because the company wants them to function. They want to have a chance to communicate with the men; they want difficulties settled.

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