This Day in Labor History: May 23, 1950

On May 23, 1950, the United Auto Workers and General Motors came to an agreement that became known as the Treaty of Detroit. This landmark agreement created labor peace in the auto industry but at the cost of the end of the the UAW’s attempt to gain greater control over production decisions and challenging the core tenets of American capitalism. In return, autoworkers would get record contracts with good pay and great benefits. This went far to set the terms of the peak of American unionism, but also helped lay the groundwork for its decline.

In the aftermath of World War II, the United Auto Workers was one of the nation’s strongest unions. After a raucous period of internal dissension, Walter Reuther emerged as the union’s undisputed leader, with his brothers Victor and Roy at his side. There would be plenty of opposition to Reuther, both from his left and his right, but he was the most prominent and important face of American labor in the 1950s and 1960s. Reuther was anti-communist, even though he had spent time in the Soviet Union in the 1930s, but he also saw a post-world nation where unions were at the center of every decision making process. That definitely included inside the factory, which we will discuss in a moment, but also in every policy issue in the nation. For example, Reuther had a guy working on American nuclear policy full time, which started with the UAW winning contracts to represent workers at Oak Ridge National Laboratory and moved into this person being one of the most important early anti-nuclear testing figures. The CIO had a lawyer committed full-time to conservation issues. There were a lot of examples of this sort of thing. Basically, Reuther and his allies wanted American unions to operate in coordination with the state and corporations, as they would in some western European nations.

To say the least, the automakers were not going to go along with this. American employers had always been more anti-union than their European counterparts and given their influence over the state, unions had a very hard time establishing themselves before the Great Depression. Roosevelt and the new structure of labor law changed that, but that in itself caused a lot of bitterness from employers. By 1950, they might accept the existence of unions, albeit begrudgingly, but they would do whatever they could to undermine those unions. That might be legislatively, through the Taft-Hartley Act for instance, or it might be at the bargaining table.

The late 1940s saw a series of battles between the UAW and the auto companies over what the postwar economy would look like, which happened in other industries as well. In November 1945, the UAW went on strike against General Motors, demanding a 30 percent raise without the company raising car prices. This was a response to the fact that workers had received a pretty raw deal during World War II, with prices rising faster than wages and the National War Labor Board fairly ineffective at solving these problems. The spurt of worker activism in 1945 and 1946, such as the Oakland General Strike, was much more motivated by bread and butter concerns such as this rather than any kind of leftist radicalism. They didn’t win that much, rather getting an 18.5 cents an hour that other unions, including the radical United Electric Workers (UE), had already agreed to, but it set the stage for further UAW militancy. A 1947 contract granted the UAW COLA (cost of living adjustment) arrangements, set by Bureau of Labor Statistics numbers. No more would the UAW have to negotiate just to make up for inflation. Everything would be a gain. Reuther pushed for pensions, vacation pay, and other unprecedented benefits as well.

With the economy booming by the late 40s, the UAW had a lot of leverage. So the companies began caving on these issues. In 1949, Ford simply agreed to cover the entire cost of pensions, just to avoid another strike. When Chrysler refused to cover all the money itself, Reuther led the UAW off the job for 104 days. Chrysler gave in after losing $1 billion.

But Reuther really wanted more. He wanted the UAW to be part of corporate production decisions. And he wanted the union to have access to the company books. The companies were not going to do that. They just flat out would not. To them, bitter still that had to even talk to unions, the idea of corporate leaders giving up complete control over corporate decisions was heresy. So in 1950, GM and the UAW came to an agreement that got Reuther to give up on those demands in exchange for a lot of money and consistent production. The key to this was that it was a 5-year contract. Fortune magazine labeled this deal the “Treaty of Detroit” and the name stuck. Ford and Chrysler soon agreed to similar long-term agreements. This was intended to end the strikes that had so roiled production. And it worked. Auto workers made unprecedented money, had a nice pension, took vacations, started owning homes. The work sucked in terms of turning humans into mindless automatons and foremen still greatly resented the unions. Things weren’t perfect. But the car companies made lots of money too. In the short term, the Treaty of Detroit was great for everyone because the vision was an expanding pie that would serve both workers and employers.

But in the long term, the end of militancy for the workers, with significant workplace democracy, frequent strikes, and a lot of challenging the precepts of capitalism, really undermined the ability of unions to adjust to new conditions. They became staid, top-down organizations with aging leadership and little to do with the workers on the shop floor. This was OK to some extent so long as the basic agreement of the Treaty of Detroit held up. Younger workers might hate their work lives–as Lordstown would show in 1972–but at least the workers were well-compensated for boring jobs. But once the auto companies started outsourcing a lot of work, closing factories and reopening them in the South or Mexico, etc., the unions simply were caught flat-footed and had no useful way to respond. The shopfloor of the auto plants remained awful–especially compared to Japanese auto companies which did not have unions, but did have worker input over production decisions. On American auto shopfloors, employers and foremen declared open, low-level, war on workers, reflecting the continued anger from them over unions having a presence at all and the unwillingness to accept any sort of power sharing in work relationships or culture. Finally, the UAW had to agree to terrible two-tiered contracts in the last recession, effectively demonstrating that the workers were now powerless in the face of employer demands.

This is the 270th post in this series. Previous posts are archived here.