There is a union difference: mortality rates from COVID-19 are lower in unionized nursing homes

We need strong unions, all of us.  Tragically, even during the pandemic, businesses continue to aggressively resist worker attempts at unionization. And recent decisions by the NLRB only add to worker difficulties.

Here is one example of what is at stake: a recently published study of New York State nursing homes found that mortality rates from COVID-19 were 30 percent lower in unionized nursing homes than in facilities without health care worker unions.  By gaining better protection for themselves, unionized workers were also able to better protect the health of those they served.

Although the pandemic makes organizing and solidarity actions more difficult, it is essential that we find effective ways to support worker struggles for strong unions.

Work during the pandemic

Many workers, especially those now celebrated as “essential” or “frontline,” don’t feel safe at work, and for good reason.  Many have been denied needed personal protective equipment (PPE) or even information about the health status of their coworkers.

While surveys find that many employers have implemented new workplace cleaning procedures, they also find that a large percentage of workers continue to work without access to PPE, especially masks and gloves.  Strikingly, according to one study,

If [worker] access to PPE was limited in our data, policies mandating that workers wear protective gear were even more uncommon. Around a third of workers in restaurants, fast food, coffee shops, and hotels and motels reported requirements to wear gloves. This share was dramatically lower (around 12%) in big-box stores, department stores, retail stores, grocery stores, and pharmacies. The share of workers required to wear gloves was even lower in warehouses, fulfillment centers, and in delivery. Mask requirements were vanishingly uncommon across workplaces, at between 2% and 7% in convenience stores, coffee shops, fast food, restaurants, grocery stores, retail, department stores, and big-box stores. Just 12% of those in fulfillment centers reported a mask requirement, which was significantly higher than the 5% of warehouse and delivery workers.

Adding to the danger, many companies are aggressively trying to keep information about worker infections secret from coworkers and the public.  As a Bloomberg Law post explains:

U.S. businesses have been on a silencing spree. Hundreds of U.S. employers across a wide range of industries have told workers not to share information about Covid-19 cases or even raise concerns about the virus, or have retaliated against workers for doing those things, according to workplace complaints filed with the NLRB and the Occupational Safety and Health Administration (OSHA).

Workers at Amazon.com, Cargill, McDonald’s, and Target say they were told to keep Covid cases quiet. The same sort of gagging has been alleged in OSHA complaints against Smithfield Foods, Urban Outfitters, and General Electric. In an email viewed by Bloomberg Businessweek, Delta Air Lines told its 25,000 flight attendants to “please refrain from notifying other crew members on your own” about any Covid symptoms or diagnoses. At Recreational Equipment Inc., an employee texted colleagues to say he’d tested positive and that “I was told not to tell anybody” and “to not post or say anything on social media.”

These policies may help the corporate bottom line, but they endanger workers and those they serve, and thereby help to spread the pandemic.

Without unions, workers have limited ways to force their employers to create a safe work environment.  One is to file a complaint with the Occupational Safety and Health Administration.  And, despite fears of retaliation, many workers have done just that.  As a Brookings blog post reports:

Using data from the Occupational Safety and Health Administration (OSHA), [the figure below] shows the cumulative number of COVID-19 related workplace safety complaints. Between April 20 and August 20, total COVID-19 related workplace safety complaints rose over 350 percent.

Unfortunately, these complaints have achieved little.  According to the Bloomberg Law post,Many thousands of OSHA complaints about coronavirus safety issues have yielded citations against just two companies—a health-care company and a nursing home—totaling about $47,000.” OSHA has still not issued any regulations that address the pandemic.

OSHA rarely sends out inspectors to investigate complaints.  The Bloomberg Law post describes one case in which a mechanic at Maid-Rite, a company that supplies frozen meat products to military bases, nursing homes, and schools, wrote to OSHA describing unsafe conditions:

The mechanic says OSHA called him to say it would be sending Maid-Rite a letter instead of coming to inspect the plant, and that was the last he ever heard from the agency about his complaint. Letters between OSHA and Maid-Rite show OSHA told Maid-Rite in April to investigate worker allegations itself, and Maid-Rite wrote back saying that it was providing and mandating masks and that 6-foot distancing sometimes wasn’t feasible.

No changes were made and so other workers followed up with more complaints over the following weeks, leading OSHA to finally send an inspector to the plant.  However,

in a break from typical protocol, [the inspector] gave the company a heads-up. “OSHA is here, so do everything right!” a supervisor told staff during the inspection, the mechanic later wrote in an affidavit. Fifteen minutes later, the supervisor returned to say “Never mind,” because the visit was over, the mechanic wrote: “As soon as OSHA left, everything went exactly back to the way it was.”

Unions can help

Unions are far from perfect, but they are one of the most effective means workers have to protect their interests, and by extension those they serve.  That point is highlighted by the results of the above noted study on COVID-19 deaths in nursing homes which found that mortality rates from COVID-19 are lower in unionized nursing homes.  This is significant because approximately 43% of all reported COVID-19 deaths in the United States have occurred in nursing homes.

The three authors–Adam Dean, Atheendar Venkataramani, and Simeon Kimmel–focused on nursing homes in New York State, which has had over 6,500 COVID-19 nursing home deaths, second only to New Jersey.  The authors built a model that attempted to explain the variation in confirmed COVID-19 deaths at these New York State nursing homes with an eye to determining if the presence of a health care union made a difference.  They used “proprietary data from 1199SEIU United Healthcare Workers East, the International Brotherhood of Teamsters, and the Communication Workers of America (CWA), as well as publicly-available data from the New York State Nurses Association (NYSNA) to determine if a labor union represented health care workers in each facility.”

Their cross-section regression model also included a range of nonunion variables as possible causes for the variation.  These variables included: whether or not a facility had an adequate supply of PPEs, including masks, eye shields, gowns, gloves, and hand sanitizer; the average age of residents; Resource Utilization Group Nursing Case Mix Index of resident acuity, which classifies patient care needs based on diagnosis, proposed treatment, and level of needed assistance with activities of daily living; occupancy rates; staff-hours-to resident-days ratios for RN, CNA, and licensed practical nurses; percent of residents whose primary support comes from Medicaid or Medicare; Overall 5-Star Rating; whether the nursing home was part of a chain; whether the nursing home was for-profit or non-profit; and county-level data on confirmed cases of COVID-19 and population.

Their main regression result, confirmed by several sensitivity tests, was that, taking all the other variables into account, the presence of a health care labor union was associated with a 30% relative decrease in the COVID-19 mortality rate compared to facilities without a health care labor union.

In examining possible reasons for this result, they ran two other regressions.  One found that the presence of a health care labor union was associated with a 13.8% relative increase in access to N95 masks and a 7.3% relative increase in access to eye shields. Labor union status was not a significant predictor of access to other types of PPE.  The other regression found that the presence of a health care labor union was associated with a 42% relative decrease in the COVID-19 infection rate.

The struggle ahead

There is good reason to believe that the union benefits found by Dean, Venkataramani, and Kimmel in their study are not limited to New York State nursing homes.  Unions are one of the most effective ways for workers to ensure access to critical PPEs and implementation of safety regulations, things that as noted above workers desperately seek.

But of course, corporations don’t want to pay the higher costs that come with unionization.  They prefer the status quo, where working people are forced to pay far greater costs, individually and collectively.  And even in the midst of the pandemic, the NLRB continues to pass new rules making it ever more difficult for workers to unionize.

Workers are increasingly coming to understand that they cannot rely on OSHA or the NLRB to defend their interests. Thus, growing numbers of workers are bravely engaging in direct action, risking their jobs, to fight for their rights and the safety of their co-workers.  We need to find ways to support them and improve the broader environment for organizing and unionizing. A recent Gallup poll offers one hopeful sign: approval of unions continues to grow.

Times remain hard, especially for low-wage workers

The current economic crisis has hit workers hard.  Unemployment rates remain high, with total weekly initial claims for unemployment insurance benefits continuing to grow.  Recent reports of a sharp rise in median earnings for full-time workers appear to complicate the picture.  However, a more detailed examination of worker earnings and employment not only helps to sharpen our understanding of the devastating nature of the current crisis for working people, but makes clear that low wage workers are the hardest hit.

Earnings growth

The labor department recently published data showing wages skyrocketing.  As Federal Reserve Bank of San Francisco researchers reported in a recent Economic Letter:

Recent data show that median usual weekly earnings of full-time workers have grown 10.4 percent over the four quarters preceding the second quarter of 2020. This is a 6.4 percentage point acceleration compared with the fourth quarter of 2019. The median usual weekly earnings measure that we focus on here is not an exception. Other measures of wage growth—like average hourly earnings and compensation per hour—show similar spikes.

The spike can be seen in the movement in the blue line in the figure below (which is taken from the Economic Letter).  As we can see, nominal average weekly earnings for full-time employees grew by 10.4 percent between spring of 2019 and spring of 2020, the fastest rate of growth in nearly 40 years.

While this earnings trend suggests a strong labor market, it is, as the researchers correctly note, highly misleading.  The reason is that this measure has been distorted by the massive loss of jobs disproportionally suffered by low wage full-time workers.  The decline in the number of full-time low wage workers has been large enough to change the earnings distribution, leading to a steadily growing value for the median earnings of the remaining full-time workers.

In other words, the spike in median earnings is not the result of currently employed workers enjoying significant wage gains.  This becomes clear when we adjust for the decline in employment by only considering the nominal median earnings of those workers that remained employed full-time throughout the past year.  As the downward movement in the green line in the above figure shows, the gains in medium earnings for those continuously employed has been small and falling.

Disproportionate job losses for full-time low-wage workers

The researchers confirmed that it was low-wage workers that have disproportionately suffered job losses by calculating the earnings distribution of the full-time workers forced to exit to, in the words of the researchers, “nonemployment” – by which they mean either unemployment or nonparticipation — each month over the past two decades.

They began by estimating the yearly share of full-time worker exits to unemployment and nonparticipation.  As we see in the figure above, in non-recession years, about 7 percent of those with full-time jobs become nonemployed each year—2 percent become unemployed and 5 percent leave the labor force.  During the Great Recession, nonemployment peaked in August 2009 at 11 percent, with most of the increase driven by a sharp rise in unemployment (as shown by the big bump in green area).  There was little change in the rate at which full-time workers dropped out of the labor force.

The severity of our current crisis is captured by the dramatic rise in the share of workers exiting full-time employment beginning in March 2020.  Exits to nonemployment peaked in May 2020 at 17 percent, with 9 percent moving to unemployment and 8 percent to nonparticipation. Not only is this almost twice as high as during the Great Recession, the extremely challenging state of the labor market is underscored by the fact that the share of nonemployed who chose nonparticipation and thus exit from the labor market was almost as great as the share who remained part of the labor force and classified as unemployed.

The next figure shows the share of workers exiting to nonemployment by their position in the wage distribution. The three areas depict exits by workers in the lowest quarter of the earnings distribution, the second lowest quarter, and the top half, respectively.

As the researchers explain,

In the months following the onset of COVID-19, workers in the bottom 25 percent of the earnings distribution made up about half of the exits to nonemployment. In contrast, the top half of the distribution only accounted for about a third of the exits. . . .

Therefore, the recent spike in aggregate nominal wage growth does not reflect the benefits of pay raises and a strong labor market for workers. Instead, it is the result of the high levels of job loss among low-income workers since the start of the pandemic.

Tragically, low wage workers have not only suffered disproportional job losses during this pandemic. Those who remain employed are increasingly being victimized by wage theft.  As Igor Derysh, writing in Salon, notes: “A paper released this week by the . . . Washington Center for Equitable Growth found that minimum wage violations have roughly doubled compared to the period before the pandemic.”

These are indeed hard times for almost all working people but, perhaps not surprisingly, those at the bottom of the wage distribution are suffering the most.

Big tech support for racial justice is more talk than action

In the month following the May 25th death of George Floyd, the largest technology companies collectively pledged more than a billion dollars in support of racial justice.  Sounds like a lot of money, but for these companies it is pocket change.  And, despite the accompanying corporate statements of support for structural change to fight racism, there is little indication that they plan to back up their words with meaningful action.

Big tech is riding high

In early June Apple announced the launch of a $100 million Racial Equity and Justice Initiative to “promote racial equality for people of color with a focus on ‘education, economic equality, and criminal justice reform.’”  But, as Jay Peters, writing in The Verge, makes clear, the amount doesn’t sound so impressive when you consider Apple’s earnings.

Apple is now the world’s most valuable company.  Apple made $6.3 million in profit every single hour in 2019, which means that its initiative cost it about 16 hours of business on one day of the year.

And despite the current recession, big tech appears set to earn more this year than last. “Right now, it’s big tech’s world and everyone else is paying rent,” said Wedbush Securities analyst Dan Ives. “They are consumer staples now and this crisis has bought their growth forward by about two years.”

Combined, Amazon, Apple, Alphabet and Facebook reported revenue of $206 billion and net income of $29 billion in the three months ending in late June 2020.  As the New York Times summarized:

Amazon’s sales were up 40 percent from a year ago and its profit doubled. Facebook’s profit jumped 98 percent. Even though the pandemic shuttered many of its stores, Apple increased sales of all its products in every part of the world and posted $11.25 billion in profit. Advertising revenue dropped for Alphabet, the laggard of the bunch, but it still did better than Wall Street had expected.

Very modest giving

To put tech company racial justice donations in perspective, Peters calculated what the equivalent giving would be for person earning the median U.S. salary of $63,179.  The calculation was based on the size of the corporate donation relative to company revenue, not profits, since the $63,179 is the median worker’s salary and not disposable income.  As the following figure shows, recent corporate donations are indeed quite modest.

If someone earning the median U.S. salary donated the same percentage of their salary to racial justice as Amazon, that person would be contributing a yearly amount of just $4.17.  The median salary annual equivalent donation would also be under $5 for Dell, Intel, Disney, and Verizon. Even for Facebook, the biggest giver, the equivalent would only be $100.  It would take Dell 6 minutes to recuperate its pledge, Intel 35 minutes, and Disney and Verizon less than 5 hours.

And as highlighted above, the reason for such modest giving is not low profits.  The figure below shows the pledged amount for racial justice by major U.S. tech companies and their annual profit.

As Peters commented:

Frankly, a lot of these contributions seem even tinier when you consider how much these companies tend to spend on other things. AT&T reportedly spent $73 million on a single campaign to advertise its fake 5G network, which is more than three times its commitment to Black lives. At $7 to $11 million per episode, Amazon would have been hard-pressed to produce three episodes of its alternate reality Nazi-fighting show The Man in the High Castle with the money it’s pledged since Floyd’s death. Microsoft spent over $100 million trying to reinvent the Xbox gamepad only to wind up nearly all the way back where it started.

Money isn’t everything

Of course, there are other things companies can do to promote racial equality. One is to change their hiring policies.  For example, the share of Black employees is just 3 percent at Google and 9 percent at Apple.  And beyond increasing numbers, it is essential that tech companies also reconsider how they organize and compensate the work of their Black employees.

An even more important action tech companies could take would be to listen to their workers and BIPOC leaders and reconsider the nature of the goods and services they choose to develop and sell.  Johana Bhuiyan, writing in the LA Times, highlights the contrast between corporate statements in opposition to racism and corporate profit-driven production priorities to illustrate what is at stake.  Here is her portrait of Amazon:

What [Amazon] said: “The inequitable and brutal treatment of black people in our country must stop. Together we stand in solidarity with the black community — our employees, customers, and partners — in the fight against systemic racism and injustice.”

What the record shows: At the center of the protests demanding justice for Floyd are calls for police reform and an end to racist policing. Amazon has several contracts with law enforcement agencies. Of particular note, Ring, Amazon’s home surveillance company, has partnerships with at least 200 police departments across the country, as Motherboard has reported. As part of its contract with some police departments, Ring incentivized police to encourage citizens to adopt the company’s neighborhood watch app — which has reported issues with racial profiling. After reviewing more than 100 posts on the app, Motherboard found that the majority of people who users deemed “suspicious” were people of color.

“Given the reality of police violence, with impunity, impacting primarily people of color in the United States, these kinds of acts threaten the lives of third parties who are simply, in some cases, doing their jobs or living in their own neighborhoods,” Shahid Buttar, director of grass-roots advocacy for the Electronic Frontier Foundation, told Motherboard.

Amazon also licenses facial-recognition software, called Rekognition, to law enforcement agencies. A study by the MIT Media Lab found that the software performed worse at identifying the gender of individuals with dark faces, although Amazon contested the validity of the findings. Other facial-recognition algorithms have struggled to accurately identify non-white faces.

 

We shouldn’t forget that it is the strength of the Black Lives Matter movement that pushed corporations to project themselves as supporters of racial justice and make their well-publicized donations.  And it is better to have them promoting racial equality than opposing it.  But to this point, corporate actions remain largely limited to public relations statements.  Since real change will require a fundamental rethinking of the organization and aims of corporate production, we shouldn’t count on CEOs going beyond that in any meaningful sense in the near future.  At the same time, as the movement for change grows both inside leading tech companies and in the broader community, we shouldn’t discount the possibility of winning meaningful shifts in corporate policy.

 

The pandemic, technology, and remote work: the corporate push for greater control over workers’ lives

The U.S. economy is undergoing a major transformation largely driven by the coronavirus pandemic.  One hallmark of that transformation is the explosion in what is called “remote” work.

In 2017, according to a Census Bureau study, only 3 percent of full-time workers in the United States reported that they primarily worked from home.  Today, in response to the pandemic, some 42 percent of the U.S. labor force is working from home—with only 26 percent still working on-site.

Corporate leaders appear to have embraced this shift to at-home work and are pursing the use of new technologies designed to increase managerial control over the remote work process. The response of workers to these changes is still evolving.

The pandemic and the corporate embrace of at-home work

Although most corporations initially viewed the shift to remote work as a necessary short-term response to government mandated closures and consumer and worker health concerns, a number are now planning for a permanent, post-pandemic increase in its use. As the New York Times reports:

Facebook expects up to half its workers to be remote as soon as 2025. The chief executive of Shopify, a Canadian e-commerce company that employs 5,000 people, tweeted in May that most of them “will permanently work remotely. Office centricity is over.” Walmart’s tech chief told his workers that “working virtually will be the new normal.”

Quora, a question-and-answer site, said last week that “all existing employees can immediately relocate to anywhere we can legally employ them.” Those who do not want to go anywhere can still use the Silicon Valley headquarters, which would become a co-working space.

And these large firms are not alone.  As Luke Savage, writing in Jacobin, notes:

With the lockdown still only a few weeks old, a survey of company CFOs by PricewaterhouseCoopers found that almost 30 percent were already planning to reduce their business’s physical footprint, with an April study by Gartner suggesting that some three-quarters were planning to shift at least some employees to remote work on a permanent basis.

It’s a different world

Of course, this is not the first time that corporations have embraced remote work.  A number—including such major companies as IBM, Aetna, Best Buy, Bank of America, Yahoo, AT&T and Reddit—actively promoted telecommuting as recently as 15 years ago.  But they all eventually reversed course, concluding that employee productivity, loyalty, and innovation suffered.  Tech companies, in particular, responded by building expansive and expensive new facilities that offered a range of free on-site benefits such as communal cafeterias and gyms to keep employees motivated and loyal.

Because of this history, some analysts doubt that the current corporate celebration of remote work will last long.  But there is reason to believe that this time is different.  Certainly, early indications are that at-home workers remain focused and hard at work.  Savage cites a Globe and Mail article that leads with this head: “Employers used to believe remote workers were happier but less productive. Turns out it’s the opposite.”  The Globe and Mail article goes on to say:

One fear about shifting to a work-from-home culture is that it would lead to operational chaos: missed meetings, spotty WiFi, games of broken telephone (both figurative and literal). Instead, even companies with tens of thousands of employees are finding that the IT infrastructure is holding up and so are lines of authority. Workers are responding to their emails and joining Zoom calls at approximately the right time. Everyone is always reachable.

The Globe and Mail is not alone in finding evidence of high worker productivity.  For example, the New York Times quotes John Sullivan, a professor of management:

“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.”  Innovation, Dr. Sullivan added, might even catch up eventually.

And Bloomberg came to much the same conclusion, reporting that corporate executives at several different finance and investment companies all see evidence of gains in productivity.

Underlying these gains are three potentially long-lasting developments that provide support for the view that the current corporate commitment to expanding remote work needs to be taken seriously. The first is the availability of relatively low cost and easy-to-use online communication platforms like Zoom that allow managers to easily communicate with their workers and for workers to engage in group work when necessary.  The online infrastructure for corporate communication continues to improve.

The second is the recent and ongoing development of technologies that allow management to monitor and evaluate the online work effort of their employees.  As the New York Times explains: “Demand has surged for software that can monitor employees, with programs tracking the words we type, snapping pictures with our computer cameras and giving our managers rankings of who is spending too much time on Facebook and not enough on Excel.”

Of course, corporations have long used technology to monitor and direct work, and large companies like Amazon have pioneered the development and use of software for directing and intensifying the pace of warehouse workers.  Josh Dzieza, writing in the Verge, offers an example:

Every Amazon worker I’ve spoken to said it’s the automatically enforced pace of work, rather than the physical difficulty of the work itself, that makes the job so grueling. Any slack is perpetually being optimized out of the system, and with it any opportunity to rest or recover. A worker on the West Coast told me about a new device that shines a spotlight on the item he’s supposed to pick, allowing Amazon to further accelerate the rate and get rid of what the worker described as “micro rests” stolen in the moment it took to look for the next item on the shelf.

But as Dzieza makes clear, there is also growing availability and use of new software that makes it possible for corporations to easily oversee the work effort of their online workers.  One example is WorkSmart.  Dzieza describes the experience of a software engineer in Bangladesh who was required to download the software as a condition of his employment with Austin-based Crossover Technologies.  Among other things:

The software tracked his keystrokes, mouse clicks, and the applications he was running, all to rate his productivity. He was also required to give the program access to his webcam. Every 10 minutes, the program would take three photos at random to ensure he was at his desk. If [he] wasn’t there when WorkSmart took a photo, or if it determined his work fell below a certain threshold of productivity, he wouldn’t get paid for that 10-minute interval.

Other recently developed software programs currently in use to monitor the work of call center employees could easily be used to monitor home-based employees doing the same work. Recording the number and length of calls is old hat.  These new programs, using artificial intelligence, can now evaluate the “emotional” tone of the worker’s voice during their conversations with customers.  Some programs can even “coach workers in real time, telling them to speak more slowly or with more energy or to express empathy.” The growing corporate interest in remote work can be expected to spur the development of ever more sophisticated products that will allow even tighter control over at-home work and more detailed evaluation of at-home workers.

The nature of the ongoing transformation of the economy is the third reason that this period may well mark the start of a major shift in the location of work.  Simply stated: unemployment is now high and, when possible, workers welcome a safe alternative to on-site employment.

In the past on-site work was the standard corporate practice and most workers preferred it.  Thus, workers were generally able to undermine individual corporate attempts to push them into working from home.  Now, not only is remote work the new norm, because of the virus it has actually become the desired alternative.  With fear of the virus likely to remain for some time, corporations are in a far stronger position than in the past to normalize remote work and win worker acceptance of new work relations even after the pandemic is brought under control.

Benefits and costs

It is easy to understand why corporations are excited about increasing their use of remote work.  One reason is that it will allow them to greatly reduce their spending on facilities.  Gains on the labor side are likely even larger.  Companies will be able to expand their job search, hiring workers who may live thousands of miles away from the location of corporate operations with no need to pay moving expenses and with the possibility of cheapening the cost of labor by paying salaries commensurate with local living costs.  And, as a bonus, the more a company’s labor force is geographically separated and isolated, the harder it will be for its workers to build the bonds of solidarity needed to challenge management demands.

The use of remote work opens up possibilities for even greater labor savings by making possible the reclassification of new hires into independent contractors.  After all, many remote workers are already paying for the equipment they need (desks, chairs, computers, webcam), the supporting technological infrastructure (high speed Wi-Fi), and office maintenance (cleaning).

Of course, most workers also viewed at-home work positively, at least initially.  They appreciated being able to remain employed and work safely from their homes during the pandemic. But the costs of remote work, as currently structured, are mounting up for workers.

As a Bloomberg article summarizes, “We log longer hours. We attend more meetings with more people. And, we send more emails.”  The article highlights a recently published study by the National Bureau of Economic Research which was based on surveys of some 3 million people at more than 21,000 companies across 16 cities in North America, Europe and the Middle East.  The researchers:

compared employee behavior over two 8 week periods before and after Covid-19 lockdowns. Looking at email and meeting meta-data, the group calculated the workday lasted 48.5 minutes longer, the number of meetings increased about 13% and people sent an average of 1.4 more emails per day to their colleagues.

An online survey of 20,262 people in 10 countries by the technology company Lenovo Group Ltd. found that “A disturbing 71% of those working from home due to Covid-19 have experienced a new or exacerbated ailment caused by the equipment they now must use. . . the most common symptoms [being] back pain, poor posture (e.g., hunched shoulders), neck pain, eye irritation, insomnia and headaches.”

Looking just at the United States, a study done by NordVPN, based on tracking when at-home workers connected and disconnected from its service, found that at-home workers logged three hours more per day on the job than before the start of city and state lockdowns.  And a survey of 1,001 U.S. employees by Eagle Hill Consulting found that “By early April, about 45% of workers said they were burned out. Almost half attributed the mental toll to an increased workload, the challenge of juggling personal and professional life, and a lack of communication and support from their employer.”

Given the direction of corporate planning, it is likely that the costs of remote work for workers—physical and emotional—will only increase.  As one public relations executive explained when discussing why his company now views remote work so positively: The technology is better. Moreover, “we have rules now,” he said. “You have to be available between 9 a.m. and 5:30 p.m. You can’t use this as child care.”

Challenges ahead

For many workers, it is the pandemic, with its forced isolation of family in small housing units, that has made remote work so difficult and emotionally wearing.  And, for many, the experience of on-site work before the coronavirus pandemic forced closures was also far from ideal.  Thus surveys show, as the New York Times reports,

Most American office workers are in no hurry to return to the office full time, even after the coronavirus is under control. But that doesn’t mean they want to work from home forever. The future for them, a variety of new data shows, is likely to be workweeks split between office and home.

For example, a survey by the company Morning Consult done in mid-June found that:

Overall, 73 percent of U.S. adults who have careers where remote work is possible report that the pandemic has made them feel more positively about the prospect of remote work. And given the option, three quarters of these workers say they would like to work from home at least 1-2 days a week once the pandemic is under control.

At issue, then, is who will decide the place of work and perhaps even more importantly, the conditions of work, including remote work.  Current indications are that corporations plan to push workers into more remote work than surveys suggest they want, and definitely under conditions of surveillance and evaluation that they will find objectionable.  It is less clear whether those working remotely or threatened with remote work will be able to organize rapidly enough to force corporations to bargain with them over both the location of work and the work process, on- and off-site, including the aim and uses of new technology.

If there is a reason for optimism it is that there appears to be a growing solidarity between white- and blue-collar workers in the tech industry that includes support for unionization, especially at some of the large firms like Google and Amazon. As Tyler Sonnemaker and Allana Akhtar, writing for Business Insider, describe:

Even a year ago, the idea that tech’s cafeteria workers and office workers were on the same page about forming a labor union would have seemed unthinkable.

The recent wave of employee activism and organizing efforts represents a widening rift between the industry’s rank-and-file employees and its executives. For the first time, developers and product managers with higher pay and closer ties to management are siding with their lower-paid colleagues in warehouses, cafeterias, and contract gigs. . . .

Frequent leaks to the media – notable given the historically tight-knit culture at tech companies – and the emergence of groups like Rideshare Drivers United, Tech Workers Coalition, Athena, and Amazonians United are just two signs of the rise in employee activism in recent years. But over the past few months, emboldened by the pandemic and racial justice protests, workers at startups like Away and giants like Facebook have become a vocal chorus of critics.

Passively allowing management to use technology to shape the work process and the resulting final product is a recipe for ever worsening working and living conditions for the great majority of working people. Hopefully, the ongoing worker agitation and organizing in the United States will continue regardless of the unpredictable nature of the pandemic, producing a shared critique of profit-driven work and support for new organizational forms, including unions, that can fight for a more humane economic system.

Racism, COVID-19, and the fight for economic justice

While the Black Lives Matter protests sweeping the United States were triggered by recent police murders of unarmed African Americans, they are also helping to encourage popular recognition that racism has a long history with punishing consequences for black people that extend beyond policing.  Among the consequences are enormous disparities between black and white well-being and security.  This post seeks to draw attention to some of these disparities by highlighting black-white trends in unemployment, wages, income, wealth, and security. 

A common refrain during this pandemic is that “We are all in it together.”  Although this is true in the sense that almost all of us find our lives transformed for the worst because of COVID-19, it is also not true in some very important ways.  For example, African Americans are disproportionally dying from the virus.  They account for 22.4 percent of all COVID-19 deaths despite making up only 12.5 percent of the population. 

One reason is that African Americans also disproportionally suffer from serious preexisting health conditions, a lack of health insurance, and inadequate housing, all of which increased their vulnerability to the virus.  Another reason is that black workers are far more likely than white workers to work in “front-line” jobs, especially low-wage ones, forcing them to risk their health and that of their families.  While black workers comprise 11.9 percent of the labor force, they make up 17 percent of all front-line workers.  They represent an even higher percentage in some key front-line industries: 26 percent of public transit workers; 19.3 percent of child care and social service workers; and 18.2 percent of trucking, warehouse and postal service workers.

African Americans have also disproportionately lost jobs during this pandemic.  The black employment to adult population ratio fell from 59.4 percent before the start of the pandemic to a record low of 48.8 percent in April.  Not surprisingly, recent surveys find, as the Washington Post reports, that:

More than 1 in 5 black families now report they often or sometimes do not have enough food — more than three times the rate for white families. Black families are also almost four times as likely as whites to report they missed a mortgage payment during the crisis — numbers that do not bode well for the already low black homeownership rate.

This pandemic has hit African Americans especially hard precisely because they were forced to confront it from a position of economic and social vulnerability as the following trends help to demonstrate.

Unemployment

The Bureau of Labor Statistics began collecting separate data on African American unemployment in January 1972.  Since then, as the figure below shows, the African American unemployment rate has largely stayed at or above twice the white unemployment rate. 

As Olugbenga Ajilore explains

Between strides in civil rights legislation, desegregation of government, and increases in educational attainment, employment gaps should have narrowed by now, if not completely closed. Yet as [the figure above] shows, this has not been the case.

Wages

The figure below from an Economic Policy Institute study, shows the black-white wage gap for workers in different earning percentiles, by education level, and regression-adjusted (to control for age, gender, education and regional differences).  As we can see, the wage gap has grown over time regardless of measure. 

Elise Gould summarizes some important take-aways from this study:

The black–white wage gap is smallest at the bottom of the wage distribution, where the minimum wage serves as a wage floor. The largest black–white wage gap as well as the one with the most growth since the Great Recession, is found at the top of the wage distribution, explained in part by the pulling away of top earners generally as well as continued occupational segregation, the disproportionate likelihood for white workers to occupy positions in the highest-wage professions.

It’s clear from the figure that education is not a panacea for closing these wage gaps. Again, this should not be shocking, as increased equality of educational access—as laudable a goal as it is—has been shown to have only small effects on class-based wage inequality, and racial wealth gaps have been almost entirely unmoved by a narrowing of the black–white college attainment gap . . . . And after controlling for age, gender, education, and region, black workers are paid 14.9% less than white workers.

Income

The next figure shows that while median household income has generally stagnated for all races/ethnicities over the period 2000 to 2017, only blacks have suffered an actual decline.  The median income for black households actually fell from $42,348 to $40,258 over this period.  As a consequence, the black-white income gap has grown.  The median black household in 2017 earned just 59 cents for every dollar of income earned by the white median household, down from 65 cents in 2000.

Moreover, as Valerie Wilson, points out, “Based on [Economic Policy Institute] imputed historical income values, 10 years after the start of the Great Recession in 2007, only African American and Asian households have not recovered their pre-recession median income.“  Median household income for African American households fell 1.9 percent or $781 over the period 2007 to 2017.  While the decline was greater for Asian households (3.8 percent), they continued to have the highest median income.

Wealth

The wealth gap between black and white households also remains large.  In 1968, median black household wealth was $6,674 compared with median white household wealth of $70,768.  In 2016, as the figure below shows, it was $13,024 compared with $149,703.

As the Washington Post summarizes:

“The historical data reveal that no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years,” wrote economists Moritz Kuhn, Moritz Schularick and Ulrike I. Steins in their analysis of U.S. incomes and wealth since World War II.

As of 2016, the most recent year for which data is available, you would have to combine the net worth of 11.5 black households to get the net worth of a typical white U.S. household.

The self-reinforcing nature of racial discrimination is well illustrated in the next figure.  It shows the median household wealth by education level as defined by the education level of the head of household. 

As we see, black median household wealth is below white median household wealth at every education level, with the gap growing with the level of education.  In fact, the median black household headed by someone with an advanced degree has less wealth than the median white household headed by someone with only a high school diploma.  The primary reason for this is that wealth is passed on from generation to generation, and the history of racism has made it difficult for black families to accumulate wealth much less pass it on to future generations. 

Security

The dollar value of household ownership of liquid assets is one measure of economic security.  The greater the value, the easier it is for a household to weather difficult times not to mention unexpected crises, such as today’s pandemic.  And as one might expect in light of the above income and wealth trends, black households have far less security than do white households.

As we can see in the following figure, the median black household held only $8,762 in liquid assets (as defined as the sum of all cash, checking and savings accounts, and directly held stocks, bonds, and mutual funds).  In comparison, the median white household held $49,529 in liquid assets.  And the black-white gap is dramatically larger for households headed by someone with a bachelors degree or higher. 

Hopeful possibilities

The fight against police violence against African Americans, now being advanced in the streets, will eventually have to be expanded and the struggle for racial justice joined to a struggle for economic justice.  Ending the disparities highlighted above will require nothing less than a transformational change in the organization and workings of our economy.

One hopeful sign is the widespread popular support for and growing participation in the Black Lives Matter-led movement that is challenging not only racist policing but the idea of policing itself and is demanding that the country acknowledge and confront its racist past.  Perhaps the ways in which our current economic system has allowed corporations to so quickly shift the dangers and costs of the pandemic on to working people, following years of steady decline in majority working and living conditions, is helping whites better understand the destructive consequences of racism and encouraging this political awakening. 

If so, perhaps we have arrived at a moment where it will be possible to build a multi-racial working class-led movement for structural change that is rooted in and guided by a commitment to achieving economic justice for all people of color. One can only hope that is true for all our sakes.

The economy: we are still in big trouble

The announcement by the Bureau of Labor Statistics that the federal unemployment rate declined to 13.3 percent in May, from 14.7 percent in April, took most analysts by surprise.  The economy added 2.5 million jobs in May, the first increase in employment since February.  Most economists had predicted further job losses and a rise in the unemployment rate to as high as 20 percent.

This employment gain has encouraged some analysts, especially those close to the Trump administration, to proclaim that their predicted V-shaped economic recovery had begun.  But there are strong reasons to believe that the US economy is far from recovery.

Long term trends and the coronavirus

Predictions for a V-shaped recovery rest to a considerable degree on the belief that our current economic collapse was caused by state mandated business closures to battle the coronavirus which unsurprisingly choked off our long expansion.  Now that a growing number of states are ending their forced lockdowns it is only natural that the economy would resume growing.  Certainly, the stock market’s recent rise suggests that many investors agree. 

However, there are many reasons to challenge this upbeat story of impending recovery.  One of the most important is that the pre-coronavirus period of expansion (June 2009 to February 2020), although the longest on record, was also one of the weakest. It was marked by slow growth, weak job creation, deteriorating job quality, declining investment, rising debt, declining life expectancy, and narrowing corporate profit margins. In other words, the economy was heading toward recession even before the start of state mandated lockdowns.  For example, the manufacturing sector spent much of 2019 in recession.   

Another reason is that the downturn in economic activity that marks the start of our current recession predates lockdown orders.  It was driven by health concerns.  As Emily Badger and Alicia Parlapiano explain in their New York Times article, and as illustrated in the following graphic taken from the article:

In the weeks before states around the country issued lockdown orders this spring, Americans were already hunkering down. They were spending less, traveling less, dining out less. Small businesses were already cutting employment. Some were even closing shop.

People were behaving this way — effectively winding down the economy — before the government told them to. And that pattern, apparent in a range of data looking back over the past two months, suggests in the weeks ahead that official pronouncements will have limited power to open the economy back up.

In some states that have already begun that process, like Georgia, South Carolina, Oklahoma and Alaska, the same daily economic data shows only meager signs so far that businesses, workers and consumers have returned to their old routines.

Thus, while some rebound in economic growth is to be expected given the severity of the downturn to this point, it is unlikely that the May employment jump signals the start of a powerful economic recovery.  Weak underlying economic conditions and health worries remain significant obstacles.

In fact, even the optimistic US Congressional Budget Office predicts at best a long, slow recovery.  As Michael Roberts describes:

It now expects US nominal GDP to fall 14.2% in the first half of 2020, from the trend it forecast in January before the COVID-19 pandemic broke. Then it expects the various fiscal and monetary injections by the authorities and the end of the lockdowns to reduce this loss from the January figure to 9.4% by end 2020. The CBO still expects a sort of V-shaped recovery in US GDP in 2021 but does not expect the pre-pandemic crisis trend in US economic growth (already reduced in the Long Depression since 2009) to be reached until 2029 and may not even return to the previous trend growth forecast until after 2030! So there will be a permanent loss of 5.3% in nominal GDP compared to pre-COVID forecasts – $16trn in value lost forever. In real GDP terms, the loss will be about 3% cumulatively, or $8trn in 2019 money.  And this assumes no second wave in the pandemic and no financial collapse as companies go bust.

Depression level unemployment

Although President Trump has celebrated the May employment gains, the fact is we continue to suffer depression level unemployment.  The following figure from the Washington Post provides some historical perspective.  The current official unemployment rate of 13.3 percent is more than a third higher than the highest level of unemployment reached during the Great Recession. 

But even the Bureau of Labor Statistics acknowledges that because of the unique nature of the current crisis the official announced unemployment rate for each of the last three months is flawed.  The unemployment rate is based on household surveys.  For the past three months, in an attempt to better understand the impact of the coronavirus, interviewers were supposed to classify people not working because of the virus as “unemployed on temporary layoff.” However, as the Bureau of Labor Statistics acknowledges, many of those people were incorrectly classified as “employed but absent at work,” which is the classification used when a person isn’t coming to work because of vacation, illness, bad weather, a labor dispute, or other reasons.  People in this latter category are not counted as unemployed.

The BLS has determined that correcting the classification error would boost the official April unemployment rate to 19.7 percent and the May rate to 16.3 percent.  And, it is important to note that this unemployment rate does not include those workers who have stopped looking for work and those who are involuntarily working part-time.  Including them would push the May rate close to 25 percent.  

Stephen Moore, an economic adviser to President Trump, has stated that the May job numbers take “a lot of the wind out of the sails of any phase 4 [stimulus bill] — we don’t need it now. There’s no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report.”  This is crazy.

Danger signs ahead

There are three reasons to fear that without substantial new federal action May employment gains will be short-lived. 

First, it has been relatively low-wage production and nonsupervisory workers who have suffered the greatest number of job losses.  That has left many businesses relatively top-heavy with managers and high-income professionals. A number of business analysts are now predicting a new wave of layoffs or firings of higher-income and management personal to bring staffing levels back into pre-coronavirus balance.

The following figure shows that almost 90 percent of the jobs lost from mid-February to mid-April were in the six lowest paid supersectors as defined by the Bureau of Labor Statistics. The May employment gains were also in these six sectors.

Economists with Bloomberg Economics are now warning of a second wave of job losses that will include “higher-paid supervisors in sectors where frontline workers were hit first, such as restaurants and hotels. It also includes the knock on-effects to connected industries such as professional services, finance and real estate.”

As Bloomberg explains:

The pandemic isn’t finished with the U.S. labor market, threatening a second wave of job cuts—this time among white-collar workers. . . .

For the analysis, [Bloomberg Economics economists] looked at job losses by sector in March and April—with affected industries dominated by blue-collar, hospitality and production workers—and determined how those layoffs would move to supervisory positions, since management cuts tend to lag the frontline workers.

The economists then took government data on relations between industries to compute the ones most reliant on demand from the most-affected sectors. Combining that information with the hit to employment in the most affected sectors they extrapolated to other jobs at risk, most of which were higher-skilled, white-collar roles.

The second reason to downplay the significance of the May employment gains is that critically important stimulus measures–in particular the one-time grant of $1200 for individuals and the $600 a week additional unemployment benefit (which expires at the end of July)–appear unlikely to be renewed.  If that boost to earnings is withdrawn, economic demand and employment will likely fall again.

As Ben Casselman, writing in the New York Times, points out:

Research routinely finds that unemployment insurance is one of the most effective parts of the safety net, both in cushioning the effects of job loss on families and in lifting the economy. In economists’ parlance, the program is “well targeted” — it goes to people who need the money and who will spend it. Various studies have found that in the last recession, the system helped prevent 1.4 million foreclosures, saved two million jobs and kept five million people out of poverty.

The impact could be greater in this crisis because the program is reaching more people and giving them more money. The government paid $48 billion in benefits in April and has reached $86 billion in May, according to the Treasury Department.

As the following figure shows, almost all workers have suffered significant declines in employment income with low income workers taking the biggest hit.

Yet, the increase in food insecurity has been relatively small, especially for low income workers.

It is, as highlighted in the next figure, the massive individual benefit boosts included in the March stimulus package that has so far kept the decline in employment income from translating into dramatic spikes in food insecurity. If Congress refuses to pass a new stimulus that includes direct aid to the unemployed, the odds are great that the economic recovery will stall and unemployment will grow again.

The last reason for pessimism is the likely further contraction in state and local government spending and, by extension, employment and services, as a result of declining revenue.  State and local government employment fell by 1 million from February to April, and by an additional 600 million in May.  Looking just at state budgets, the Center for Budget and Policy Priorities estimates a shortfall in state budgets of $765 billion over fiscal years 2020-22, “much deeper than in the Great Recession of about a decade ago” (see the figure below).

And unfortunately, as the Center for Budget and Policy Priorities also notes, the federal government has, up to now, been unwilling to do much to help state governments manage their ballooning deficits:

Federal aid that policymakers provided in earlier COVID-19 packages isn’t nearly enough. Only about $65 billion is readily available to narrow state budget shortfalls. Treasury Department guidance now says that states may use some of the aid in the CARES Act of March to cover payroll costs for public safety and public health workers, but it’s unclear how much of state shortfalls that might cover; existing aid likely won’t cover much more than $100 billion of state shortfalls, leaving nearly $665 billion unaddressed. States hold $75 billion in their rainy-day funds, a historically high amount but far too little to meet the unprecedented challenge they face. And, even if states use all of it to cover their shortfalls, that still leaves them about $600 billion short.

States must balance their budgets every year, even in recessions. Without substantial federal help during this crisis, they very likely will deeply cut areas such as education and health care, lay off teachers and other workers in large numbers, and cancel contracts with many businesses. . . . That would worsen the recession, delay the recovery, and further harm families and communities.

Without a new stimulus measure that also includes support for state and local governments, their forced reduction in spending and cuts in employment can only add to the existing pressures working against recovery.

In sum, the crisis is real.  A new stimulus that included a renewal of special unemployment payments as well as direct support for state and local governments and other critical services like the postal service could help stabilize the economy.  But real progress will require a major effort on the part of the federal government to ensure adequate production of COVID-19 test kits and PPE as well as nationwide testing and contact tracing programs and then, most importantly, a fundamental reorganization of our economy.

Victory: Ohio’s plan to deny workers their unemployment insurance is shelved

Some stories are just so satisfying that they deserve to be shared.  Here is one.

In early May, Ohio Republican Governor Mike DeWine began reopening the state economy.  And to support business and slash state expenses, both at worker expense, he had a “COVID-19 Fraud” form put up on the Ohio Department of Job and Family Services website where employers could confidentially report employees “who quit or refuse work when it is available due to COVID-19.”  Inspectors would then investigate whether the reported workers should lose their unemployment benefits and possibly be charged with unemployment fraud.

Significantly, as Sarah Ingles, the board president of the Central Ohio Worker Center, noted in a statement quoted by the Intercept, the form “does not define what constitutes a ‘good cause’ exemption, and by doing so, may exclude many Ohio workers who have justifiable reasons for not returning to work and for receiving unemployment insurance benefits.”  In other words, “while the state did not take the time to define what a ‘good cause’ exemption includes or does not include, it did have time to develop an online form where employers could report employees.”

However, thanks to the work of an anonymous hacker, the site has now been taken down. In officialese, “The previous form is under revision pending policy references.”  Most importantly, as Janus Rose writing for Motherboard reports:

“No benefits are being denied right now as a result of a person’s decision not to return to work while we continue to evaluate the policy,” ODJFS Director Kimberly Hall told Cleveland.com.

According to Rose, the hacker developed a script that overwhelmed the system:

The script works by automatically generating fake information and entering it into the form. For example, the companies are taken from a list of the top 100 employers in the state of Ohio—including Wendy’s, Macy’s, and Kroger—and names and addresses are randomly created using freely-available generators found online. Once all the data is entered, the script has to defeat a CAPTCHA-like anti-spam measure at the end of the form. Unlike regular CAPTCHAs, which display a grid of pictures and words that the user must identify, the security tool used by the form is merely a question-and-answer field. By storing a list of common questions and their respective answers, the script can easily defeat the security measure by simply hitting the “switch questions” button until it finds a question it can answer.

To make the code more accessible, software engineer David Ankin repackaged the script into a simple command line tool which allows users to run the script in the background of their computer, continuously submitting fake data to the Ohio website.

“If you get several hundred people to do this, it’s pretty hard to keep your data clean unless you have data scientists on staff,” Ankin told Motherboard.

The hacker told Motherboard they viewed their effort as a form of direct action against the exploitation of working people during the COVID-19 crisis.  Score one for working people.

The 1930s and Now: Looking Back to Move Forward

My article What the New Deal Can Teach Us About Winning a Green New Deal is in the latest issue of the journal Class, Race and Corporate Power.  As I say in the abstract,

While there are great differences between the crises and political movements and possibilities of the 1930s and now, there are also important lessons that can be learned from the efforts of activists to build mass movements for social transformation during the Great Depression. My aim in this paper is to illuminate the challenges faced and choices made by these activists and draw out some of the relevant lessons for contemporary activists seeking to advance a Green New Deal.

Advocates of a Green New Deal often point to the New Deal and its government programs to demonstrate the possibility of a progressive state-directed process of economic change.  I wrote my article to show that the New Deal was a response to growing mass activity that threatened the legitimacy and stability of the existing economic and political order rather than elite good-will, and to examine the movement building process that generated that activity.

Depression-era activists were forced to organize in a period of economic crisis, mass unemployment and desperation, and state intransigence. While they fell short of achieving their goal of social transformation, they did build a movement of the unemployed and spark a wave of militant labor activism that was powerful enough to force state policy-makers to embrace significant, although limited, social reforms, including the creation of programs of public employment and systems of social security and unemployment insurance.

Differences between that time period and this one are shrinking and the lessons we can learn from studying the organizing strategies and tactics of those activists are becoming ever more relevant.  The US economy is now in a deep recession, one that will be more devastating than the Great Recession.  US GDP shrank at a 4.8 percent annualized rate in the first quarter of this year and will likely contract at a far greater 25 percent annualized rate in the second quarter.  While most analysts believe the economy will begin growing again in the third quarter, their predictions are for an overall yearly decline in the 6-8 percent range.   As for the years ahead—no one can really say.  The Economist, for example, is talking about a 90 percent economy for years after the current lockdown ends.  In other words, life will remain hard for most working people for some time.

Not surprisingly, given the size of the economic contraction, unemployment has also exploded. According to the Economic Policy Institute, “In the past six weeks, nearly 28 million, or one in six, workers applied for unemployment insurance benefits across the country.”  More than a quarter of the workforce in the following states have filed for benefits: Hawaii, Kentucky, Georgia, Rhode Island, Michigan, and Nevada.  And tragically, millions of other workers have been prevented from applying because of outdated state computer systems and punitive regulations as well as overworked employment department staff.  Even at its best, the US unemployment system, established in 1935 as part of the New Deal reforms, was problematic, paying too little, for too short a time period, and with too many eligibility restrictions.  Now, it is collapsing under the weight of the crisis.

Yet, at the same time, worker organizing and militancy is growing. Payday Report has a strike tracker that has already identified over 150 strikes, walkouts, and sickouts since early March across a range of sectors and industries, including retail, fast food, food processing, warehousing, manufacturing, public sector, health care, and the gig economy.  As an Associated Press story points out:

Across the country, the unexpected front-line workers of the pandemic — grocery store workers, Instacart shoppers and Uber drivers, among them — are taking action to protect themselves. Rolling job actions have raced through what’s left of the economy, including Pittsburgh sanitation workers who walked off their jobs in the first weeks of lockdown and dozens of fast-food workers in California who left restaurants last week to perform socially distant protests in their cars.

Rather than defending workers, governments are now becoming directly involved in suppressing their struggles. For example, after meatpacker walkouts closed at least 22 meat plans and threatened the operation of many others, triggered by an alarming rise in the number of workers testing positive for the virus, President Trump signed an executive order requiring companies to remain open and fully staffed. It remains to be seen how workers will respond.  In Pennsylvania, the Governor responded to nurse walkouts at nursing homes and long-term care facilities to protest a lack of protective equipment by sending national guard members to replace them.

Activists throughout the country are now creatively exploring ways to support those struggling to survive the loss of employment and those engaged in workplace actions to defend their health and well-being.  Many are also seeking ways to weave the many struggles and current expressions of social solidarity together into a mass movement for radical transformation.  Despite important differences in political and economic conditions, activists today are increasingly confronting challenges that are similar to ones faced by activists in the 1930s and there is much we can learn from a critical examination of their efforts.  My article highlights what I believe are some of the most important lessons.

The Green New Deal and the State: Lessons from World War II—Part II

There is growing interest in a Green New Deal, but far too little discussion among supporters about the challenging nature of the required economic transformation, the necessary role of public planning and ownership in shaping it, or the strategies necessary to institutionalize a strong worker-community voice in the process and final outcome. In this two-part series I draw on the experience of World War II, when the state was forced to direct a rapid transformation from civilian to military production, to help encourage and concretize that discussion.

In Part I, I first discussed the need for a rapid Green New Deal-inspired transformation and the value of studying the U.S. experience during World War II to help us achieve it. Then, I examined the evolution, challenges, and central role of state planning in the wartime conversion to alert us to the kind of state agencies and capacities we will need to develop. Finally, I highlighted two problematic aspects of the wartime conversion and postwar reconversion which we must guard against: the ability of corporations to strengthen their dominance and the marginalization of working people from any decision-making role in conversion planning.

Here in Part II, I discuss the efforts of labor activists to democratize the process of transformation during the war period in order to sharpen our thinking about how best to organize a labor-community movement for a Green New Deal.  During this period, many labor activists struggled against powerful political forces to open up space for new forms of economic planning with institutionalized worker-community involvement.  The organizing and movement building efforts of District 8 leaders of the United Electrical, Radio & Machine Workers of America (UE), as described by Rosemary Feuer in her book Radical Unionism in the Midwest, 1900-1950, stand out in this regard.  Although their success was limited, there is much that we can learn from their efforts.

Organizing for a worker-community planned conversion process

District 8 covered Missouri, Iowa, Kansas, Arkansas, southern Indiana and southern and western Illinois, and UE contracts in that area were heavily weighted towards small and medium sized firms producing mechanical and electrical products.  As the government began its war time economic conversion in 1941, its policy of suppressing civilian goods and rewarding big corporations with defense contracts hit the firms that employed UE members hard.

The UE response was to build a labor and community-based effort to gain control over the conversion process. In Evansville, Indiana, the UE organized a community campaign titled “Prevent Evansville from Becoming a Ghost Town.”  As Feurer explains,

District 8’s tentative proposal called upon union and civic and business leaders to request the establishment of a federal program that would “be administered through joint and bona fide union-management-government cooperation” at the local level. It would ensure that before reductions in the production of consumer goods were instituted, government must give enough primary war contracts and subcontracts to “take up the slack” of unemployment caused in cities such as Evansville. It also proposed that laid-off workers would get “first claim on jobs with other companies in the community,” while excessive overtime would be eliminated until unemployment was reduced.

District 8 organizers pressed Evansville’s mayor to gather community, labor, and business representatives from all over the Midwest to discuss how to manage the conversion to save jobs.  They organized mass petition drives and won endorsements for their campaign from many community groups and small businesses.  Persuaded, Evansville’s mayor contacted some 500 mayors from cities with populations under 250,000 in eleven midwestern states, requesting that they send delegations of “city officials, labor leaders, managers of industry and other civic leaders” to a gathering in Chicago.  Some 1500 delegates attended the September meeting.

The conference endorsed the UE’s call for a significant role for labor in conversion planning, specifically “equal participation of management and labor in determining a proper and adequate retraining program and allocation of primary and sub-contracts. . . [And that] all possible steps be taken to avoid serious dislocations in non-defense industries.”  A committee of seven, with two labor representatives, was chosen to draw up a more concrete program of action.

One result was that Evansville and Newton, Iowa (another city with a strong UE presence) were named “Priority Unemployment Plan” areas, and allowed to conduct “an experiment for community-based solving of unemployment and dislocations caused by war priorities.”  The plan restricted new plant construction if existing production capacity was considered sufficient, encouraged industry-wide and geographical-based pooling of production facilities to boost efficiency and stabilize employment, required companies to provide training to help workers upgrade their skills, and supported industry-wide studies to determine how to best adapt existing facilities for military production.

William Sentner, the head of District 8, called for labor to take a leading role in organizing community gatherings in other regions and creating regional planning councils. Unfortunately, CIO leaders did little to support the idea. Moreover, once the war started, unemployment stopped being a serious problem and the federal government took direct control over the conversion process.

Organizing for a worker-community planned reconversion process

As the war began to wind down, District 8 leaders once again took up the issue of conversion, this time conversion back to a peacetime economy.  In 1943, they got the mayor of St. Louis to create a community planning committee, with strong labor participation, to discuss future economic possibilities for the city.  In 1944, they organized a series of union conferences with elected worker representatives from each factory department in plants under UE contract throughout the district, along with selected guests, to discuss reconversion and postwar employment issues.

At these conferences District 8 leaders emphasized the importance of continued government planning to guarantee full employment, but also stressed that the new jobs should be interesting and fulfilling and the workweek should be reduced to 30 hours to allow more time for study, recreation, and family life.  They also discussed the importance of other goals: an expansion of workers’ rights in production; labor-management collaboration to develop and produce new products responsive to new needs; support for women who wanted to continue working, in part by the provision of nurseries; and the need to end employment discrimination against African Americans.

While these conferences were taking place, the Missouri River flooded, covering many thousands of acres of farmland with dirt and sand, and leaving thousands of people homeless.  The US Army Corps of Engineers rushed to take advantage of the situation, proposing a major dredging operation to deepen the lower Missouri River channel, an effort strongly supported by big shipping interests.  It became known as the Pick Plan. Not long after, the Bureau of Reclamation proposed a competing plan that involved building a series of dams and reservoirs in the upper river valley, a plan strongly supported by big agricultural interests. It became known as the Sloan Plan.

While lower river and upper river business interests battled, a grassroots movement grew across the region opposing both plans, seeing them, each in their own way, as highly destructive.  For example, building the dams and reservoirs would destroy the environment and require the flooding of hundreds of thousands of acres, much of it owned by small farmers, and leave tens of thousands of families without homes.

Influenced by the growing public anger, newspapers in St. Louis began calling for the creation of a new public authority, a Missouri Valley Authority (MVA), to implement a unified plan for flood control and development that was responsive to popular needs.  Their interest in an MVA reflected the popularity of the Tennessee Valley Authority (TVA), an agency created in 1933 and tasked with providing cheap electricity to homes and businesses and addressing many of the region’s other development challenges, such as flooding, land erosion, and population out-migration.  In fact, during the 1930s, several bills were submitted to Congress to establish other river-based regional authorities.  Roosevelt endorsed seven of them, but they all died in committee as the Congress grew more conservative and war planning took center stage in Washington DC.

District 8, building on its desire to promote postwar regional public planning, eagerly took up the idea of an MVA.  It issued a pamphlet titled “One River, One Plan” that laid out its vision for the agency.  As a public agency, it was to be responsive to a broad community steering committee; have the authority to engage in economic and environmental planning for the region; and, like the TVA, directly employ unionized workers to carry out much of its work.  Its primary tasks would be the electrification of rural areas and flood control through soil and water conservation projects and reforestation.  The pamphlet estimated that five hundred thousand jobs could be created within five years as a result of these activities and the greater demand for goods and services flowing from electrification and the revitalization of small farms and their communities.

District 8 used its pamphlet to launch a community-based grassroots campaign for its MVA, which received strong support from many unions, environmentalists, and farm groups.  And, in August 1944, Senator James Murray from Montana submitted legislation to establish an MVA, written largely with the help of District 8 representatives.  A similar bill was submitted in the House.  Both versions called for a two-year planning period with the final plan to be voted on by Congress.

District 8 began planning for a bigger campaign to win Congressional approval.  However, their efforts were dealt a major blow when rival supporters of the Pick and Sloan plans settled their differences and coalesced around a compromise plan.  Congress quickly approved the Pick-Sloan Flood Control Act late December 1944 but, giving MVA supporters some hope that they could still prevail, Senator Murray succeeded in removing the act’s anti-MVA provisions.

District 8 leaders persuaded their national union to assign staff to help them establish a St. Louis committee, a nine-state committee, and a national committee to support the MVA. The St. Louis committee was formed in January 1945 with a diverse community-based steering committee.  Its strong outreach effort was remarkably successful, even winning support from the St. Louis Chamber of Commerce.  Feurer provides a good picture of the breadth and success of the effort:

By early 1945, other city-based committees were organizing in the nine-state region. A new national CIO committee for an MVA laid plans for “reaching every CIO member in the nine-state region on the importance of regionally administered MVA.  In addition, other state CIO federations pledged to organize for an MVA and to disseminate material on the MVA through local unions to individual members.  Further the seeds planted in 1944 among AFL unions were beginning to develop into a real coalition.  In Kansas City, the AFL was “circulating all the building trades unions in the nine states for support” to establish a nine-state buildings trades MVA committee. Both the AFL and CIO held valley wide conferences on the MVA to promote and organize for it.

Murray submitted a new bill in February 1945, which included new measures on soil conversation and the protection of wild game, water conservation, and forest renewal. It also gave the MVA responsibility for the “disposal of war and defense factories to encourage industrial and business expansion.”

But the political tide had turned.  The economy was in expansion, the Democratic Party was moving rightward, and powerful forces were promoting a growing fear of communism.  Murray’s new bill was shunted to a hostile committee and big business mounted an unrelenting and successful campaign to kill it, arguing that the MVA would establish an undemocratic “super-government,” was a step toward “state socialism,” and was now unnecessary given passage of the Pick-Sloan Flood Control Act.

Drawing lessons

A careful study of District 8’s efforts, especially its campaign for an MVA, can help us think more creatively and effectively about how to build a labor-community coalition in support of a Green New Deal.  In terms of policy, there are many reasons to consider following District 8 in advocating for regionally based public entities empowered to plan and direct economic activity as a way to begin the national process of transformation.  For example, many of the consequences of climate change are experienced differently depending on region, which makes it far more effective to plan regional responses.  And many of the energy and natural resources that need to be managed during a period of transformation are shared by neighboring states.  Moreover, state governments, unions, and community groups are more likely to have established relations with their regional counterparts, making conversation and coordination easier to achieve.  Also, regionally organized action would make it much harder for corporations to use inter-state competition to weaken initiatives.

Jonathan Kissam, UE’s Communication Director and editor of the UE News, advocates just such an approach:

UE District 8’s Missouri Valley Authority proposal could easily be revived and modernized, and combined with elements of the British proposal for a National Climate Service. A network of regional Just Transition Authorities, publicly owned and accountable to communities and workers, could be set up to address the specific carbon-reduction and employment needs of different regions of the country.

The political lessons are perhaps the most important.  District 8’s success in building significant labor-community alliances around innovative plans for war conversion and then peacetime reconversion highlights the pivotal role unions can, or perhaps must, play in a progressive transformation process.  Underpinning this success was District 8’s commitment to sustained internal organizing and engagement with community partners.  Union members embraced the campaigns because they could see how a planned transformation of regional economic activity was the only way to secure meaningful improvements in workplace conditions, and such a transformation could only be won in alliance with the broader community.  And community allies, and eventually even political leaders, were drawn to the campaigns because they recognized that joining with organized labor gave them the best chance to win structural changes that also benefited them.

We face enormous challenges in attempting to build a similar kind of working class-anchored movement for a Green New Deal-inspired economic transformation.  Among them: weakened unions; popular distrust of the effectiveness of public planning and production; and weak ties between labor, environmental, and other community groups.  Overcoming these challenges will require our own sustained conversations and organizing to strengthen the capacities of, and connections between, our organizations and to develop a shared and grounded vision of a Green New Deal, one that can unite and empower the broader movement for change we so desperately need.

The Green New Deal and the State: Lessons from World War II—Part I

There is growing interest in a Green New Deal, but far too little discussion among supporters about the challenging nature of the required economic transformation, the necessary role of public planning and ownership in shaping it, or the strategies necessary to institutionalize a strong worker-community voice in the process and final outcome.  In this two-part series I draw on the experience of World War II, when the state was forced to direct a rapid transformation from civilian to military production, to help encourage and concretize that discussion.

In this post, I first discuss the need for a rapid Green New Deal-inspired transformation and the value of studying the US experience during World War II to help us achieve it.  Next, I examine the evolution, challenges, and central role of state planning in the wartime conversion of the US economy to alert us to the kind of state agencies and capacities  we will need to develop. Finally, I highlight two problematic aspects of the wartime conversion and postwar reconversion which must be avoided if we hope to ensure a conversion to a more democratic and solidaristic economy.

In the post to follow, I will highlight the efforts of labor activists to democratize the process of transformation during the war period in order to sharpen our thinking about how best to organize a labor-community mass movement for a Green New Deal.

The challenge of transformation

We are already experiencing a climate crisis, marked by extreme weather conditions, droughts, floods, warming oceans, rising sea levels, fires, ocean acidification, and soil deterioration.  The Special Report on Global Warming of 1.5°C by the Intergovernmental Panel on Climate Change underscores the importance of limiting the increase in the global mean temperature to 1.5 degrees Celsius above pre-industrial levels by 2100 if we are to avoid ever worsening climate disasters and “global scale degradation and loss of ecosystems and biodiversity.” The report makes clear that achieving this goal requires reducing global net carbon dioxide emissions by 45 per cent by 2030 and then reaching net zero emissions by 2050.

Tragically, despite the seriousness of the crisis, we are on track for a far higher global mean temperature.  Even big business is aware of what is at stake. Two researchers employed by JP Morgan, the world’s largest financer of fossil fuels, recently published an internal study that warns of the dangers of climate inaction. According to the Guardian, which obtained a copy of the report, “the authors say policymakers need to change direction because a business-as-usual climate policy ‘would likely push the earth to a place that we haven’t seen for many millions of years,’ with outcomes that might be impossible to reverse.”

It is easy to see why growing numbers of people are attracted to the idea of a Green New Deal.  The Green New Deal promises a rapid and dramatic curtailing of fossil fuel use as part of a broader transformation to a more sustainable, egalitarian, and socially responsive economy.  Such a transformation will, by necessity, involve massive new investments to promote the production and distribution of clean renewable energy, expand energy efficient public transit systems, support regenerative agriculture, and retrofit existing homes, offices, and factories.  The Green New Deal also promises new, publicly funded programs designed to ensure well-paid and secure employment for all; high-quality universal health care; affordable, safe public housing; clean air; and healthy and affordable food.

Unfortunately, the proposed Green New Deal investments and programs, as attractive and as needed as they may be, are unlikely on their own to achieve the required reduction in carbon emissions.  It is true that many Green New Deal investments and programs can be expected to lower overall energy demand, thereby making it easier for rapidly growing supplies of clean energy to support economic activity.  But even though renewable energy production is growing rapidly in the US, it still accounts for less than 15 percent of total US energy consumption and less than 20 percent of electricity generation.  And based on the experience of other countries, increasing the production of renewable energy does not, by itself, guarantee a significant decline in the production and use of fossil fuels, especially when they remain relatively cheap and plentiful.

Rapid decarbonization will also require direct government action to force down the production of fossil fuels and make their use prohibitively expensive.  And this action will have significant consequences.  For example, limiting fossil fuel production will leave fossil fuel companies with enormous unused and therefore worthless assets.  Raising the price of fossil fuels will sharply increase the cost of flying, with negative consequences for the large manufacturers of airplanes and their subcontractors.  It will also increase the cost of gasoline, with negative consequences for automobile companies that produce gas guzzling cars.  Other major industries will also be affected, for example, the home building industry that specializes in large suburban homes, and the financial sector that has extended loans to firms in all these industries.

Thus, any serious attempt to rapidly force down fossil fuel use can be expected to negatively affect important sectors of the economy. Proposed Green New Deal investments and social policy initiatives will lay the foundation for a new economy, helping to boost employment and absorb some of the newly created excess capacity, but given the need for a speedy transformation to head off climate catastrophe, the process, if left unplanned, could easily end up dragging the economy down.

As difficult as this process appears, we do have historical experience to draw upon that can help us prepare for some of the challenges we can expect to face: the experience of World War II, when the US government was forced to initiate a rapid transformation of the US economy from civilian to military production.  New planning bodies were created to direct resources away from civilian use, retrain workers, encourage retooling of parts of the civilian economy to produce military goods and services, and direct massive investments to build new facilities to expand production or produce new goods needed for the war effort.  While far from a model to be recreated, advocates of a Green New Deal can learn much from studying the US war-time experience.

World War II planning

The shift to a war economy began gradually in 1939, some two years before the US actually entered the war. In June 1939, the Congress passed the Strategic and Critical Materials Stockpiling Act, which called for establishing reserves of strategic materials necessary for defense.  In August 1939, President Roosevelt established the War Resources Board to help the Joint Army and Navy Munitions Board develop plans for mobilizing the economic resources of the country in the event of war.

In June 1940, a National Roster of Scientific and Specialized Personnel was created.  In August 1940, the Defense Plant Corporation was created and charged with planning how to expand the nation’s ability to produce military equipment.  And in September 1940, the Congress approved the Selective Training and Service Act of 1940, which required all men between the ages of 21 and 45 to register for the draft.

In January 1941, President Roosevelt created the Office of Production Management to centralize all federal procurement programs concerned with the country’s preparation for war.  Shortly after the US entered the war, this office was replaced by the War Production Board (WPB), which was tasked with directing the conversion of industries from civilian to military work; the allocation of scare materials; and the establishment of priorities for the distribution of goods and services, including those to be rationed.

The conversion to a war economy, and the end of the depression, roughly dates to the second half of 1941, when defense spending sharply accelerated.  Federal spending on goods and services for national defense rose from 2.2 percent of GNP in 1940 to 11 percent of GNP in 1941. This was the last year that military-generated activity was compatible with growing civilian production. In 1942, military spending soared to 31 percent of GNP.  From then to the end of the war, civilian production was suppressed in order to secure the desired growth in military production.

For example, real consumer durable expenditures reached $24.7 billion (in 1972 dollars) or 6.2 percent of GNP in 1941.  The following year they fell to $16.3 billion or 3.6 percent of GNP.  Real personal consumption which grew by 6.2 percent in 1941, fell absolutely the following year.  Between 1940 and 1944, the total production of non-war goods and services fell from $180 billion to $164 billion (in 1950 dollars).  In contrast, real federal purchases of military commodities grew from $18 billion in 1941 to $88 billion in 1944 (in 1947 dollars), accounting for approximately one-half of all commodities produced that year.

No doubt, the high level of unemployment that existed at the start of the conversion made it easier to ramp up military production—but the military itself soon absorbed a large share of the male working age population.  Moreover, the challenge facing planners was not just that of ramping up production in a depressed economy, but of converting the economy to produce different goods, often in new locations.  This required the recruitment, training, and placement of millions of workers in accordance with ever changing industrial, occupational, and geographic requirements.

In the period of preparation for war, perhaps the biggest challenge was training.  It was largely met thanks to vocational training programs organized by the Employment Division.  These training programs made use of ongoing New Deal programs such as the Civilian Conservation Corps, Works Progress Administration, and National Youth Administration; the existing network of schools and colleges, and a Training-Within-Industry program.  Once the war began, the War Manpower Commission continued the effort.  Altogether, some 7 million people went through training programs, almost half through Training-Within-Industry programs.

The hard shift from a civilian driven economy into a military dominated one was, to a large degree, forced on the government by corporate concerns over future profitability.  In brief, most large corporations were reluctant to expand their productive capacity for fear that doing so would leave them vulnerable to a post-war collapse in demand and depression.  Among the most resistant were leading firms in the following industries: automobile, steel, oil, electric power, and railroads.  At the same time, these firms also opposed the establishment of government owned enterprises; they feared they might become post-war competitors or even worse, encourage popular interest in socialism.

Unwilling to challenge business leaders, the government took the path of least resistance—it agreed to support business efforts to convert their plant and equipment from civilian to military production; offer businesses engaged in defense work cost plus contracting; and suppress worker wages and their right to strike.  And, if the government did find it necessary to invest and establish new firms to produce critical goods, it agreed to allow private businesses to run them, with the option to purchase the new plant and its equipment at a discounted price at the war’s conclusion.  As a consequence, big business did quite well during the war and was well position to be highly profitable in the years following the end of the war.

Business reluctance to invest in expanding capacity, including in industries vital to the military, meant that the government had to develop a number of powerful new planning bodies to ensure that the limited output was allocated correctly and efficiently across the military-industrial supply chain.  For example, raw steel production grew only 8 percent from 1941 to the 1944 wartime peak.  Crude petroleum refining capacity grew only 12 percent between 1941 and 1945.  Leading firms in the auto industry were also reluctant to give up sales or engage in conversion to military production, initially claiming that no more than 15 percent of its machine tools were convertible.  But, once the war started and US planners regulated steel use, giving priority to military production, the auto industry did retool and produce a range of important military goods, including tanks, jeeps, trucks, and parts and subassemblies for the aircraft industry, including engines and propellers.

In many cases, corporate foot-dragging forced the government to establish its own production. Thus, while steel ingot capacity expanded by a modest 17 percent from 1940 to 1945, almost half of that increase came from government owned firms.  The role of government production was probably greatest in the case of synthetic rubber.  The US had relied on imports for some 90 percent of its supply of natural rubber, mostly from countries that fell under Japanese control.  Desperate for synthetic rubber to maintain critical civilian and military production, the government pursued a massive facility construction program. Almost all of the new capacity was financed and owned by the government and then leased to private operators for $1 per year. Thanks to this effort, synthetic rubber output rose from 22,434 long tons in 1942 to 753,111 long tons in 1944.  The Defense Plant Corporation ended up financing and owning approximately one-third of all the plant and equipment built during the war.

The War Production Board, created by presidential executive order in January 1942, was the country’s first major wartime planning agency.   Roosevelt choose Donald M. Nelson, a Sears Roebuck executive, to be its chairperson. Other members of the board were the Secretaries of War, Navy, and Agriculture, the lieutenant general in charge of War Department procurement, the director of the Office of Price Administration, the Federal Loan Administrator, the chair of the Board of Economic Warfare, and the special assistant to the President for the defense aid program.

The WPB managed twelve regional offices, and operated some one hundred twenty field offices throughout the country.  Their work was supported by state-level war production boards, which were responsible for keeping records on the firms engaged in war production in their respective states, including whether they operated under government contract.

However, despite its vast information gathering network, the WPB was never able to take command of the conversion of the economy. To some extent that was because Nelson proved to be a weak leader. But a more important reason was that the WPB had to contend with a number of other powerful agencies that were each authorized to direct the output of a specific critical industry.  The result was a kind of free-for-all when it came to developing and implementing a unified plan.

Perhaps the most powerful independent agency was the Army-Navy Munitions Board.  And early on the WPB ceded its authority over the awarding of military contracts to it. The Army and Navy awarded more contracts then could be fulfilled, creating problems in the supply chain as firms competed to obtain needed materials.  Turf fights among government agencies led to other problems. For example, the Office of Defense Transportation and the Petroleum Administration for War battled over who could decide petroleum requirements for transportation services.  And the Office of Price Administration fought the Solid Fuels Administration over who would control the rationing of coal.

A Bureau of the Budget history of the period captures some of the early chaos:

Locomotive plants went into tank production when locomotives were more necessary than tanks . . . Truck plants began to produce airplanes, a change that caused shortages of trucks later on . . . Merchant ships took steel from the Navy, and the landing craft cut into both. The Navy took aluminum from aircraft.  Rubber took valves from escort vessels, from petroleum, from the Navy.  The pipe-lines took steel from ships, new tools, and the railroads. And at every turn there were foreign demands to be met as well as requirements for new plants.

In response to the chaos, Roosevelt established another super agency in May 1943, the Office of War Mobilization (OWM).  This agency, headed by James F. Byrnes, a former politician and Supreme Court justice, was given authority over the WPB and the other agencies.  In fact, Byrnes’ authority was so great, he was often called the “assistant President.”

The OWM succeeded in installing a rigorous system of materials control and bringing order to the planning process.  As a result, civilian production was efficiently suppressed and military production steadily increased.  Over the period 1941 to 1945, the US was responsible for roughly 40 percent of the world’s production of weapons and supplies, and with little increase in the nation’s capital stock.

The experience highlighted above shows the effectiveness of planning, and that a contemporary economic conversion based on Green New Deal priorities, in which fossil fuel dependent industries are suppressed in favor of more sustainable economic activity, can be achieved.  It also shows that a successful transformation will require the creation of an integrated, multi-level system of planning, and that the process of transformation can be expected to generate challenges that will need to be handled with flexibility and patience.

World War II planning: cautionary lessons

The war-time conversion experience also holds two important cautionary lessons for a Green New Deal-inspired economic transformation.  The first is the need to remain vigilant against the expected attempt by big business to use the planning process to strengthen its hold on the economy.  If we are to achieve our goal of creating a sustainable, egalitarian, and solidaristic economy, we must ensure a dominant and ongoing role for public planning of economic activity and an expansive policy of public ownership, both taking over firms that prove resistant to the transformation and retaining ownership of newly created firms.

Unfortunately, the federal government was all too willing to allow big corporations to dominate the war-time conversion process as well as the peacetime reconversion, thereby helping them boost their profits and solidify their post-war economic domination.  For example, the Army and Navy routinely awarded their defense contracts to a very few large companies.  And these companies often chose other big companies as their prime subcontractors.  Small and medium sized firms also struggled to maintain their production of civilian goods because planning agencies often denied them access to needed materials.

Harold G. Vatter highlights the contract preference given to big firms during the war, noting that:

of $175 billion of primary contracts awarded between June 1940 and September 1944, over one-half went to the top 33 corporations (with size measured by value of primary supply contracts received). The smallest 94 percent of prime supply contract corporations (contracts of $9 million or less) got 10 percent of the value of all prime contracts in that period.

The same big firms disproportionally benefited from the reconversion process.  In October 1944, the OWM was converted into the Office of War Mobilization and Reconversion (OWMR), with Byrnes remaining as head.  The OWMR embraced its new role and moved quickly to achieve the reconversion of the economy.  It overcame opposition from the large military contractors, who were reluctant to give up their lucrative business, by granting them early authorization to begin production of civilian goods, thereby helping them dominate the emerging consumer markets.

The OWMR was also generous in its post-war distribution of government assets. The government, at war’s end, owned approximately $17 billion of plant and equipment.  These holdings, concentrated in the chemical, steel, aluminum, copper, shipbuilding, and aircraft industries, were estimated to be about 15 percent of the country’s total postwar plant capacity.  The government also owned “surplus” war property estimated to be worth some $50 and $70 billion.

Because of the way government wartime investment had been structured, there was little question about who would get the lion’s share of these public assets.  Most government owned plants were financed under terms specifying that the private firms operating them would be given the right to purchase them at war’s end if desired.  Thus, according to one specialist, roughly two-thirds of the $17 billion of government plant and equipment was sold to 87 large firms.  The “bulk of copolymer synthetic rubber plants went to the Big Four in rubber; large chemical plants were sold to the leading oil companies, and U.S. Steel received 71 percent of government-built integrated steel plants.”

The second cautionary lesson is the need to resist efforts by the government, justified in the name of efficiency, to minimize the role of unions, and working people more generally, in the planning and organization of the economic conversion. The only way to guarantee that a Green New Deal-inspired transformation will create an economy responsive to the needs of working people and their communities is to create institutional arrangements that secure popular participation in decision-making at all levels of economic activity.

While organized labor had at least an advisory role in prewar planning agencies, once the war began, it was quickly marginalized, and its repeated calls for more participation rejected.  For example, Sidney Hillman (head of the Amalgamated Clothing Workers) was appointed to be one of two chairs of the Office of Production Management, which was established in January 1941 to oversee federal efforts at national war preparation. The other was William S. Knudsen (president of General Motors).  The OPM also included a Labor Bureau, also led by Hillman, which was to advise it on labor recruitment, training, and mobilization issues, as well as Labor Advisory Committees attached to the various commodity and industry branches that reported to the OPM.

The labor presence was dropped from the War Production Board, which replaced the OPM in January 1942; Roosevelt appointed a businessman, Donald M. Nelson, to be its sole chair.  Hillman was appointed director of the board’s Labor Division, but that division was soon eliminated and its responsibilities transferred to the newly created War Manpower Commission in April 1942.

More generally, as organized labor found itself increasingly removed from key planning bodies, workers found themselves increasingly asked to accept growing sacrifices.  Prices began rising in 1940 and 1941 as the economy slowly recovered from the depression and began its transformation to war production.  In response, workers pushed for significant wage increases which the government, concerned about inflation, generally opposed.  In 1940, there were 2500 strikes producing 6.7 million labor-days idle.  The following year there were 4300 strikes with 23.1 million labor-days idle.

Hillman called for a national policy of real wage maintenance based on inflation indexing that would also allow the greatest wage gains to go to those who earned the least, but the government took no action.  As war mobilization continued, the government sought a number of concessions from the unions.  For example, it wanted workers to sacrifice their job rights, such as seniority, when they were transferred from nondefense to defense work.  Union leaders refused.  Union leaders also demanded, unsuccessfully, that military contracts not be given to firms found to violate labor laws.

Worried about disruptions to war production, Roosevelt established the War Labor Board by executive order in January 1942.  The board was given responsibility for stabilizing wages and resolving disputes between workers and managers at companies considered vital to the war effort. The board’s hard stand on wage increases was set in July, when it developed its so-called “Little Steel Formula.” Ruling in a case involving the United Steelworkers and the four so-called “Little Steel” companies, the board decided that although steelworkers deserved a raise, it had to be limited to the amount that would restore their real earnings to their prewar level, which they set as January 1, 1941.  Adding insult to injury, the board relied on a faulty price index that underestimated the true rate of inflation since the beginning of 1941.

Thus, while corporations were able to pursue higher profits, workers would have to postpone their “quest for an increasing share of the national income.”  Several months later, Roosevelt instructed the War Labor Board to use a similar formula, although with a different baseline, in all its future rulings.  Not surprisingly, the number of strikes continued to rise throughout the war years despite a December 1941 pledge by AFL and CIO leaders not to call strikes for the duration of the war.

In June 1943, with strikes continuing, especially in the coal fields, Congress passed the War Labor Disputes Act.  The act gave the president the power to seize and operate privately owned plants when an actual or threatened strike interfered with war production. Subsequent strikes in plants seized by the government were prohibited. The act was invoked more than 60 times during the war. The act also included a clause that made it illegal for unions to contribute to candidates for office in national elections, clearly an attempt to weaken labor’s political influence.

Although wage struggles drew most attention, union demands were far more expansive.  As Vatter describes:

Organized labor wanted wartime representation and participation in production decision-making at all levels, not merely the meaningless advisory role allotted to it during the preparedness period. But from the outset, management maintained a chronic hostile stance on the ground that management-labor industry councils such as proposed by Walter Reuther and CIO President Philip Murray in 1940 would, under cover of patriotism, undermine managements prerogatives and inaugurate a postwar “sovietization” of American industry.

Unions often pointed to the chaos of early planning, as captured by the Budget Bureau history, arguing that their active participation in production decisions would greatly improve overall efficiency.  The government’s lack of seriousness about union involvement is best illustrated by the WPB’s March 1942 decision to establish a special War Production Drive Division that was supposed to encourage the voluntary creation of labor-management plant committees.  However, the committees were only allowed to address specific physical production problems, not broader labor-management issues or production coordination across firms. Most large firms didn’t even bother creating committees.

Significantly, there was only one time that the government encouraged and supported popular participation in wartime decision-making, and that effort proved a great success.  Inflation was a constant concern of the government throughout the war years, largely because it was a trigger for strikes which threatened war time production.  The Office of Price Administration tried a variety of voluntary and bureaucratic controls to limit price increases on consumer goods and services, especially food, with little success.  Finally, beginning in mid-1943, and over the strong opposition of business, it welcomed popular participation in the operation of its price control system.

Tens of thousands of volunteers were formally authorized to visit retail locations throughout the country to monitor business compliance with the controls and tens of thousands of additional volunteers were chosen to serve on price boards that were empowered to fine retailers found in violation of the controls.  As a result, prices remained relatively stable from mid-1943 until early 1946 when the government abruptly ended the system of controls.  This was incredible achievement considering that the production of civilian goods and services declined over those years, while consumer purchasing power and the money supply rose.

 

Part II, on organizing and movement building lessons.