Realizing a Green New Deal: Lessons from World War II

Many activists in the United States support a Green New Deal transformation of the economy in order to tackle the escalating global climate crisis and the country’s worsening economic and social problems.  At present, the Green New Deal remains a big tent idea, with advocates continuing to debate what it should include and even its ultimate aims.[1]  Although perhaps understandable given this lack of agreement, far too little attention has been paid to the process of transformation.  That is concerning, because it will be far from easy.

One productive way for us to sharpen our thinking about the transformation is to study the World War II-era mobilization process. Then, the U.S. government, facing remarkably similar challenges to the ones we are likely to confront, successfully converted the U.S. economy from civilian to military production in a period of only three years.

It is easy to provide examples of some of the challenges that await us.  All Green New Deal proposals call for a sharp decrease in fossil fuel production, which will dramatically raise fossil fuel prices.  The higher cost of fossil fuels will significantly raise the cost of business for many industries, especially air travel, tourism, and the aerospace and automobile industries, triggering significant declines in demand and reductions in their output and employment.   We will need to develop a mechanism that allows us to humanely and efficiently repurpose the newly created surplus facilities and provide alternative employment for released workers.

New industries, especially those involved in the production of renewable energy will have to be rapidly developed.  We will need to create agencies capable of deciding the speed of their expansion as well as who will own the new facilities, how they will be financed, and how best to ensure that the materials they require will be produced in sufficient quantities and made available at the appropriate time. We will also have to develop mechanisms for deciding where the new industries will be located and how to develop the necessary social infrastructure to house and care for the required workforce.  

We will also need to ensure the rapid and smooth expansion of facilities capable of producing mass transit vehicles and a revitalized national rail system.  We will need to organize the retrofitting of existing buildings, both office and residential, as well as the training of workers and the production of required equipment and materials.  The development of a new universal health care system will also require the planning and construction of new clinics and the development of new technologies and health practices.  In sum, a system-wide transformation involves a lot of moving parts that have to be managed and coordinated.

While it would be a mistake to imagine that the U.S. wartime experience can provide a readymade blueprint for the economic conversion we seek, there is much we can learn, both positive and negative, from it.  In what follows, I first highlight some of the key lessons and then conclude with a brief discussion of the relevance of the World War II experience to our current efforts to transform the U.S. economy.

1. A rapid, system-wide conversion of the U.S. economy is possible 

The primary driver of the wartime conversion was the enormous increase in military spending over the years 1940-1943.  Military spending grew by an incredible 269.3 percent in 1941, 259.7 percent in 1942, and 99.5 percent in 1943.  As a consequence, military spending as a share of GDP rose from 1.6 percent in 1940 to 32.2 percent in 1943.  That last year, federal spending hit a record high of 46.6 percent of GDP and remained at over 41 percent of GDP in each of the following two years.[2] 

The results were equally impressive: the combined output of the war-related manufacturing, mining, and construction industries doubled between 1939 and 1944.[3] In 1943 and 1944 alone, the United States was responsible for approximately 40 percent of all the munitions produced during World War II. 

This record has led many to call what was accomplished a “production miracle.”  However, a more complete assessment of the period tells a different story.  For example, there is little difference between the years 1921-24 and 1941-1944 in either the growth of industrial production or the growth in real gross nonfarm product.[4] 

Paul A. C. Koistinen casts further doubt on production miracle claims, pointing out that:

When placed in the proper context, the American production record does not appear exceptional, unless the characterization applies to all other belligerents. Gauged by the percentage distribution of the world’s manufacturing production for the period 1926-1929, the United Sates in the peak year 1944 was producing munitions at almost exactly the level it should have been.  Great Britain is modestly high, Canada low, Germany high, Japan very high, and the Soviet Union spectacularly high.[5]

The explanation for these two significantly different views of the period is that the transformation involved far more than the increase in military spending.  There was also the curtailment or outright suppression of the production of many industries, the rationing of limited supplies of many goods, and the development and production of entirely new goods and services.  For example, civilian automobile production was stopped, tires and food were rationed, and synthetic rubber was created and produced in significant amounts.  Between 1940 and 1944, the total production of non-war goods and services actually fell by some 9 percent, from $180 billion to $164 billion (in 1950 dollars).

In other words, the tremendous gains in U.S. military production were achieved, and in a relatively short period of time, not because of some impossible-to-repeat production miracle, but because a government directed-mobilization succeeded in fully employing the country’s resources while shifting their use from civilian to military purposes. 

2. State capacities and action matter

The economy’s successful transformation demonstrates the critical importance of state planning, public financing and ownership, and state direction of economic activity.  Mobilization officials faced two major tasks. The first was to quickly expand the economy’s capacity to produce the weapons and supplies required by the military.  The second was to manage the scarcities of critical materials and components caused by the rapid pace of the mobilization. 

The first task was made significantly more difficult by a lack of corporate support.  Most corporations were reluctant to undertake the massive expansion in plant and equipment required to achieve the desired boost in military production. In fact, private investment actually fell in value over the years 1941-43.  It was the federal government, using a variety of new policy initiatives, that provided the solution.

One of the most important initiatives was the creation of the Defense Production Corporation (DPC). In May 1940, Congress passed a series of amendments which allowed the still operating depression-era Reconstruction Finance Corporation (RFC) to create new subsidiaries “with such powers as it may deem necessary to aid the Government of the United States in its national defense program.”  The DPC was one of those new subsidiaries. 

Since the RFC had independent borrowing authority, the DPC was able to directly finance the expansion of facilities deemed critical to the military buildup without needing Congressional approval.  The DPC kept ownership of the new facilities it financed, but planned the construction with and then leased the new facilities for a minimal fee to predetermined contractors who would operate them. The DPC eventually financed and owned some one-third of all the plant and equipment built during the war.

By its termination at the end of June 1945, the DPC:

owned approximately 96 per cent of the capacity of the synthetic-rubber industry, 90 per cent of magnesium metal, 71 per cent of aircraft and aircraft engines, and 58 per cent of the aluminum metal industry. It also had sizeable investments in iron and steel, aviation gasoline, ordnance, machinery and machine tool, transportation, radio, and other more miscellaneous facilities.[6]

The DPC supported facilities expansion in other ways too.  Responding to concerns of shortages in machine tools and the industry’s reluctance to boost capacity to produce them, the DPC began a machine tools pool program.  The DPC gave machine tool producers a 30 percent advance to begin production.  If the producers found a private buyer, they returned the advance.  If they found no buyer, the DPC would pay them full price and put the machine tool in storage for later sale.  This program proved remarkably successful in boosting machine tool production and, with machine tools readily available, speeding up weapons production.[7]

The second task, the timely delivery of scarce materials to military and essential civilian producers, was accomplished thanks to the efforts of the War Production Board (WPB), the country’s primary wartime mobilization agency.  In late 1942, after considerable experimentation, it launched its Controlled Materials Plan (CMP).  The plan required key claimants, such as the Army, the Navy, and the Maritime Commission, to provide detailed descriptions of their projected programs and the quantities of essential controlled metals required to realize them, with a monthly production schedule for the upcoming year.  The WPB industry divisions responsible for these metals would then estimate their projected supply and decide the amount of each metal to be allocated to each claimant following WPB policy directives.  The claimants would then adjust their programs accordingly and assign their metal shares to their prime contractors who were then responsible for assigning supplies to their subcontractors. 

When, over time, a shortage of components replaced the shortage of metals as the most serious bottleneck to military production, the WPB introduced another program.  The newly established Production Executive Committee created a list of 34 critical components.  One of its subcommittees, working in concert with the CMP process, would then arrange for essential manufacturers to receive all their required scarce materials and components. 

3. Flexibility is important

Flexibility in both planning structures and mobilization policies was critical to the success of the conversion.  President Roosevelt began the mobilization process in May 1940, with an executive order reactivating the World War 1-era National Defense Advisory Commission (NDAC).  In December 1940, he replaced the NDAC with the Office of Production Management (OPM). Then, in August 1941, he created the Supply Priorities and Allocation Board (SPAB) and placed it over the OPM with the charge of developing a long-term mobilization strategy and overseeing OPM’s work.  And finally, again using an executive order, he established the War Production Board (WPB) in January 1942, replacing both the OPM and the SPAB.  

All three agencies, the NDAC, OPM, and WPB, relied heavily on divisions overseeing industrial sections to carry out their responsibilities.  The NDAC had 7 divisions: Industrial Production, Industrial Materials, Labor, Price Stabilization, Farm Products, Transportation, and Consumer Protection.  The first two were the most important.

The Industrial Production Division had 8 sections, the most important being aircraft; ammunition and lite ordnance; and tanks, trucks, and tractors. The Industrial Materials Division had three subdivisions, each with its own sections: the mining and minerals products subdivision had sections for iron and steel, copper, aluminum, and tin; the agricultural and forest products subdivision had sections for textiles, leather, paper, rubber, and the like; and the chemical and allied products division had sections for petroleum, nitrogen, etc. 

Each division, subdivision, and section had an appointed head, and each section head had an industry advisory committee to assist them. The divisions, subdivisions, and sections were responsible, as appropriate, for assessing the industrial capacities of their respective industries to meet present and projected military needs, facilitating military procurement activity, and assisting with plant expansion plans and the priority distribution and allocation of scarce goods.

When Roosevelt felt that an existing mobilization agency was not up to the task of furthering the war effort, he replaced it.  Accordingly, each new mobilization agency had a more centralized decision-making structure, broader responsibilities, and greater authority over private business decisions than its predecessor. 

Thus, the OPM, reflecting a different stage in the mobilization, was more narrowly focused on production and had only four divisions: Production Division, Purchases Division, Priorities Division, and Labor Division.  Later, in recognition of the spillover effects of military production on civilian production, the Civilian Supply Division was added and given responsibility for all industries producing 50 percent or less for the defense program. 

The WPB had six divisions: Production Division, Materials Division, Division of Industry Operations, Purchases Division, Civilian Supply Division, and Labor Division.  The newly created Division of Industry Operations included all nonmunitions-producing industries and had responsibility for promoting the conversion of industries to military production and for maximizing the flow of materials, equipment, and workers to essential producers.   

4.  Conversion means conflict

Powerful corporations and the military opposed policies that threatened their interests even when those policies benefitted the war effort.  Corporations producing goods of direct importance to the military often refused to undertake needed investments.  Corporations producing for the civilian market routinely ignored agency requests that they curtail or convert their production to economize on the nonmilitary use of scarce materials.

By late 1940, this corporate resistance had begun to cause shortages, especially of strategic materials.  Aluminum was one of those materials and Alcoa, the only major producer of the metal, aggressively resisted expanding its production capacity even though a lack of aluminum was causing delays in military aircraft production.  A similar situation existed with steel, with steel executives arguing that there was no need for capacity expansion while critical activities such as ship building and railroad car manufacturing ground to a halt because of a lack of supply.[8]

This growing shortage problem, and its threat to the military buildup, could have been minimized if large producers of consumer durables had been willing to either reduce their production or convert to military production. But almost all of them rebuffed NDAC entreaties. They were enjoying substantial profits for the first time in years and were unwilling to abandon their civilian markets. 

The industry that drew the most criticism because of its heavy resource use was the automobile industry. In 1939, the automobile industry “absorbed 18 percent of total national steel output, 80 percent of rubber, 34 percent of lead, nearly 10-14 percent of copper, tin, and aluminum, and 90 percent of gasoline. Throughout 1940 and 1941, automobile production went up, taking proportionately even more materials and products indispensable for defense preparation.”[9]

In some cases, this corporate opposition to policies that threatened their profits lasted deep into the war years, with some firms objecting not only to undertaking their own expansion but to any government financed expansion as well, out of fear of post-war overproduction and/or loss of market share.  This stance is captured in the following exchange between Senator E. H. Moore of Oklahoma and Interior Secretary and Petroleum Administrator for War Harold L. Ickes at a February 1943 Congressional hearing over the construction of a federally financed petroleum pipeline from Texas to the East Coast:

Secretary Ickes. I would like to say one thing, however. I think there are certain gentlemen in the oil industry who are thinking of the competitive position after the war.

The Chairman. That is what we are afraid of, Mr. Secretary.

Secretary Ickes. That’s all right. I am not doing that kind of thinking.

The Chairman. I know you are not.

Secretary Ickes. I am thinking of how best to win this war with the least possible amount of casualties and in the quickest time.

Senator Moore. Regardless, Mr. Secretary, of what the effect would be after the war? Are you not concerned with that?

Secretary Ickes. Absolutely.

Senator Moore. Are you not concerned with the economic situation with regard to existing conditions after the war?

Secretary Ickes. Terribly. But there won’t be any economic situation to worry about if we don’t win the war.

Senator Moore. We are going to win the war.

Secretary Ickes. We haven’t won it yet.

Senator Moore. Can’t we also, while we are winning the war, look beyond the war to see what the situation will be with reference to –

Secretary Ickes (interposing). That is what the automobile industry tried to do, Senator. It wouldn’t convert because it was more interested in what would happen after the war. That is what the steel industry did, Senator, when it said we didn’t need any more steel capacity, and we are paying the price now. If decisions are left with me, it is only fair to say that I will not take into account any post-war factor—but it can be taken out of my hands if those considerations are paid attention to.[10]

Military procurement agencies, determined to maintain their independence, also greatly hindered government efforts to ensure a timely flow of resources to essential producers by actively opposing any meaningful oversight or regulation of their activities. Most importantly, the procurement agencies refused to adjust their demand for goods and services to the productive capacity of the economy. Demanding more than the economy could produce meant that shortages, dislocations, and stockpiling were unavoidable. The Joint Chiefs of Staff actually ignored several WPB requests to form a joint planning committee. 

David Kennedy provides a good sense of what was at stake:

As money began to pour into the treasury, contracts began to flood out of the military purchasing bureaus—over $100 billion worth in the first six months of 1942, a stupefying sum that exceeded the value of the entire nation’s output in 1941 . . . Military orders became hunting licenses, unleashing a jostling frenzy of competition for materials and labor in the jungle of the marketplace.  Contractors ran riot in a cutthroat scramble for scarce resources.[11]

It took until late 1942 for the WPB to win what became known as the “feasibility dispute,” after which the military’s procurement agencies grudgingly took the economy’s ability to produce into account when making their procurement demands.

5. Class matters

Leading corporations and their executives took advantage of every opportunity to shape the wartime mobilization process and strengthen their post-war political and economic power.  Many of the appointed section heads responsible for implementing mobilization policies were so-called “dollar-a-year men” who remained employed by the very firms they were supposed to oversee.  And most of these section heads relied on trade association officials as well as industry advisory committees to help them with their work.  In some cases, trade association officials themselves served as section heads of the industries they were hired to represent.  These appointments gave leading corporations an important voice in decisions involving the speed and location of new investments, the timing and process of industry conversions, procurement contract terms and procedures, the use of small businesses as subcontractors, the designation of goods as scare and thus subject to regulation, the role of unions in shopfloor production decisions, and labor allocation policies.

NDAC officials initially welcomed the participation of dollar-a-year men on the grounds that business executives knew best how to organize and maximize production. However, they soon often found these executives speaking out against agency policies in defense of corporate interests.  In response, the OPM created a Legal Division and empowered it to write and implement regulations designed to limit their number and power, but to little avail.  As the agency’s responsibilities grew, so did the number of dollar-a-year men working for it. 

Little changed under the WPB.  In fact, between January and December 1942, their number grew from 310 to a wartime high of 805, driven in large part by the explosion in the number of industry advisory committees.[12] The WPB’s continued dependence on these nominally paid business executives was a constant source of concern in Congress.

Corporate leaders also never lost sight of what was to them the bigger picture, the post-war balance of class power.  Thus, from the very beginning of the wartime mobilization, they actively worked to win popular identification of democracy with corporate freedom of action and totalitarianism with government planning and direction of economic activity.

As J.W. Mason illustrates:

Already by 1941, government enterprise was, according to a Chamber of Com­merce publication, “the ghost that stalks at every business conference.” J. Howard Pew of Sun Oil declared that if the United States abandoned private ownership and “supinely reli[es] on government control and operation, then Hitlerism wins even though Hitler himself be defeated.” Even the largest recipients of military contracts regarded the wartime state with hostility. GM chairman Alfred Sloan—referring to the danger of government enterprises operating after war—wondered if it is “not as essential to win the peace, in an eco­nomic sense, as it is to win the war, in a military sense,” while GE’s Philip Reed vowed to “oppose any project or program that will weaken” free enterprise.[13]

Throughout the war, business leaders and associations “flooded the public sphere with descriptions of the mobilization effort in which for-profit companies figured as the heroic engineers of a production ‘miracle’.”  For example, Boeing spent nearly a million dollars a year on print advertising in 1943-45, almost as much as it set aside for research and development.

The National Association of Manufactures (NAM) was one of the most active promoters of the idea that it was business, not government, that was winning the war against state totalitarianism.  It did so by funding a steady stream of films, books, tours, and speeches.  Mark R. Wilson describes one of its initiatives:

One of the NAM’s major public-relations projects for 1942, which built upon its efforts in radio and print media, was its “Production for Victory” tour, designed to show that “industry is making the utmost contributions toward victory.” Starting the first week in May, the NAM paid for twenty newspaper reporters to take a twenty-four-day, fifteen-state trip during which they visited sixty-four major defense plants run by fifty-eight private companies. For most of May, newspapers across the country ran daily articles related to the tour, written by the papers’ own reporters or by one of the wire services. The articles’ headlines included “Army Gets Rubber Thanks to Akron,” “General Motors Plants Turning Out Huge Volume of War Goods,” “Baldwin Ups Tank Output,” and “American Industry Overcomes a Start of 7 Years by Axis.”[14]

The companies and reporters rarely mentioned that almost all of these new plants were actually financed, built, and owned by the government, or that it was thanks to government planning efforts that these companies received needed materials on a timely basis and had well-trained and highly motivated workers.  Perhaps not surprisingly, government and union efforts to challenge the corporate story were never as well funded, sustained, or shaped by as clear a class perspective.[15]  As a consequence, they were far less effective.

6. Final thoughts

 Although the World War II-era economic transformation cannot and should not serve as a model for a Green New Deal transformation of the U.S. economy, it does provide lessons that deserve to be taken seriously.  Among the most important is that a rapid system-wide transformation, such as required for a Green New Deal, is possible to achieve, and in a timely manner.  It will take the development of new state capacities and flexible policies.  And we should be prepared, from the beginning, that our own efforts to create a more socially just and environmentally sustainable economy will be met by sophisticated opposition from powerful corporations and their allies. 

The conversion history also points to some of our biggest challenges. Germany’s military victories in Europe as well as Japan’s direct attack on the United States encouraged popular support for state action to convert the economy from civilian to military production. In sharp contrast, widespread support for state action to combat climate change or restrict corporate freedom of action does not yet exist. Even now, there are many who deny the reality of climate change.  There is also widespread doubt about the ability of government to solve problems. This means we have big work ahead to create the political conditions supportive of decisive action to transform our economy.

Perhaps equally daunting, we have no simple equivalent to the military during World War II to drive a Green New Deal transformation.  The war-time mobilization was designed to meet the needs of the military.  Thus, the mobilization agencies generally treated military procurement demands as marching orders.  In contrast, a Green New Deal transformation will involve changes to many parts of our economy, and our interest in a grassroots democratic restructuring process means there needs to be popular involvement in shaping the transformation of each part, as well as the connections between them. Thus, we face the difficult task of creating the organizational relationships and networks required to bring together leading community representatives, and produce, through conversation and negotiation, a broad roadmap of the process of transformation we collectively seek.

And finally, we must confront a corporate sector that is far more powerful and popular now than it was during the period of the war.  And thanks to the current freedom corporations enjoy to shift production and finance globally, they have a variety of ways to blunt or undermine state efforts to direct their activities.

In sum, achieving a Green New Deal transformation will be far from easy. It will require developing a broad-based effort to educate people about how capitalism is driving our interrelated ecological and economic crises, building a political movement for system-wide change anchored by a new ecological understanding and vision, and creating the state and community-based representative institutions needed to initiate and direct the desired Green New Deal transformation. 

It is that last task that makes a careful consideration of the World War II-era conversion so valuable.  By studying how that rapid economy-wide transformation was organized and managed, we are able to gain important insights into, and the ability to prepare for, some of the challenges and choices that await us on the road to the new economy we so badly need.

Notes

[1] These include debates over the speed of change, the role of public ownership, and the use of nuclear power for energy generation.  There are also environmentalists who oppose the notion of sustained but sustainable growth explicitly embraced by many Green New Deal supporters and argue instead for a policy of degrowth, or a “Green New Deal without growth.”

[2] Christopher J. Tassava, “The American Economy during World War II,” EH.Net Encyclopedia, edited by Robert Whaples, February 10, 2008.

[3] Harold G. Vatter, The U.S. Economy in World War II (New York: Columbia University Press, 1985), 23.

[4] Vatter, The U.S. Economy in World War II, 22.

[5] Paul A.C Koistinen, Arsenal of World War II, The Political Economy of American Warfare 1940-1945. (Lawrence, Kansas: University of Kansas Press, 2004), 498.

[6] Gerald T. White, “Financing Industrial Expansion for War: The Origin of the Defense Plant Corporation Leases,” The Journal of Economic History, Vol. 9, No. 2 (November, 1949), 158.

[7] Andrew Bossie and J.W. Mason, “The Public Role in Economic Transformation: Lessons from World War II,” The Roosevelt Institute, March 2020, 9-10.

[8] Maury Klein, A Call to Arms, Mobilizing America for World War II (New York: Bloomsbury Press, 2013), 165.

[9] Koistinen, Arsenal of World War II, 130.

[10] As quoted in Vatter, The U.S. Economy in World War II, 24-25.

[11] As quoted in Klein, A Call to Arms, 376.

[12] Koistinen, Arsenal of World War II, 199.

[13] J.W. Mason, “The Economy During Wartime,” Dissent Magazine, Fall 2017.

[14] Mark R. Wilson, Destructive Creation, American Business and the Winning of World War II (Philadelphia: University of Pennsylvania Press, 2016), 102.

[15] Union suggestions for improving the overall efficiency of the mobilization effort as well as their offers to join with management in company production circles were routinely rejected. See Martin Hart-Landsberg, The Green New Deal and the State, Lessons from World War II,” Against the Current, No. 207 (July/August 2020); Paul A. C. Koistinen, “Mobilizing the World War II Economy: Labor and the Industrial-Military Alliance,” Pacific Historical Review, Vol. 42, No. 4 (November 1973); and Nelson Lichtenstein, Labor’s War at Home, The CIO in World War II (New York: Cambridge University Press, 1982).

Time to put the spotlight on corporate taxes

A battle is slowly brewing in Washington DC over whether to raise corporate taxes to help finance new infrastructure investments.  While higher corporate taxes cannot generate all the funds needed, the coming debate over whether to raise them gives us an opportunity to challenge the still strong popular identification of corporate profitability with the health of the economy and, by extension, worker wellbeing.

According to the media, President Biden’s advisers are hard at work on two major proposals with a combined $3 trillion price tag.  The first aims to modernize the country’s physical infrastructure and is said to include funds for the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and affordable and energy efficient housing as well as rural broadband, improvements to the electric grid, and worker training programs.  The second targets social infrastructure and would provide funds for free community college education, universal prekindergarten, and a national paid leave program. 

To pay for these proposals, Biden has been talking up the need to raise corporate taxes, at least to offset some of the costs of modernizing the country’s physical infrastructure.  Not surprisingly, Republican leaders in Congress have voiced their opposition to corporate tax increases.  And corporate leaders have drawn their own line in the sand.  As the New York Times reports:

Business groups have warned that corporate tax increases would scuttle their support for an infrastructure plan. “That’s the kind of thing that can just wreck the competitiveness in a country,” Aric Newhouse, the senior vice president for policy and government relations at the National Association of Manufacturers, said last month [February 2021].

Regardless of whether Biden decides to pursue his broad policy agenda, this appears to be a favorable moment for activists to take advantage of media coverage surrounding the proposals and their funding to contest these kinds of corporate claims and demonstrate the anti-working-class consequences of corporate profit-maximizing behavior.  

What do corporations have to complain about?

To hear corporate leaders talk, one would think that they have been subjected to decades of tax increases.  In fact, quite the opposite is true.  The figure below shows the movement in the top corporate tax rate.  As we can see, it peaked in the early 1950s and has been falling ever since, with a big drop in 1986, and another in 2017, thanks to Congressionally approved tax changes.

One consequence of this corporate friendly tax policy is, as the following figure shows, a steady decline in federal corporate tax payments as a share of GDP.  These payments fell from 5.6 percent of GDP in 1953 to 1.5 percent in 1982, and a still lower 1.0 percent in 2020.  By contrast there has been very little change in individual income tax payments as a share of GDP; they were 7.7 percent of GDP in 2020.

Congressional tax policy has certainly been good for the corporate bottom line.  As the next figure illustrates, both pre-tax and after-tax corporate profits have risen as a share of GDP since the early 1980s.  But the rise in after-tax profits has been the most dramatic, soaring from 5.2 percent of GDP in 1980 to 9.1 percent in 2019, before dipping slightly to 8.8 percent in 2020.   To put recent after-tax profit gains in perspective, the 2020 after-tax profit share is greater than the profit share in every year from 1930 to 2005.

What do corporations do with their profits?

Corporations claim that higher taxes would hurt U.S. competitiveness, implying that they need their profits to invest and keep the economy strong.  Yet, despite ever higher after-tax rates of profit, private investment in plant and equipment has been on the decline.

As the figure below shows, gross private domestic nonresidential fixed investment as a share of GDP has been trending down since the early 1980s.  It fell from 14.8 percent in 1981 to 13.4 percent in 2020.

Rather than investing in new plant and equipment, corporations have been using their profits to fund an aggressive program of stock repurchases and dividend payouts.  The figure below highlights the rise in corporate stock buybacks, which have helped drive up stock prices, enriching CEOs and other top wealth holders. In fact, between 2008 and 2017, companies spent some 53 percent of their profits on stock buybacks and another 30 percent on dividend payments.

It should therefore come as no surprise that CEO compensation is also exploding, with CEO-to-worker compensation growing from 21-to-1 in 1965, to 61-to-1 in 1989, 293-to-1 in 2018, and 320-to-1 in 2019.  As we see in the next figure, the growth in CEO compensation has actually been outpacing the rise in the S&P 500.

In sum, the system is not broken.  It continues to work as it is supposed to work, generating large profits for leading corporations that then find ways to generously reward their top managers and stockholders.  Unfortunately, investing in plant and equipment, creating decent jobs, or supporting public investment are all low on the corporate profit-maximizing agenda.  

Thus, if we are going to rebuild and revitalize our economy in ways that meaningfully serve the public interest, working people will have to actively promote policies that will enable them to gain control over the wealth their labor produces.  One example: new labor laws that strengthen the ability of workers to unionize and engage in collective and solidaristic actions.  Another is the expansion of publicly funded and provided social programs, including for health care, housing, education, energy, and transportation. 

And then there are corporate taxes.  Raising them is one of the easiest ways we have to claw back funds from the private sector to help finance some of the investment we need.  Perhaps more importantly, the fight over corporate tax increases provides us with an important opportunity to make the case that the public interest is not well served by reliance on corporate profitability.

The U.S. recovery on pause, December brings new job losses

A meaningful working-class recovery from the recession seems far away.

After seven months of job gains, although diminishing gains to be sure, we are again losing jobs.  As the chart below shows,  the number of jobs fell by 140,000 in December.

We are currently about 9.8 million jobs down from the February 2020 employment peak, having recovered only 55 percent of the jobs lost.  And, as the following chart illustrates, the percentage of jobs lost remains greater, even now after months of job growth, than it was at any point during the Great Recession. 

If the job recovery continues on its current pace, some analysts predict that it will likely take more than three years to just get back to pre-pandemic employment levels.  However, this might well be too rosy a projection.  One reason is that the early assumption that many of the job losses were temporary, and that those unemployed would soon be recalled to employment, is turning out to be wrong.  A rapidly growing share of the unemployed are remaining unemployed for an extended period. 

As we see below, in October, almost one-third of the unemployed had been unemployed for 27 weeks or longer.  According to the December jobs report, that percentage is now up to 37 percent, four times what it was before the pandemic.  And that figure seriously understates the problem, since many workers have given up looking for work; having dropped out of the workforce, they are no longer counted as unemployed.  The labor force participation rate is now 61.5 percent, down from 63.3 percent in February.

Dean Baker, quoted in a recent Market Place story, underscores the importance of this development:

“This is obviously a story of people losing their job at the beginning of the crisis in March and April and not getting it back,” said Dean Baker, co-founder and senior economist with the Center for Economic and Policy Research.

Those out of work for 27 weeks or more make up a growing share of the unemployed, and that could have enduring consequences, Baker said.

“After people have been unemployed for more than six months, they find it much harder to get a job,” he said. “And if they do get a job, their labor market prospects could be permanently worsened.”

And tragically, the workers that have suffered the greatest job losses during this crisis are those that earned the lowest wages. 

It is no wonder that growing numbers of working people are finding it difficult to meet their basic needs.

There is no way to sugar coat this situation.  We need a significant stimulus package, a meaningful increase in the minimum wage, real labor law reform, a robust national single-payer health care system, and an aggressive Green New Deal designed public sector investment and jobs program.  And there is no getting around the fact that it is going to take hard organizing and mutually supportive community and workplace actions to move the country in the direction it needs to go.

The planning and politics of conversion: World War II lessons for a Green New Deal—Part 1

This is the first in a series of posts that aim to describe and evaluate the World War II mobilization experience in the United States in order to illuminate some of the economic and political challenges we can expect to face as we work for a Green New Deal.  

This post highlights the successful government directed wartime reorientation of the U.S. economy from civilian to military production, an achievement that both demonstrates the feasibility of a rapid Green New Deal transformation of the U.S. economy and points to the kinds of organizational capacities we will need to develop. The post also highlights some of the strategies employed by big business to successfully stamp the wartime transformation as a victory for “market freedom,” an outcome that strengthened capital’s ability to dominate the postwar U.S. political economy and suggests the kind of political struggles we can expect and will need to overcome as we work to achieve a just Green New Deal transformation.

The climate challenge and the Green New Deal

We are hurtling towards a climate catastrophe.  The Intergovernmental Panel on Climate Change, in its Special Report on Global Warming of 1.5°C, warns that we must limit the increase in the global mean temperature to 1.5 degrees Celsius above pre-industrial levels by 2100 if we hope to avoid a future with ever worsening climate disasters and “global scale degradation and loss of ecosystems and biodiversity.”  And, it concludes, to achieve that goal global net carbon dioxide emissions must fall by 45 per cent by 2030 and reach net zero emissions by 2050.

Tragically, none of the major carbon dioxide emitting nations has been willing to pursue the system-wide changes necessary to halt the rise in the global mean temperature.  Rather than falling, carbon dioxide emissions rose over the decade ending in 2019.  Only a major crisis, in the current case a pandemic, appears able to reverse the rise in emissions.   

Early estimates are that the COVID-19 pandemic will cause a fall in global emissions of somewhere between 4 and 7 percent in 2020.  But the decline will likely be temporary.  For example, the International Monetary Fund is forecasting an emission rise of 5.8 percent in 2021. This bounce back is in line with what happened after the 2008-09 Great Recession.  After falling by 1.4 percent in 2009, global emissions grew by 5.1 percent in 2010.

Motivated by signs of the emerging climate crisis—extreme weather conditions, droughts, floods, warming oceans, rising sea levels, fires, ocean acidification, and soil deterioration—activists in the United States have worked to build a movement that joins climate and social justice activists around a call for a Green New Deal to tackle both global warming and the country’s worsening economic and social problems. The Green Party has promoted its ecosocialist Green New Deal since 2006, but it was the 2018 mass actions by new climate action groups such as Extreme Rebellion and the Sunrise Movement and then the 2019 introduction of a Green New Deal congressional resolution by Representative Alexandria Ocasio-Cortez and Senator Edward Markey that helped popularize the idea.

The Ocasio-Cortez—Markey resolution, echoing the Intergovernmental Panel on Climate Change, calls for a ten-year national program of mobilization designed to cut CO2 emissions by 40-60 percent from 2010 levels by 2030 and achieve net-zero emissions by 2050.  Its program includes policies that aim at replacing fossil fuels with clean, renewable sources of energy, and existing forms of transportation, agriculture, and urban development with new affordable and sustainable ones; encouraging investment and the growth of clean manufacturing; and promoting good, high paying union jobs and universal access to clean air and water, health care, and healthy food.

While there are similarities, there are also important differences, between the Green Party’s Green New Deal and Ocasio-Cortez—Markey’s Green New Deal, including over the speed of change, the role of public ownership, and the use of fracking and nuclear power for energy generation.  More generally, there are also differences among supporters of a Green New Deal style transformation over whether the needed government investments and proposed social policies should be financed by raising taxes, slashing the military budget, borrowing, or money creation.  There are also environmentalists who oppose the notion of sustained but sustainable growth explicitly embraced by many Green New Deal supporters and argue instead for a policy of degrowth, or a “Green New Deal without growth.”

These arguments are important, representing different political sensibilities and visions, and need to be taken seriously.  But what has largely escaped discussion is any detailed consideration of the actual process of economic transformation required by any serious Green New Deal program.  Here are some examples of the kind of issues we will need to confront:

Fossil fuel production has to be ratcheted down, which will dramatically raise fossil fuel prices.  The higher cost of fossil fuels will significantly raise the cost of business for many industries, especially air travel, tourism, and the aerospace and automobile industries, triggering significant declines in demand for their respective goods and services and reductions in their output and employment.  We will need to develop a mechanism that will allow us to humanely and efficiently repurpose newly created surplus facilities and provide alternative employment for released workers.

New industries, especially those involved in the production of renewable energy will have to be rapidly developed.  We will need to develop agencies capable of deciding the speed of their expansion as well as who will own the new facilities, how they will be financed, and how best to ensure that the materials required by these industries will be produced in sufficient quantities and made available at the appropriate time. We will also have to develop mechanisms for deciding where the new industries will be located and how to develop the necessary social infrastructure to house and care for the new workforce.  

The list goes on—we will need to ensure the rapid and smooth expansion of facilities capable of producing electric cars, mass transit vehicles, and a revitalized national rail system.  We will need to organize the retrofitting of existing buildings, both office and residential, as well as the training of workers and the production of required equipment and materials.  The development of a new universal health care system will also require the planning and construction of new clinics and the development of new technologies and health practices. 

The challenges sound overwhelming, especially given the required short time frame for change.  But, reassuringly, the U.S. government faced remarkable similar challenges during the war years when, in approximately three years, it successfully converted the U.S. economy from civilian to military production. This experience points to the importance of studying the World War II planning process for lessons and should give us confidence that we can successfully carry out our own Green New Deal conversion in a timely fashion.

World War II economic mobilization

The name Green New Deal calls to mind the New Deal of the 1930s, which is best understood as a collection of largely unrelated initiatives designed to promote employment and boost a depressed economy.  In contrast, the Green New Deal aims at an integrated transformation of a “functioning” economy, which is a task much closer to the World War II transformation of the U.S. economy. That transformation required the repression of civilian production, much like the Green New Deal will require repression of the fossil fuel industry and those industries dependent on it.  Simultaneously, it also required the rapid expansion of military production, including the creation of entirely new products like synthetic rubber and weapon systems, much like the Green New Deal will require expansion of new forms of renewable energy, transportation, and social programs.  And it also required the process of conversion to take place quickly, much like what is required under the Green New Deal. 

J.W. Mason and Andrew Bossie highlight the contemporary relevance of the wartime experience by pointing out:

Just as in today’s public-health and climate crises, the goal of wartime economic management was not to raise GDP in the abstract, but to drastically raise production of specific kinds of goods, many of which had hardly figured in the prewar economy. Then as now, this rapid reorganization of the economy required a massive expansion of public spending, on a scale that had hardly been contemplated before the emergency. And then as, potentially, now, this massive expansion of public spending, while aimed at the immediate non-economic goal, had a decisive impact on long-standing economic problems of stagnation and inequality. Of course, there are many important differences between the two periods. But the similarities are sufficient to make it worth looking to the 1940s for economic lessons for today.

Before studying the organization, practice, and evolution of the World War II era planning system, it is useful to have an overall picture of the extent, speed, and success of the economy’s transformation. The following two charts highlight the dominant role played by the government.  The first shows the dramatic growth and reorientation in government spending beginning in 1941.  As we can see federal government war expenditures soared, while non-war expenditures actually fell in value.  Military spending as a share of GNP rose from 2.2 percent in 1940, to 11 percent in 1941, and to 31.2 percent in 1942.

The second shows that the expansion in plant and equipment required to produce the goods and services needed to fight the war was largely financed by the government.  Private investment actually fell in value over the war years.

Source: U.S. Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government, Washington DC: The U.S. Government Printing Office, 1947, p. 92.

Source: U.S. Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government, Washington DC: The U.S. Government Printing Office, 1947, p. 115.

The next chart illustrates the speed and extent of the reorientation of industrial production over the period 1941-1944.  As we can see, while industrial production aimed at military needs soared, non-military industrial production significantly declined.

Source: U.S. Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government, Washington DC: The U.S. Government Printing Office, 1947, p. 104.

The next two charts illustrate the success of the conversion process.  The first shows the rapid increase in the production of a variety of military weapons and equipment.  The second demonstrates why the United States was called the “Arsenal of democracy”; it produced the majority of all the munitions produced during World War II.

Source: U.S. Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government, Washington DC: The U.S. Government Printing Office, 1947, p. 319

Source: U.S. Bureau of the Budget, The United States at War, Development and Administration of the War Program by the Federal Government, Washington DC: The U.S. Government Printing Office, 1947, p. 507.

Significantly, while the rapid growth in military related production did boost the overall growth of the economy, because it was largely achieved at the expense of nonmilitary production, the economy’s overall growth over the years 1941-44/45, was far from extraordinary.  For example, the table below compares the growth in real gross nonfarm product over the early years of the 1920’s to that of the early years of the 1940’s.  As we can see, there is little difference between the two periods, and that holds true even if we exclude the last year of the war, when military spending plateaued and military production began to decline.  The same holds true when comparing just the growth in industrial production over the two periods.

Years                   Growth in real gross nonfarm product                                              

1921-2528.4%
1941-4524.6%
  
1921-2426.2%
1941-4425.8%
Source: Harold G. Vatter, The U.S. Economy in World War II, New York: Columbia University Press, 1985, p. 22.

This similarity between the two periods reinforces the point that the economic success of the war years, the rapid ramping up of military production, was primarily due to the ability of government mobilization agencies to direct an economic conversion that privileged the production of goods and services for the military at the expense of non-military goods and services.  This experience certainly lends credibility to those who seek a similar system-wide conversion to achieve a Green New Deal transformation of the U.S. economy.

Such a transformation is not without sacrifice.  For example, workers did pay a cost for the resulting suppression of civilian oriented production, but it was limited.  As Harold Vatter points out: “There were large and real absolute decreases in total consumer expenditures between 1941 and 1945 on some items considered important in ordinary times.  Prominent among these, in the durable goods category, were major home appliances, new cars, and net purchases of used cars, furniture, and radio and TV sets.”

At the same time there were real gains for workers.  Overall personal consumption which rose in both 1940 and 1941, declined absolutely in 1942, but then began a slow and steady increase, with total personal consumption higher in 1945 than in 1941.  However, this record understates the real gains.  The U.S. civilian population declined from 131.6 million in 1941 to 126.7 million in 1944.  Thus, the gain in personal consumption on a per capita basis was significant.  As Vatter notes, “real employee compensation per private employee in nonfarm establishments rose steadily ever year, and in 1945 was over one-fifth above the 1941 level. . . . More broadly, similar results show up for the index of real disposable personal income per capita, which increased well over one-fourth during the same war years.”  Of course, these gains were largely the result of more people working and for longer hours; it was definitely earned.  Also important is the fact that pretax family income rose faster for those at the bottom of the income distribution than for those at the top, helping to reduce overall income inequality. 

In sum, there are good reasons for those seeking to implement a Green New Deal style transformation of the U.S. economy to use the World War II planning experience as a template.  A careful study of that experience can alert us to the kinds of organizational and institutional capacities we will need to develop.  And, it is important to add, it can also alert us to the kinds of political challenges we can expect to face.

Planning and politics

The success of the U.S. economy’s World War II transformation was due, in large part, to the work of a series of changing and overlapping mobilization agencies that President Roosevelt established by executive order and then replaced or modified as new political and economic challenges emerged. Roosevelt took his first meaningful action to help prepare the United States economy for war in May 1940, when he reactivated the World War 1-era National Defense Advisory Commission (NDAC).  The NDAC was replaced by the Office of Production Management (OPM) in December 1940.  The Supply Priorities and Allocation Board (SPAB) was then created in August 1941 to develop a needed longer-term planning orientation to guide the work of the OPM.  And finally, both the OPM and the SPAB were replaced by the War Production Board (WPB) in January 1942.  With each change, decision-making became more centralized, planning responsibilities expanded, and authority to direct economic activity strengthened.

The work of these agencies was greatly enhanced by a number of other initiatives, one of the most important being the August 1940 establishment of the Defense Plant Corporation (DPC). The DPC was authorized to directly finance and own plant and equipment vital to the national defense. The DPC ended up financing and owning roughly one-third of the plant and equipment built during the war, most of which was leased to private companies to operate for a minimal amount, often $1 a year. The aircraft industry was the main beneficiary of DPC investment, but plants were also built to produce synthetic rubber, ships, machine tools, iron and steel, magnesium, and aluminum.

Despite its successful outcome, the process of economic conversion was far from smooth and the main reason was resistance by capitalists.  Still distrustful of New Deal reformers, most business leaders were critical of any serious attempt at prewar planning that involved strengthening government regulation and oversight of their respective activities.  Rather, they preferred to continue their existing practice of individually negotiating contracts with Army and Navy procurement agencies.  Many also opposed prewar government entreaties to expand their scale of operations to meet the military’s growing demand for munitions and equipment.  Their reasons were many: they were reluctant to expand capacity after a decade of depression; civilian markets were growing rapidly and highly profitable; and the course of the war, and the U.S. participation in it, remained uncertain.

Their attitude and power greatly influenced the operation and policies of the NDAC, which was built on industry divisions run by industry leaders, most of whom were so-called “dollar-a-year men” who continued to draw their full salaries from the corporations that employed them, and advised by industry associations.  This business-friendly structure, with various modifications, was then transferred to the OPM and later the WPB.

With business interests well represented in the prewar mobilization agencies, the government struggled to transform the economy in preparation for war.  The lack of new business investment in critical industries meant that by mid-1941 material shortages began forcing delays in defense orders; aluminum, magnesium, zinc, steel, and machine tools were all growing scare.  At the same time, a number of industries that were major consumers of these scare materials and machinery, such as the automobile industry, also resisted government efforts to get them to abandon their consumer markets and convert to the production of needed military goods.

In some cases, this resistance lasted deep into the war years, with some firms objecting not only to undertaking their own expansion but to any government financed expansion as well, out of fear of post-war overproduction and/or loss of market share.  The resulting political tension is captured by the following exchange at a February 1943 Congressional hearing between Senator E. H. Moore of Oklahoma and Interior Secretary and Petroleum Administrator for War Harold L. Ickes over the construction of a petroleum pipeline from Texas to the East Coast:

Secretary Ickes. I would like to say one thing, however. I think there are certain gentlemen in the oil industry who are thinking of the competitive position after the war.

The Chairman. That is what we are afraid of, Mr. Secretary.

Secretary Ickes. That’s all right. I am not doing that kind of thinking.

The Chairman. I know you are not.

Secretary Ickes. I am thinking of how best to win this war with the least possible amount of casualties and in the quickest time.

Senator Moore. Regardless, Mr. Secretary, of what the effect would be after the war? Are you not concerned with that?

Secretary Ickes. Absolutely.

Senator Moore. Are you not concerned with the economic situation with regard to existing conditions after the war?

Secretary Ickes. Terribly. But there won’t be any economic situation to worry about if we don’t win the war.

Senator Moore. We are going to win the war.

Secretary Ickes. We haven’t won it yet.

Senator Moore. Can’t we also, while we are winning the war, look beyond the war to see what the situation will be with reference to –

Secretary Ickes (interposing). That is what the automobile industry tried to do, Senator. It wouldn’t convert because it was more interested in what would happen after the war. That is what the steel industry did, Senator, when it said we didn’t need any more steel capacity, and we are paying the price now. If decisions are left with me, it is only fair to say that I will not take into account any post-war factor—but it can be taken out of my hands if those considerations are paid attention to.

Once the war began, many businesses were also able to build a strategic alliance with the military that allowed them to roll back past worker gains and isolate and weaken unions.  For example, by invoking the military’s overriding concern with achieving maximum production of the weapons of war, business leaders were able to defeat union attempts to legislate against the awarding of military contracts to firms in violation of labor law. They also succeeded in ignoring overtime pay requirements when lengthening the workweek and in imposing new workplace rules that strengthened management prerogatives. 

If unions struck to demand higher wages or resist unilateral workplace changes, business and military leaders would declare their actions a threat to the wartime effort, which cost them public support. Often the striking unions were threatened with government sanctions by mobilization authorities.  In some cases, especially when it came to the aircraft industry, the military actually seized control of plants, sending in troops with fixed bayonets, to break a strike.  Eventually, the CIO traded a no-strike pledge for a maintenance of membership agreement, but that often put national union officials in the position of suppressing rank-and-file job actions and disciplining local leaders and activists, an outcome which weakened worker support for the union.

Business didn’t always have its own way.  Its importance as essential producer was, during the war, matched by the military’s role as essential demander.  And, while the two usually saw eye-to-eye, there were times when military interests diverged from, and dominated, corporate interests.  Moreover, as the war continued, government planning agencies gained new powers that enabled them to effectively regulate the activities of both business and the military.  Finally, the work of congressional committees engaged in oversight of the planning process as well as pressure from unions and small business associations also helped, depending on the issue, to place limits on corporate prerogatives.

Still, when all was said and done, corporate leaders proved remarkably successful in dominating the mobilization process and strengthening their post-war authority over both the government and organized labor.  Perhaps the main reason for their success is that almost from the beginning of the mobilization process, a number of influential business leaders and associations aggressively organized themselves to fight their own two-front war—one that involved boosting production to help the United States defeat the Axis powers and one that involved winning popular identification of the fight for democracy with corporate freedom of action.

In terms of this second front, as J.W. Mason describes:

Already by 1941, government enterprise was, according to a Chamber of Com­merce publication, “the ghost that stalks at every business conference.” J. Howard Pew of Sun Oil declared that if the United States abandoned private ownership and “supinely reli[es] on government control and operation, then Hitlerism wins even though Hitler himself be defeated.” Even the largest recipients of military contracts regarded the wartime state with hostility. GM chairman Alfred Sloan—referring to the danger of government enterprises operating after war—wondered if it is “not as essential to win the peace, in an eco­nomic sense, as it is to win the war, in a military sense,” while GE’s Philip Reed vowed to “oppose any project or program that will weaken” free enterprise.

Throughout the war, business leaders and associations “flooded the public sphere with descriptions of the mobilization effort in which for-profit companies figured as the heroic engineers of a production ‘miracle’.”  For example, Boeing spent nearly a million dollars a year on print advertising in 1943-45, almost as much as it set aside for research and development.

The National Association of Manufactures (NAM) was one of the most active promoters of the idea that it was business, not government, that was winning the war against state totalitarianism.  It did so by funding a steady stream of films, books, tours, and speeches.  Mark R. Wilson describes one of its initiatives:

One of the NAM’s major public-relations projects for 1942, which built upon its efforts in radio and print media, was its “Production for Victory” tour, designed to show that “industry is making the utmost contributions toward victory.” Starting the first week in May, the NAM paid for twenty newspaper reporters to take a twenty-four-day, fifteen-state trip during which they visited sixty-four major defense plants run by fifty-eight private companies. For most of May, newspapers across the country ran daily articles related to the tour, written by the papers’ own reporters or by one of the wire services. The articles’ headlines included “Army Gets Rubber Thanks to Akron,” “General Motors Plants Turning Out Huge Volume of War Goods,” “Baldwin Ups Tank Output,” and “American Industry Overcomes a Start of 7 Years by Axis.”

It was rarely if ever mentioned by the companies or the reporters that almost all of these new plants were actually financed, built, and owned by the government, or that it was thanks to government planning efforts that these companies had well-trained workers and received needed materials on a timely basis.  Perhaps not surprisingly, government and union efforts to challenge the corporate story were never as well funded, sustained, or shaped by as clear a class perspective.  As a consequence, they were far less effective.

Paul A.C. Koistinen, in his major study of World War II planning, quotes Hebert Emmerich, past Secretary of the Office of Production Management (OPM), who looking back at the mobilization experience in 1956 commented that “When big business realized it had lost the elections of 1932 and 1936, it tried to come in through the back door, first through the NRA and then through the NDAC and OPM and WPB.”  Its success allowed it to emerge from the war politically stronger than when it began.

Capital is clearly much more organized and powerful today than it was in the 1940s.  And we can safely assume that business leaders will draw upon all their many strengths in an effort to shape any future conversion process in ways likely to limit its transformative potential.  Capital’s wartime strategy points to some of the difficult challenges we must prepare to face, including how to minimize corporate dominance over the work of mobilization agencies and ensure that the process of transformation strengthens, rather than weakens, worker organization and power.  Most importantly, the wartime experience makes clear that the fight for a Green New Deal is best understood as a new front in an ongoing class war, and that we need to strengthen our own capacity to wage a serious and well-prepared ideological struggle for the society we want to create.

Profits over people: frontline workers during the pandemic

It wasn’t that long ago that the country celebrated frontline workers by banging pots in the evening to thank them for the risks they took doing their jobs during the pandemic. One national survey found that health care workers were the most admired (80%), closely followed by grocery store workers (77%), and delivery drivers (73%). 

Corporate leaders joined in the celebration. Supermarket News quoted Dacona Smith, executive vice president and chief operating officer at Walmart U.S., as saying in April:

We cannot thank and appreciate our associates enough. What they have accomplished in the last few weeks has been amazing to watch and fills everyone at our company with enormous pride. America is getting the chance to see what we’ve always known — that our people truly do make the difference. Let’s all take care of each other out there.

Driven by a desire to burnish their public image, deflect attention from their soaring profits, and attract more workers, many of the country’s leading retailers, including Walmart, proudly announced special pandemic wage increases and bonuses.  But as a report by Brookings points out, although their profits continued to roll in, those special payments didn’t last long.

There are three important takeaways from the report: First, don’t trust corporate PR statements; once people stop paying attention, corporations do what they want.  Second, workers need unions to defend their interests.  Third, there should be some form of federal regulation to ensure workers receive hazard pay during health emergencies like pandemics, similar to the laws requiring time and half for overtime work.

The companies and their workers

In Windfall Profits and Deadly Risks, Molly Kinder, Laura Stateler, and Julia Du look at the compensation paid to frontline workers at, and profits earned by, 13 of the 20 biggest retail companies in the United States.  The 13, listed in the figure below, “employ more than 6 million workers and include the largest corporations in grocery, big-box retail, home improvement, pharmacies, electronics, and discount retail.” The seven left out “either did not have public financial information available or were in retail sectors that were hit hard by the pandemic (such as clothing) and did not provide COVID-19 compensation to workers.”

Pre-pandemic, the median wages for the main frontline retail jobs (e.g., cashiers, salespersons, and stock clerks) at these 13 companies generally ranged from $10 to $12 per hour (see the grey bar in the figure below).  The exceptions at the high end were Costco and Amazon, both of which had a minimum starting wage of $15 before the start of the pandemic. The exception at the low end was Dollar General, which the authors estimate had a starting wage of only $8 per hour.  

Clearly, these companies thrive on low-wage work.  And it should be added, disproportionately the work of women of color.  “Women make up a significantly larger share of the frontline workforce in general retail stores and at companies such as Target and Walmart than they do in the workforce overall. Amazon and Walmart employ well above-average shares of Black workers (27% and 21%, respectively) compared to the national figure of 12%.”

Then came the pandemic

Eager to take advantage of the new pandemic-driven business coming their way, all 13 companies highlighted in the report quickly offered some form of special COVID-19-related compensation in an effort to attract new workers (as highlighted in the figure below).  “Commonly referred to as “hazard pay,” the additional compensation came in the form of small, temporary hourly wage increases, typically between $2 and $2.50 per hour, as well as one-off bonuses. In addition to temporary hazard pay, a few companies permanently raised wages for workers during the pandemic.“

Unfortunately, as the next figure reveals, these special corporate payment programs were short-lived.  Of the 10 companies that offered temporary hourly wage increases, 7 ended them before the beginning of July and the start of a new wave of COVID-19 infections. Moreover, even with these programs, nine of the 13 companies continued to pay wages below $15 an hour.  Only three companies instituted permanent wage hikes.   While periodic bonuses are no doubt welcomed, they are impossible to count on and of limited dollar value compared with an increase in hourly wages.  So much, for corporate caring!

Don’t worry about the companies

As the next figure shows, while the leading retail companies highlighted in the study have been stingy when it comes to paying their frontline workers, the pandemic has treated them quite well.  As the authors point out:

Across the 13 companies in our analysis, revenue was up an average of 14% over last year, while profits rose 39%. Excluding Walgreens—whose business has struggled during the pandemic—profits rose a staggering 46%. Stock prices rose on average 30% since the end of February. In total, the 13 companies reported 2020 profits to date of $67 billion, which is an additional $16.9 billion compared to last year.

Looking just at the compensation generosity of the six companies that had public data on the total cost of their extra compensation to workers, the authors found that the numbers “paint a picture of most companies prioritizing profits and wealth for shareholders over investments in their employees. On average, the six companies’ contribution to compensating workers was less than half of the additional profit earned during the pandemic compared to the previous year.”

This kind of scam, where companies publicly celebrate their generosity only to quietly withdraw it a short time later, is a common one.  And because it is hard to follow corporate policies over months, they are often able to sell the public that they really do care about the well-being of their workers.  That is why this study is important—it makes clear that relying on corporations to do the “right thing” is a losing proposition for workers.

America’s labor crisis

We face a multifacited labor crisis. One of the most important aspects of this crisis is the U.S. economy’s diminishing capacity to provide employment. This development is highlighted in the chart below, which shows the trend in civilian employment over the last thirty years.  Civilian employment includes all individuals who worked at least one hour for a wage or salary, or were self- employed, or were working at least 15 unpaid hours in a family business or on a family farm, during the week including the 12th of the month when surveys are taken.

As we can see, it took approximately 4 years to bring civilian employment back to its pre-crisis peak after the 2001 recession, and a much longer 6.5 years after the 2008 recession.  The number of years it will take to regain the pre-crisis peak employment level after the end of this recession (which remains ongoing) can be expected to be far greater, with some analysts predicting it could take a decade or more. And of course, new people will be entering the labor force over that decade, generating a serious unemployment problem.

The following chart, which shows the trend in the civilian labor force participation rate, offers additional evidence of the economy’s declining job creating potential. The civilian labor force participation rate is calculated by dividing the sum of all workers who are employed or actively seeking employment by the total noninstitutionalized, civilian working-age population.

As we can see, this measure has been in sharp decline for many years, including over the years of expansion that followed the 2008 recession.  With growing numbers of working-age people, including prime-age workers, forced to drop out of the labor force even during so-called “good times,” there is little reason to expect a significant improvement in employment opportunities in the years following the end of this recession.

These charts make clear that without a significant change in the workings of the economy, working people are facing a future of declining employment possibilities. And it certainly appears that there is no enthusiasm for major economic changes among the most powerful and wealthy in the United States.  According to a recent report, U.S. billionaires saw their fortunes soar by $434 billion during the nation’s lockdown between mid-March and mid-May. And Market Watch reported that the S&P 500 and Nasdaq just booked the best postelection day gains in history.  The reason:

Wall Street warmed to the possibility of a divided U.S. government and further political gridlock in Washington following a contentious election, potentially keeping Trump administration’s tax cuts in place no matter who sits in the White House.

In sum, if we want a meaningful economic recovery, one that serves majority needs, we will have to fight for it.  Among other things, this means finding new ways to strengthen labor-community coalitions and engage people in sustained conversation about the class-contradictory nature of our economic system.

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.

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.

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.

Coronavirus: a return to normal is not good enough

We shouldn’t be satisfied with a return to normalcy. We need a “new normal.”

We are now in a recession, one triggered by government ordered closures of businesses producing nonessential goods and services, an action taken to limit the spread of the coronavirus. In response, Congress has approved three stimulus measures which legislators hope will keep the economy afloat until the virus is contained and companies can resume business as usual.

Many people, rightly criticizing the size, speed, and aims of these measures, have called for a new, improved stimulus package.  But what is getting far less attention, and may be the most important thing to criticize, is the notion that we should view a return to normalcy as our desired goal.  The fact is we also need a new economy.

The old normal only benefited a few

The media, even those critical of the Trump administration, all too often showcase economic experts who, while acknowledging the severity of the current crisis, reassure us that economic activity will return to normal before too long.  But since our economy increasingly worked to benefit a small minority, that is no cause for celebration.

Rarely mentioned is the fact that our economy was heading into a recession before the coronavirus hit. Or that living and working conditions for the majority of Americans were declining even during the past years of expansion. Or that the share of workers in low-wage jobs was growing over the last fifteen years.  Or that Americans are facing a retirement crisis.  Or that life expectancy fell from 2014 to 2017 because of the rise in mortality among young and middle-aged adults of all racial groups due to drug overdoses, suicides, and alcoholism.  If existing patterns of ownership and production remain largely unchanged, we face a future of ever greater instability, inequality, and poverty.

The economic crisis

The failings of our current system are only accentuated by the crisis. Many analysts are predicting an unprecedented one-quarter decline in GDP of 8 percent to 10 percent in the second quarter of this year.   The overall yearly decline may well be in the 5-7 percent range, the steepest annual drop in growth since 1946.

The unemployment rate is soaring and may reach 20 percent before the year is out.  A recent national survey found that 52 percent of workers under the age of 45 have already lost their job, been placed on leave, or had their hours cut because of the pandemic-caused downturn.

As a consequence, many people are finding it difficult to pay rent.  Survey results show that only 69 percent of renters paid their rent during the first week of April compared with over 80 percent during the first week of March.  And this includes renters who made partial payments.  Homeowners are not in much better shape.

Our unemployment insurance system has long been deficient: benefits are inadequate, last for only short period of time, and eligibility restrictions leave many workers uncovered. As of year-end 2019, the average unemployment insurance check was only $378 a week, the average duration of benefits was less than 15 weeks, and fewer than one-third of those unemployed were drawing benefits.

Now, the system is overwhelmed by people seeking to file new claims, leaving millions unable to even start their application process.  Although recent federal legislation allows states to expand their unemployment insurance eligibility and benefits, a very large share of those losing their jobs will find this part of our safety net not up to its assigned job.

A better crafted stimulus is needed

In response to the crisis, policy-makers have struggled to approve three so-called stimulus measures, the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act being the largest and most recent.  Unfortunately, these efforts have been disappointing.  For example, most of the provisions in the CARES Act include set termination dates untied to economic or health conditions. Approved spending amounts for individuals are also insufficient, despite the fact that Treasury Secretary Mnuchin believes the $1200 provided to most Americans as part of the CARES Act will be enough to tide them over for 10 weeks.

Also problematic is that not all CARE funds are directed to where they are most needed.  For example, no money was allocated to help states maintain their existing Medicaid program eligibility and benefit standards or expand health care coverage to uninsured immigrants and those who lose their job-based insurance.  And no money was allocated to state and local governments to help them maintain existing services in the face of declining tax revenues. Perhaps not surprisingly, the largest share of CARES approved spending is earmarked for corporate rescues without any requirement that the funds be used for saving jobs or wages.  In sum, we need another, better stimulus measure if we hope to minimize the social costs of our current crisis.

Creating a new normal

Even a better stimulus measure leaves our economy largely unchanged.  Yet, ironically, our perilous situation has encouraged countless expressions of social trust and solidarity that reveal ways to move forward to a more humane, egalitarian, and sustainable economy.  This starts with the growing recognition by many Americans that social solidarity, not competitive individualism, should shape our policies. People have demonstrated strong support for free and universal access to health care during this crisis, and we can build on that to push for an expansive Medicare for All health care system.  People also have shown great solidarity with the increasingly organized struggles of mail carriers, health care workers, bus drivers, grocery shoppers, cashiers, and warehouse workers to keep themselves safe while they brave the virus for our benefit.  We can build on that solidarity to push for new labor laws that strengthen the ability of all workers to form strong, democratic unions.

There is also growing support for putting social well-being before the pursuit of profit.  Many people have welcomed government action mandating that private corporations convert their production to meet social needs, such as the production of ventilators and masks.  We can build on this development to encourage the establishment of publicly owned and operated industries to ensure the timely and affordable production of critical goods like pharmaceuticals and health care equipment. And many people are coming to appreciate the importance of planning for future crises.  This appreciation can be deepened to encourage support for the needed transformation of our economy to minimize the negative consequences of the growing climate crisis.

We should not discount our ability to shape the future we want.