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Labor and Social Security

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Several months ago, I was asked to write something for a labor group about the connections between organized labor and Social Security. I don’t think it was ideological enough for what they were wanting and in any case, I am pretty sure it never actually got used. But it was about as well-researched as I can do based on the secondary sources and I thought it would be worth reprinting here. And while I will be watching football, this will be something for those of you who do not like football to chew on a bit. There are probably some typos in here, so forgive them.

Introduction

In the now nearly century-long struggle to create and defend Social Security, American organized labor has played a complex role. The labor movement did not play a major role in the creation of the early American social welfare state. But the expansion of that welfare state helped spur the conditions for labor organizing. Labor has often extended the limited American welfare state through negotiating stronger agreements through collective bargaining. Often, they paired this with a relative indifference toward non-union workers, in part to incentivize the unionization of other workplaces for these benefits.

But as both the labor movement and the welfare state became stressed by conservative attacks in the late twentieth century, they became increasingly paired. Today, the labor movement has emerged as a major defender of the welfare state’s maintenance and expansion. Tying broader social welfare benefits to the organized labor movement has likely helped build the record support for it in polling. In an era of extreme income inequality, the fight for worker rights and for a broader welfare state are intertwined in the public imagination, in part because so many worker actions in the recent strike wave have revolved around a unionism for the public good.

The Early Labor Movement’s Opposition to Social Welfare Programs

While early attempts to unite all workers into a single union, such as the Knights of Labor, as well as attempted alliances between the urban and rural working classes such as the Populists, made demands of the federal government to engage in large-scale regulation, most of the organized labor movement was skeptical. The American Federation of Labor, founded in 1886, simply did not trust the federal government to keep its word on anything that would help the working class. Its belief in “pure and simple unionism,” a unionism that focused on the contract and avoided demands for large-scale political changes, was both a reaction to the repression overtly political unions had received in American history and a heartfelt belief that the proper role of unions was to negotiate worker power strictly through the union contract.

The Industrial Workers of the World had more or less the same beliefs about the connections between the working class and the government and while it eschewed the craft unionism of the AFL and distrusted union contracts generally, it also lacked any faith that the federal government would ever do anything useful for working Americans. The AFL encouraged  the government crushing the IWW in World War I and briefly began to explore working with the Wilson administration, which included work on some labor legislation such as the Seaman’s Act of 1915. But in the general repression of unions in the 1920s, the suspicious of any federal action again grew.

By the Great Depression, the AFL expressed an out-of-date mentality, a nineteenth century worldview well into the twentieth century. This meant opposition to nearly every proposal in a federal program to provide benefits to the working class. The AFL did not read the temperature of its own members. For example, Samuel Gompers had opposed early compulsory health insurance campaigns in California and New York in the 1910s. Doing so gave employers and the medical industry coverage to oppose it themselves. But Gompers and the employers both ignored that New York workers were wildly for it. The New York State Federation of Labor was a major lobbyist for the passage of the bill in that state, realizing the possibilities it gave to workers. But the AFL office helped squash it.[1]

The AFL finally had to acknowledge the demands of its members during the Great Depression, but only with great reluctance. The AFL had long opposed unemployment insurance. In 1916, Gompers testified before the House Labor Committee against unemployment insurance, calling it “socialist,” which for Gompers was the ultimate insult.

But the AFL severely underestimated the impact of the Great Depression. This position placed the AFL squarely in the sights of the left, as well as growing number of liberal writers who openly criticized the labor movement for not even seeming to understand the problems affecting American workers. More importantly, grassroots opposition to the AFL’s traditional stance grew within the federation itself. In 1930, the California state AFL unanimously voted to urge AFL leadership to back an unemployment insurance system that would include contributions from employers, workers, and taxpayers.

But the AFL leadership remained sharply opposed. Victor Olander of the Seaman’s Union responded to these demands at the AFL’s 1930 convention in Boston by asking whether it will “hew to the line in demanding a greater freedom for the working people of America, or whether liberty shall be sacrificed…to enable workers to obtain a small measure of unemployment relief under government supervision and control.” Moreover, he felt that unemployment insurance would undermine the workers’ movement, arguing it would “prevent the workers from joining in movements to increase wages and improve working conditions because of fears that they might thus sacrifice their eligibility to unemployment insurance.”

One of the major goals of early twentieth century reformers was to create some sort of old-age pension insurance program, which in 1935, became the Social Security Act. Early pension plans were inconsistently funded at best and covered few workers. Organized labor saw them with suspicion, as it feared their use to control worker behavior and undermine unionism. Union leaders also thought workers deserved money, not years later.[2] Gompers saw old-age pensions as something suspicious intellectuals did to “dominate the labor movement with their panaceas or destroy it.”[3]

But the AFL severely underestimated the impact of the Great Depression. Grassroots opposition to the AFL’s traditional stance grew within the federation itself. In 1930, the California state AFL unanimously voted to urge AFL leadership to back an unemployment insurance system that would include contributions from employers, workers, and taxpayers. But national AFL leadership remained sharply opposed in 1930. Victor Olander of the Seaman’s Union responded to these demands at the AFL 1930 convention in Boston by asking whether the AFL will “hew to the line in demanding a greater freedom for the working people of America, or whether liberty shall be sacrificed…to enable workers to obtain a small measure of unemployment relief under government supervision and control.” Moreover, he felt that unemployment insurance would undermine the workers’ movement, arguing it would “prevent the workers from joining in movements to increase wages and improve working conditions because of fears that they might thus sacrifice their eligibility to unemployment insurance.”

However, as the economy did not improve, the demands for federal intervention grew. The big shift was the Teamsters supporting it in a February 1931 article in the International Teamster that attacked the AFL position. The 1931 convention saw real gains for interventionists thanks to the Teamsters and shifting opinion within the United Mine Workers. Unemployment insurance was defeated again in 1931, but the winter of 1932 destroyed the voluntarist side of the labor movement. Union leaders could no longer explain to millions of unemployed workers, including their own members, that they opposed unemployment insurance for abstract reasons. Interestingly, even employers approached the AFL saying something needed be done, with General Electric’s Gerald Swope meeting with William Green to support an unemployment compensation system that would include employee contributions instead of the employer-only contributions industry feared.

Yet even here, Green remained to the right of industry. But by April 1932, Green read the cards and knew he had to change his position. In 1932, the AFL Executive Council met in Atlantic City and passed a resolution to create a pro-unemployment insurance policy that ensured federal rather than state control and that would safeguard workers’ rights to maintain union membership. At this point, there were 11 million Americans out of work. The final proposal wanted a federal system but also supplemental state systems. Private insurance companies would play no role. The rump of voluntarist leaders continued to fight the proposal, but with Green’s support, its passage was assured and it passed.[4]

Social Security and the CIO

It took the labor uprisings of 1934 to create the political space for both Social Security and the National Labor Relations Act, which both became law the next year. This uprising had multiple sources. Workers jumped on the somewhat throwaway line in the 1933 National Industrial Recovery Act stating that workers had the right to union. Strikes exploded the next year. Four enormous rebellions—Minneapolis teamsters, Toledo autoworkers, San Francisco longshoremen, and southern and New England textile workers—and many smaller strikes shook the nation to its core. Workers wanted change and they wanted the government to facilitate that change. Moreover, the economic devastation of the Depression led to new ideas percolating in the working classes, including increasingly popular programs to provide versions of welfare for seniors and the unemployed. That included Frances Townsend’s monthly pension plan for the elderly, Huey Long’s “Share the Wealth” clubs, and Upton Sinclair’s “End Poverty in California” program.[5]

Rank and file workers themselves demanded new relief benefits from the government, whether their unions approved of them or not. For example, Edward J. Newman, a thirty year veteran of the shop floors for U.S. Steel and International Harvester in Chicago, wrote to President Roosevelt for help securing “the food, coal, and cloathing and the necessity of life which wea re deserving of as any good Americans citizen…I cannot see where Americans comes first you say this in your speeches why dont we Americans get what we are intitled to?”[6] The passage of the Social Security Act and the National Labor Relations Act in 1935 intended to provide those entitlements, both in terms of creating some kind of guaranteed social welfare based on work histories and by allowing workers to form unions in a government mediated fashion that would allow them to build the income necessary for a dignified worklife and retirement.

That same year, 1935, the CIO formed. While we should not overstate its immediate impact on social policy (after all, it was not until World War II that the new federation even had stable internal finances), it provided an important new voice on the relationship between the labor movement and the federal government. The Roosevelt administration was influenced by John L. Lewis’ attempts to provide social security plans for the elderly and disabled in the coal industry. Moreover, this new wing of the labor movement almost completely abandoned the voluntarism of the AFL and made strong demands of the federal government for new legislation in alliance with unions that would create comprehensive benefits for the American working class. The first real impact this would have was through the Fair Labor Standards Act in 1938, but through World War II, labor’s influence within the federal government grew to new heights.

Leading Democrats such as President Roosevelt and Secretary of Labor Frances Perkins had long desired some sort of Social Security plan. The idea of “security” writ large was central to the New Deal, with government using its power to promote collective goods, hopefully with private support but without it if necessary. In the case of the Social Security Act, the insurance industry especially worked with the administration and helped shape the bill.[7]

With the passage of the Social Security Act, workers felt empowered that they, along with the Democratic Party, could work together to fix the nation. A federal old age benefit immediately meant workers could stop contributing their meager incomes to private insurance companies or ethnic benefit societies and spend it on other necessities, even though the SSA would not pay benefits for several years. To quote the historian Lizabeth Cohen, “By voting Democratic and supporting the New Deal, many workers felt that they were affirming rather than denying their class statues.”[8]

Between 1935 and 1945, the labor movement exploded in size. The New Deal state was hardly uniformly liberal. It was a complex coalition that ranged from northern Black voters to far-right white supremacists in the South. Moreover, Franklin Delano Roosevelt had a limited commitment to liberalism. It was the constant push by workers, both inside and outside unions, that created the political space for that liberalism. Whether through the strike or the ballot box, the empowered workers invigorated the nation’s leaders to act.[9]

What the National Labor Relations Act and then the CIO provided was a structure for class victory. Acts such as Social Security spurred organizing precisely because they bolstered a belief in the state to get things done for the working class. If contemporary unions were behind the times, as many AFL unions were, then the new CIO unions would be the agents by which workers reshaped their lives. The CIO embraced Social Security and other parts of the new welfare state. The mass organizing of the auto, steel, and rubber workers, in addition to the dozens of smaller industries from meatpacking to canneries that unionized under the CIO, brought millions of people, not only union members but also their families, into a newly energized liberal state.

The new CIO became a massive defender of the New Deal. It did not take long for conservatives to regain a great deal of their power in America and by late 1938, the Roosevelt administration spent much more time defending its programs than creating or expanding them. Although tensions were rising between CIO chief John L. Lewis and Roosevelt, Lewis was publicly and privately a major voice in defending Social Security and calling for its expansion. In fact, much of Lewis’ growing anger with Roosevelt came from his feeling that the administration was too defensive. He called for a massive expansion of Social Security, as well as vastly expanded public housing programs and a more robust jobs program, as well as their foreign policy differences as the nation moved toward World War II.[10]

From the beginning of the CIO, organized labor played a critical role in building Social Security. Its experts worked with the policy people to hone the program. Its leaders testified before Congress and lobbied politicians. Its members came to the ballot box based on politicians who would support the program. SSA workers gave organized labor ideas about how to expand the program, which as government workers they could not lobby for themselves. The AFL was far less sure about Social Security, typically worried it would get in the way of what its unions could negotiate on their own and mistrustful of the government. It was not until 1943 that the AFL became involved with Social Security when the Wagner-Murray-Dingell bill proposed to expand it to include disability and medical care.[11]

CIO-affiliated unions also played an important role in the unsuccessful fight to expand the welfare state into medical insurance. The United Auto Workers and Steel Workers Organizing Committee soon became central to these conversations, often through their female workers and rank and file members such as SWOC’s Florence Greenberg, who made her claims to authority as representing the families of union workers.[12] Even the AFL began pushing for health insurance as part of its response to the CIO threat, though more about supporting group health plans than nationalized health insurance.[13] Some unions, such as the Transport Workers Union in New York and the Retail Food Employees Union even began experimenting with their own health care plans they offered for free to members by the late 30s.[14]

World War II put major social legislation on the back burner, but it also solidified the role of organized labor in the Democratic Party as CIO leaders such as Sidney Hillman became close advisors of the Roosevelt administration and the administration sought to limit strikes during the war by creating maintenance of membership contracts that created stable union membership and finances during the war, in exchange for a no-strike pledge from unions. Organized labor planned to come out of the war with a revived drive to expand the welfare state.

Post-World War II and the Union Contract Welfare State

After World War II, both the CIO and the AFL played an active role in promoting the expansion of Social Security and other programs. They saw labor’s involvement in the Democratic Party as a lane toward expanding the welfare state for all Americans. The older politics of individualism and pure and simple unionism were effectively dead. Nearly everyone in the labor movement, including long time rivals George Meany and Walter Reuther, fought for greater government involvement in the economy, including expansions of workers’ compensation, health care, and Social Security.[15] However, the right-wing resurgence at the end of the war and the anti-communist provisions of the 1947 Taft-Hartley Act severely restricted the future expansion of a union-supported robust public welfare state. Attempts to create national health care plans, supported by many unions after the war, failed in the face of conservative and medical professional opposition.

Instead, unions fought for so-called “fringe benefits” in their contracts and left the fundamentals of the welfare state to the government. That often included pensions, which were additional to Social Security. The 1949 Supreme Court decision ruling that non-wage matters were subject to collective bargaining opened the door to greater victories on these fronts by unions. But they were a return to unions only bargaining for their own members and doing little to create larger emancipation for the working class.

Now, for UAW president Walter Reuther and other social democratic unionists, the fight for private benefits had a hoped for second effect. They wanted the price to the companies to be so high that corporate America would acquiesce to a real social welfare program at the federal level that high corporate and individual taxes would fund. But that did not happen. Instead, by the late 40s, management and union simply fought over benefits. Half of strikes in late 1949 were over benefits in contracts.[16] With Reuther seeing that his hoped for social democracy would not succeed, the Treaty of Detroit in 1950 called a truce to this strike wave. Corporate America would continue to rule their domains with only limited worker interference and a broad social welfare state led by labor would not come to the United States.[17]

Moreover, when unions decided to promote pensions for their own workers, it fit into corporate America’s agenda to limit Social Security. In the years after World War II, a newly emboldened business community managed to roll back the parts of New Deal labor law it hated most through the 1947 Taft-Hartley Act and it took aim at the rest of the New Deal state. Although by the 1950s, much of the business community accepted that Social Security had helped stabilize the American economy, it still wanted to roll parts back and prioritize corporate welfare once again. But the move toward private pensions undermined business’ distrust in Social Security and by 1950, the Chamber of Commerce and the National Association of Manufacturers supported a slight expansion to the program.[18]

By the early 50s as well, the energy of the 1930s was largely spent. With unions no longer organizing much and not leading the broader fight for welfare benefits and with unionized workers now living much better lives than before 1935, the impetus to radically change American dissipated. The AFL and CIO merged and became an often staid movement, more concerned about protecting their own gains than continuing to organize. Unfortunately, American unions did not learn the lessons that big government programs can galvanize the working class. With unions negotiating their own health care, organized labor did not unite around a national health care program, from the first articulation of this in the Truman administration through Bill Clinton’s attempts to create one in the 1990s.[19]

The Decline of the Labor Movement and Maybe Its Renewal

The decline of the labor movement is well-documented. Union membership peaked in the mid 1950s, slowly declined over the next twenty years as unions spent less money on organizing, and then collapsed after the mid 70s due to deindustrialization, factory closure, and the revived corporate lobby targeting unions, especially after Ronald Reagan fired the air traffic controllers in 1981.

The decline in the labor movement not coincidentally happened while conservatives decimated the American welfare state. The rise of neoliberalism under Carter and then Reagan gave advocates of deregulation and privatization the upper hand in political battles. Union membership plummeted and the only organized voices for working class Americans lost their resources to fight these battles. Bill Clinton’s aborted health care plan in 1993 demonstrated the weakness of forces to build a stronger welfare state. Clinton’s pivot to decimate Aid to Families with Dependent Children through so-called “welfare reform” demonstrated that both parties had a new commitment to forcing people out of the welfare state and onto the work rolls.

Social Security and Medicare have remained third rails in American politics though. George W. Bush’s second term goal to privatize Social Security completely failed and while contemporary politicians such as Rick Scott do bring this up, it has very little political support. The beginnings of a backlash to decimating the welfare state has not necessarily helped unions grow, but it did frame the recent rise of a more organized left in the United States over the past fifteen years.

The Great Recession in 2008 marked the moment of neoliberalism’s high tide and the beginnings of the present fights for greater economic justice. Fifteen years on, we are still having these fights, but we have seen the rise of successful coalitions that include unions that have made huge gains on minimum wages and have built cross-racial alliances that continue to impact politics at all levels today.[20] We have also seen the largest protests against injustice since the early 1970s, with noted fights over the decimation of public sector unions in Wisconsin, Occupy Wall Street, the Fight for $15, and against police violence, Trump’s immigration Muslim immigration ban, and the sexism and racism endemic in American life.[21]

In recent years, with unprecedented income inequality, this has led to record support for unions. Organized labor has realized that supporting the common good, including an expanded welfare state, builds support in the public mind. The recent wave of successful teacher strikes going back a decade now and the widespread support and excitement over union efforts at Starbucks and Amazon demonstrate the possibilities for labor today. A big reason for this is the social justice unionism of many modern organizations. Teachers are not just striking for higher wages. They strike for air conditioning in classrooms, nurses for sick kids, playgrounds. And when they do strike for wages, they can easily make the case that parents should support them. After all, what would you like your kid’s teacher to do after hours, prep for class, grade, and sleep on one hand or work a second job to make ends meet on the other and then not be prepared to teach the next day? It has proven effective.

Today, the labor movement remains at its lowest rate of organized workers since the 1920s. But it has and increasingly must take on the role as the avatar of the fight for better conditions for all Americans. American Federation of Government Employees members at the Social Security Agency now call for vast increases in agency funding.[22] Whether it is fights for paid family leave, expansions of Social Security, saving Medicaid from Republican budget cuts, or finally creating a health care system that actually serves Americans instead of the medical industry, organized labor has come a long ways since the 1930s. Now, the hopes of millions of America rest on its effective advocacy around these issues. Let’s hope that it can deliver.


[1] Roy Lubove, The Struggle for Social Security, 1900-1935 (Cambridge: Harvard University Press, 1968), 82-86.

[2] Lubove, The Struggle for Social Security, 1900-1935, 113-43.

[3] The previous three paragraphs originate from Lubove, The Struggle for Social Security, 1900-1935, 15.

[4] Irving Bernstein, The Lean Years: A History of the American Worker, 1920-1933, 345-57

[5] James R. Green, The World of the Worker: Labor in Twentieth-Century America (New York: Hill and Wang, 1980). 147-48.

[6] Quoted in Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919-1939 (New York: Cambridge University Press, 1990), 270.

[7] Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State (Princeton: Princeton University Press, 2010), 78-115.

[8] Cohen, Making a New Deal, 272, 287.

[9] Cohen, Making a New Deal, 291-321.

[10] Melvyn Dubofsky and Warren Van Tine, John L. Lewis: A Biography (New York: Quadrangle, 1977), 326-30.

[11] Sylvester J. Schieber and John B. Shoven, The Real Deal: The History and Future of Social Security (New Haven: Yale University Press, 1999), 129-34.

[12] Klein, For All These Rights, 144.

[13] Klein, For All These Rights, 149-50.

[14] Klein, For All These Rights, 152-61.

[15] Robert Zieger and Gilbert J. Gall, American Workers American Unions: The Twentieth Century 3rd ed., (Baltimore: The Johns Hopkins University Press, 2002), 165.

[16] Nelson Lichtenstein, The Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Labor (New York: Basic Books, 1995), 282.

[17] Lichtenstein, The Most Dangerous Man in Detroit, 271-98.

[18] Sanford M. Jacoby, Modern Manors: Welfare Capitalism since the New Deal (Princeton: Princeton University Press, 206-19.

[19] Marie Gottschalk, The Shadow Welfare State: Labor, Business, and the Politics of Health Care in the United States (Ithaca: Cornell University Press, 2018).

[20] Marc Doussard and Greg Schrock, Justice at Work: The Rise of Economic and Racial Justice Coalitions in Cities (Minneapolis: University of Minnesota Press, 2022).

[21] Sarah Jaffe, Necessary Trouble: Americans in Revolt (New York: Nation Books, 2016).

[22] https://www.govexec.com/workforce/2022/10/social-security-union-165-billion-funding-cooperation-management/378772/

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