LABOR’S GAINS AND THE UNIONS

In 1920, the American factory worker could look back on 66 years of substantial improvement. Real wages had risen, hours were shorter, and laborers, children, and (to some extent) women were protected by law. The fundamental ideas of social security were being more generally discussed, and clear-cut legislative victories had been won to reduce

The hardships caused by industrial accidents. In addition, urban dwellers of all kinds saw vast improvements that brought about sharp long-term reductions in mortality.

How many of these gains should be attributed to the labor movement? Clearly, the unions’ ability to control the supply of labor and, thus, the conditions and terms of work, was limited throughout the period from the Civil War to the Great Depression by the inability of the labor movement, despite valiant efforts, to organize more than a small fraction of the labor force. The crucial figures are given in Table 18.4. At the nineteenth-century peak in 1886, unions had organized about 8 percent of the nonfarm labor force. Even at the peak after World War I, unions could claim only 17 percent of the nonfarm labor force. Hence, unions could do little directly to raise the average level of real wages or improve the typical conditions of work. Unions could raise wages in unionized sectors; but by restricting the supply of labor in those sectors, they had the undesired effect of increasing the supply of labor and lowering wages in nonunionized sectors.

On the eve of World War I, however, unions could lay claim to some other important gains for their members. As direct owner supervision declined, the power of foremen indulging their personal whims increased. Unions helped reduce arbitrariness in hiring and firing and other harsh treatment by supervising personnel. In addition, some strong unions gained substantial wage differentials for their members. For example, a substantial differential was obtained in the bituminous (soft) coal industry, where union workers received wages some 40 percent higher than those of nonunion workers. For most unskilled work, though, the wages of union members were only slightly higher than those of nonunion workers, perhaps a few percentage points (Lewis 1963).

Finally, trade unions had become an important voice for labor in the political system. Labor Day as a national holiday was first celebrated in 1894; in 1913, cabinet-level status was given to the Department of Labor.

Perhaps the most important result of the growing political power of labor was the change in rules governing compensation to workers for injuries received on the job. Under the common law an injured worker could sue his employer for damages. But an

TABLE 18.4 UNION MEMBERSHIP, SELECTED YEARS

Source: Lebergott 1964, 220; and Historical Statistics 1975, Series D4, D7, D8, D12, D17, D940, D943.

Employer who was sued had three powerful defenses that often prevented an injured worker from receiving compensation: (1) the worker had known and accepted the risk, (2) the worker had not been reasonably careful, and (3) the worker had been injured because of the negligence of a fellow worker. Between 1910 and 1930, however, labor won changes in state laws that first eliminated these defenses and eventually required that all injured workers be compensated.94 In addition, insurance programs were established; employers and employees contributed to a common pool that compensated injured workers. The main result of these laws was that injured workers received more compensation. Employers, in many cases, also approved the new laws because they reduced conflict with workers and because the cost of insurance could sometimes be forced back on the workers in the form of lower wages. But, as Price Fishback and Shawn Kantor (2000), the leading historians of Workers Compensation, have pointed out, the side effects sometimes differed from what was intended. It was hoped that putting the burden on employers would make for a safer workplace, and often it did. The rate of fatal accidents in bituminous coal mining, however, increased because workers had a smaller incentive to avoid accidents and because employers found it cheaper to pay the additional claims than to try to reduce accident rates. Worker’s compensation laws are a good example of Economic Reasoning Proposition 4, institutions matter.

The power of organized labor’s support for favorable legislation was destined to flower during the Great Depression. For labor as a whole, however, it is fair to conclude that labor’s nineteenth-century progress owed more to economic growth and rising productivity than to the unions’ strength.