Leo Wolman

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National
Bureau of Economic Research
Volume Title: Ebb and Flow in Trade Unionism
Volume Author/Editor: Leo Wolman
Volume Publisher: UMI
Volume ISBN: 0-87014-029-9
Volume URL: http://www.nber.org/books/wolm36-1
Publication Date: 1936
Chapter Title: The New Era and the World Depression
Chapter Author: Leo Wolman
Chapter URL: http://www.nber.org/chapters/c2754
Chapter pages in book: (p. 33 - 42)CHAPTER IV
The New Era and the World Depression
THEdecade preceding the inauguration of l'resident Roosevelt
in March 1933 and the adoption a few months later of an elaborate
national system of industrial control and labor legislation, wit-
nessed an almost uninterrupted decline of about 650,000 in union
membership. The downward movement, which had begun with
the depression Of 1921, continued, except for a nominal advance
in 1927, until the turn came with the recovery of business and the
labor policy of the New Deal in the second half of 1933.' Alto-
gether the organized labor movement had since the peak in 1920
lost 2,074,800 members, leaving it in 1933 where it had been in
1917, or, if the growth meanwhile of the working population of
the United States be taken into account, in 1910. Of the total
decrease in members since 1923, 179,400 had been lost during
the seven prosperous years, 1923—29, and the remainder, 469,600,
during the subsequent depression. The year-to-year changes in
membership, 1923—34, are recorded in Table 12.
On their face these figures do not disclose the reasons for the
course pursued by trade unionism during the period. Beginning
with the decline of 85,900 in 1924, which reflected the inevitable
slackening in the unusual rate of loss of th.e three preceding years,
the annual recessions 'thereafter remained relatively slight until
the impact of the next depression accelerated the rate of decline
once more and produced in 1932 and 1933, together, a ioss in
33YEAR
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
AVERAGE ANNUAL
MEMBERSHIP
3,622,000
3,536,100
3,519,400
3,502,400
3,546,500
3,479,800
3,442,600
3,392,800
3,358,100
3,144,300
2,973,000
3,608,600
IN TOTAL
INCREASE OR
DECREASE OVER
PRECEDING YEAR
—405,400
— 85,900
—16,700
—17,000
+ 44,100
— 66,700
— 37,200
— 49,800
—34,700
—213,800
—171,300
+635,600
34EBB AND FLOW IN TRADE UNIONISM
membership of nearly 400,000. The influence of the business
contractions of 1924 and 1927, which briefly interrupted the pros-
perity of the New Era, is hardly noticeable in the figures of mem-
bership, and, indeed, in 1927 membership actually increased,
though slightly. It was as if the momentum of decline, originating
in the depression of 1921, transcended all other forces, incfuding
business prosperity, and carried union membership lower each
year until the decline was intensified by the powerful factors of
unemployment and business liquidation initiated by the depres-
sion of 1q29. The reason the American labor movement failed
in these post-War years of more than normal business activity,
high profits, good employment and rising wages to resume the
advances traditionally associated with, the favorable effects on
unionism of good times and to retrieve at least part of its previous
losses has been for some time the subject of speculation and
controversy.
TABLE 12
AMERICAN TRADE UNIONS, ANNUAL CHANGES
MEMBERSHIP, 1923-1934THE NEWERA AND THE WORLD DEPRESSION 35
Among the numerous explanations for the persistence of this
anomalous condition throughout the New Era prosperity some
deal with influences arising from the business and industrial de-
velopments of the period and others with factors inherent in
American trade unionism itself. That elements of both kinds had
a powerful 'if indeterminate effect on the position of organized
labor is clear from the records of the times.
In business and industry the period was marked by an immense
shift in the centers of economic activity. Although the history of
an. expanding economic system is replete with instances of the
decline of old industries and the rise of new, it is rare that
the rate of change in this respect has been so great as it was
in this brief spell of seven years. In manufacturing, the relatively
young automobile, chemical, and electrical industries contributed
a disproportionate share of the increase in output, employment
and payrolls. Outside manufacturing, substantial new sources of
employment were created in the rapidly expanding public utility
industries, throughout the distributive trades, and in the whole
range of services. With few exceptions the industries and .trades
comprising at this time the most prosperous sections of the
American economy had in thepast been least penetrated bytrade
unionism and retained their immunity to organization probably
through their capacity to pay high rates of wages and to offer
satisfactory conditions of employment.
At the same time a fair number of the large firms in nearly
all these industries pursued an aggressive labor policy. This con-
sisted not only in putting up barriers to the unionization of
employees, but also in the adoption of a variety of positive
measures calculated to raise standards of labor, to stress the
community of interest of employer and employee, and to win36EBB AND FLOW IN TRADE UNIONISM
the loyalty of members of the work-force. The familiar devices
of group insurance, employee-stock ownership, employee-savings
funds and the. like, though not originating in this period, were
the subjects of more extensive experimentation than at any pre-
vious time. The combined effect of these measures—aptly de-
scribed in the literature of the period as 'welfare capitalism'—
and of the relatively high weekly and annual earnings of the
employees of the large companies was probably to aggravate the
difficulties of the union organizer and to retard, if not to block,
the advance of organization.
Technical developments in industry at this time likewise acted,
in the opinion of observers and of union sympathizers, to render
more difficult the problems of extending organization into the
non-union industries and even of retaining membership in some
already unionized. The more general application of mass produc-
tion methods was held to have resulted in the destruction of many
established skills and crafts and to have caused a radical revision
in the prevailing ratios of skilled, semi-skilled, and unskilled
workingmen in The skilled and semi-skilled employees
thus shorn of their trades were converted into machine tenders
and unskilled common laborers. As a result of this process, the
craftsman, traditionally the source of an overwhelming majority
of union members in this country, became a rarity in the shops
of these new industries, and where he persisted his trade no
longer fitted the jurisdictional framework of existing unions.
Associated with the spread of mass production methods was a
marked acceleration in the rate of the application of invention
to the processes of industry and of the introduction of machinery.
These features of the changing technique of industry in the 1920's
revealed themselyes in extraordinary increases in the per capitaTHE NEW ERA AND THE WORLD DEPRESSION 37
output of labor. They were regarded, therefore, as having the
two-fold effect of throwing out of employment precisely those
workingmen most likely to join unions and to.become the nucleus
of organization, and of creating in good times the unusual phe-
nomenon of a surplus of labor. Current estimates of unemploy-
ment,, which, it was believed, showed the existence of a consider-
able volume in even the best years of this period, and the observed
decline in manufacturing and railroad employment after 1923
lent support to the belief in the existence of a substantial amount
of so-called technological unemployment and of a surplus of
labor.'
Alongside the growing and prosperous industries there was
another group which failed to participate to anything like the
same degree in the business activity and prosperity of the period.
Such industries as clothing, textiles and coal mining were, during
much of this era of general boom, often in considerable difficulty,
in part because of factors peculiar to each and in part because
of the competition of the products of new industries. For this
reason several of them, notably textiles and bituminous coal min-
ing, were universally regarded as 'sick' industries and their plight
became a matter of public concern. Both the clothing and coal
mining industries, moreover, had been strongly organized for
some time and the New England sections of the textile industry,
while not extensively unionized, had long been a fertile field for
unionizing activities. The unfavorable condition of this group
of industries serves to account for some of the obstacles in the
path of union recovery in the prosperous years from 1923 to 1929.
In these industries, further, the movement of centers of pro-
1Evidencebearing on mostofthe foregoing items is to be found in Frederick C.
Mills, Economic Tendencies (National Bureau of Economic Research, 1932).38EBB AND FLOW IN TRADE UNIONISM
duction from union to non-union areas weakened the unions both
directly by reducing the employment of their members and in-
directly by furnishing the industry with hitherto unused reserves
•of labor. This movement is strikingly exemplified in the rise of
the cotton textile industry in the South at the expense of the
North. In the soft coal industry, where the sources of supply are
scattered over an extensive area in Pennsylvania, Illinois, West
Virginia, Indiana, Ohio and other states, the policy of the miners
union and generally adverse economic conditions so far as the
coal business was concerned caused an equally radical change in
the centers of production. Similarly, non-union competition in
the manufacture of clothing resulted in a great shrinkage in
the volume of business in established union centers and its dis-
persion to the large unorganized cities, such as Baltimore and
Philadelphia, and to numerous small towns principally in New
York, New Jersey, Connecticut and Pennsylvania in the East, and
Illinois and Michigan in the West. During this period, conse-
quently, the effects on the American labor market of the policy
of drastic restriction of immigration were offset to some degree
by the opening of new industrial areas with their pools of cheaper
labor.
The structure and policy of American trade unions, both
friendly and hostile critics of the movement believed, were not
adapted to meeting the problems of organization arising from the
economic developments of the times. The craft union, the domi-
nant form of organization in the movement, was not in this view
suited to the requirements of unionization in industries in which
the customary skills and crafts had been modified by radical
changes in technology and management. The case for industrial
unionism, long a subject of controversy in this country, was inTHE NEW ERA AND THE WORLD DEPRESSION 39
these years more vigorously urged than before. The arguments
marshalled in its support and the practical measures proposed
for conciliating the differences between the advocates of craft
and industrial unionism forecast the beginnings of a change in
policy observable in the proceedings of the annual American
Federation of Labor convention held in San Francisco in October
1934. But at the 1935 convention, in Atlantic City, compromise
proposals for adjusting the conflicting jurisdictional claims of
these two types of labor organization proved unsatIsfactory to the
supporters of industrial unionism and led them to take steps in
defense of their position that perhaps mark the beginnings of
the most serious schism within the ranks of organized labor since
the struggle for supremacy, fifty years earlier, between the Amer-
ican Federation of Labor and the Knights of Labor.
The influence of these different factors on the constituent ele-
ments of the labor movement illustrates again the diversity of
experience among single unions and among groups of them.
Special circumstances either in the industry or in the union
produce results sometimes consonant with the prevailing trend
and at other times at sharp variance with it. The data bearing on
the fortunes of the, principal groups of unions, 192 3—29, are
presented in Table 13.
The unions in five of the thirteen groups here recorded in-
creased in membership. The building unions, which already had
more than three-quarters of a million members in 1923, regis-
tered the heaviest gain because of the great boom in both private
and public construction in this country during the years under
review. The miners and clothing workers unions together lost
approximately 330,000 members as a result of the unfavorable
state of their industries and the severe competition within them40EBB AND FLOW IN TRADE UNIONISM
TABLE 13
PRINCIPAL GROUPS OF UNIONS, CHANGES IN
MEMBERSHIP,
INCREASE
GROUP OF UNIONS AVERAGE ANNUAL OR DECREASE
MEMBERSHIP 1 OVERPERIOD
1923 1929
Mining, quarrying and oil 529,600270,800 —258,800
Building construction 789,500919,000 +129,500
Metals, machinery and shipbuilding257,100211,400—45,700
Textiles 37,30035,300 —2,000
Leather and shoes 55,90046,600—9,300
Clothing 295,200218,100 77,100
Lumber and woodworking 10,60013,200+ 2,600
Paper, printing and bookbinding 150,900162,500+ 11,600
Chemicals, clay, glass and stone 49,50037,900—11,600
Food, liquor and tobacco 76,30064,600 —11,700
Transportation and communication907,300892,200 —15,100
Public service 179,800246,600+ 66,800
Theatres and music 103,600135,000+ 31,400
1SeeAppendix, Table I.
between union and non-union employers. For the rest the losses
and gains were relatively slight. But the figures are striking evi-
dence of the extent to which the strength of all the important
unions, except those in the building trades. and possibly public
service and 'printing, failed to reflect the advantageous conditions
of one of the most prosperous periods in the history, of' this
country.
The reversal of the business trend in 1929 and the beginning
of the world depression, one of the severest and longest declines
in the annals of business fluctuations, initiated a further loss
in the next three and a half years of nearly one-half million
members. Great as this decline was it is surprising, in light of the
prevailing rate of unemployment in these years, that it was 'notTHE NEW ERA AND THE WORLD DEPRESSION 41
considerably greater. By early 1933 the number employed on
construction, on the railroads, and in manufacturing was barely
half of the work-force in 1929. That the loss was not larger can
be explained only by the fact that so much had already been
surrendered since 1920. Total union membership in the large
textile industry was only 35,000 in 1929. The mining group had
270,800 members in 1929, but a large part of these were in the
anthracite fields where the monopolistic state of the industry and
its highly localized condition in a small area in Pennsylvania
made it practically impossible to dislodge the union even in bad
times. In the bituminous fields unionism was by 1929 all but
wiped out.
If the American labor movement as a whole were to suffer in
proportion to the severity of the depression, the greatest losses
were bound to be encountered in those groups of unions where
organization in 1929 was still extensive; It is, in fact, the drop
in membership in the building and transportation groups, whose
combined membership in 1929 was more than half that of all
unions, that more than accounts for the net decline in total mem
bership in the depression. The reduction in the membership of
TABLE 14
BUILDING AND TRANSPORTATION UNIONS, CHANGES IN
MEMBERSHIP, 1929-1933
AVERAGE ANNUAL DECREASE
GROUP OF UNIONS MEMBERSHIP 1 OVERPERIOD
1929 1933
Building construction 919,000582,700 336,300
Transportation and communication 892,200609,300 282,900
Total, above groups 1,811,2001,192,000 619,200
Total, all unions 3,442,6002,973,000 469,600
1SeeAppendix, Table I.42EBB AND FLOW IN TRADE
the unions in these groups is compared in Table 14 with the net
loss of all unions during the same period.
But for the vicissitudes of these two groups of unions the up.
ward turn in total membership, which reached such a substantial
figure in 1934, might well have begun in 1933. Already in 1933,
as a reaction against considerable reductions in wages and the
widespread violation of labor standards and in response to new
and vigorous organizing campaigns, several groups had gathered
a considerable number of new members. While from 1932 to 1933
the transportation and building .unions lost more than 300,000
members, unions in the mining, leather, shoe and clothing indus-
tries and in public service gained 280,000. The large increase of
1934 was thus anticipated by the substantial improvement in the
position of some unions in 1933.

Ebb and Flow in Trade Unionism

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