The Forgotten History of “The Labor Board Crew”: How Mediators at the US Labor Board Changed Organized Labor (and the World)

[THEME MUSIC PLAYING] MARK BLYTH: From the Rhodes Center for International Finance and Economics at Brown University, this is the Rhodes Center Podcast. I'm the director of the Rhodes Center and your host, Mark Blyth. On this episode, I spoke with Ron Schatz, professor of history at Wesleyan University, and author of the new book, The Labor Board Crew.

In it, he tells the story of a group of academics and lawyers who, during World War II, took on roles that hadn't really existed before. They were hired as mediators, recruited by the government to help end strikes at a time when the US government felt the country couldn't afford to have factories sitting empty. These folks-- very young folks, in fact-- weren't union organizers. They weren't even necessarily union sympathizers. But they were very good at this new kind of job, and the techniques that they pioneered changed not only labor relations in the United States, but how conflicts were resolved in settings ranging from higher education in the '60s to international relations in the '70s and '80s.

What I love about Ron's book is that this is not a story about mass movements and big struggles. It's not about institutions. It's about a set of individuals in a particular historical moment that became incredibly important for structuring the American postwar economy and society. It's a really fascinating book. Totally worth the read and we had a great conversation about it. We started by looking at the moment in history when this new Labor Board Crew emerges in the aftermath of Pearl Harbor. Here's Ron.

RON SCHATZ: Well, it's a great time for workers. So they have a lot of leverage, it would seem, during the war, and they've had a lot of power. Workers can have a job any time they want and quit anytime they want. And so they did conduct a lot of strikes. However, these were short strikes. They were often less than a day long, because the AFL and the CIO, which were two different organizations at that time, both made commitments to the US government that they would not permit or approve any strikes.

Nonetheless, workers did go on strike. With two major exceptions, the union leaders did not approve strikes. But if workers have a boss who's being bad, being awful, or it could be just the local foreman, or whatever-- they'll just stop. And since they have much leverage where the purpose of doing is to get that new agency, the National World Labor Board, to send somebody over there and do something about it.

MARK BLYTH: So this is the key thing. These guys are mediators. They're from the government. But they're not of the government. They're kind of, like, one arm removed.

RON SCHATZ: Yes. To defeat the Axis powers, the United States have to be contributing, not only in its military force, but especially, and equally important, its industrial force. Not only for the US, but for the Brits, for the Soviets, for the Chinese and others-- all the Allies. But the United States-- relationships between capital and labor in the United States would be quite hostile. Waves of strikes in Nineteen-Forty-One.

Now the AFL and the CIO make a commitment to the US government that we won't approve any strikes. But how are they going to do it? They hire these young people who they trained themselves and taught them how to mediate, arbitrate. And then these people became-- they didn't know how to do this before then, because most industries didn't have a tradition of labor management mediation and arbitration. They are young. This is sort of the age of assistant professors, 29, 30, 31-2-3 years old. Normally, they're economists. Some of them are trained in law.

MARK BLYTH: One of the most successful examples you have in the book is a guy who was a Quaker. So basically, listening. Listening became an important skill, right?

RON SCHATZ: Oh, yeah. Yeah, yeah. They had to learn in new ways how to resolve conflicts between union representatives and company representatives, and do it quickly. And they developed a skill which, then, they not only did during the war, but they continue to do it after the war.

All of the major universities-- not all the major universities, but the universities in the parts of the country where unions were strong-- in Rhode Island or Massachusetts or Illinois or California. Universities all created industrial relations programs or departments or schools, and these people were appointed as their professors and directed those programs. So they kept doing this, then, after the war, and for the rest of their lives.

MARK BLYTH: Let's move into the period after the war when, as you put it in the book, they become ascendant. Let's talk about two particularly thorny disputes. One, the Ford Motor Company, who really didn't like unions. And then after that, steel. Because steel becomes incredibly important to this story all the way through the '70s. So let's start with Ford. What do these guys do with Ford after the war, and why is it important?

RON SCHATZ: The government leaned on the Ford company that you've got to stop these strikes. You're supposed to be making airplanes, or you're making tanks and you're making cannons. And we can't do this. It's such a big company, we need you. And they hire young economists, one of whom became quite famous. Robert McNamara becomes the Secretary of Defense in the Kennedy administration and the Johnson administration.

Henry Ford's grandson, Henry Ford II, becomes president and McNamara and the other whiz kids, as they were called, become the managers for the management side. On the union side, well, the unions were also full of internal conflicts. Actually, to understand these conflicts you have to understand, often the conflicts are inside the groups as much as between them. Walter Reuther, who was a Social Democrat, was able to defeat the communists inside the United Auto Workers.

So then we have young leaders on both sides, in the union and the company, and how are they going to manage things between them? Well they get one of the Labor Board guys, Harry Shulman, who was a professor of law at Yale. And during the war, he spends-- every other week, he's in Detroit, meeting [INAUDIBLE] for long days and after dinner, over drinks, talking to people on both sides to try to overcome the conflict. And then, they kept using Harry Shulman after the war.

MARK BLYTH: So rather than, there's been this picture of enlightened bosses coming together with enlightened unions, that's going on. But what's really important is, you've got somebody who's a linchpin to this whole thing, like Shulman, who's making it happen. What's the story in the steel industry? Because it's very similar, right?

RON SCHATZ: It's parallel. Similar. Each industry is unique. Steel, after all, for instance, has no assembly lines. It's much more complex production system. Also, one company, US Steel, has about 40% of the market. About 10 others, nicknamed Little Steel, had about 40% together, collectively. And then there are many smaller ones, but they take leadership from US Steel.

And during the war, both the unions and the management-- they're guaranteed profits. And the labor's wage rates are the same, but earnings are skyrocketing up during the war because of the long hours. But they still have lots of disputes in each local place, in each factory and amongst workers, and they don't have systems for resolving them. And so the Labor Board people help construct grievance and arbitration systems, typically for five stages.

So that if you and I are the two sides, we try to resolve it. If we don't, it goes up to the next stage, next stage. At the top, it's resolved by this arbitrator, if they don't reach it any other way. And so they able to do this during the war in the steel industry. And after the war, they kept using the same kind of system.

And in fact, after the Labor Board people themselves left-- because they were no longer working for the government, they were working at universities and so forth-- the unions and the companies wrote new contracts to guarantee resolving these conflicts. The problem is, they didn't consult the actual workers. And there was huge protests about the conditions. Those guys are getting more and we're not! And so they go on strike. Lots of little strikes.

And this succession of arbitrators, one after another, is fired and fired and fired and fired and fired. And finally, they bring in Sylvester Garrett, who, during the war, was the director of the Regional War Labor Board for Pennsylvania, which meant US Steel and Bethlehem Steel, all based there. Garrett, incidentally, is another Quaker.

A lot of Quakers involved in this, and they have a background in conflict resolution. Because that's what you do. We'd go to the-- at the meeting. And it's 10 of us. If we're all Quakers, sit around and discuss. Hmm, I don't know about that, well, this is what I think. And the next one, then the-- and they resolved. And they used that technique.

So Garrett is able to resolve things, bring to the common peace it seems by the late nineteen-fifties. But underneath, profits were declining in the steel industry and the agreements seemed to benefit the unions. And so, US Steel and the other steel companies forced the unions to go on strike. And it was the biggest strike in American labor history up to that time.

Ostensibly, the unions won. They forced the company to back down. But both sides lost. The whole industry was-- you know, think, [? remember, ?] please-- these are old factories.

MARK BLYTH: Right.

RON SCHATZ: And the United States and the Marshall Plan was helping fund new factories in Germany and Japan and elsewhere. So finally, the-- well, I should--

MARK BLYTH: No, no. I mean you got exactly to the point I wanted to get to, which is essentially, this works so long as the United States is the only game in town. Right? It's really just a question of the spoils and who gets what. But once other people start taking their share of the spoils, right-- and steel is the classic example of this.

You can import steel. It's a basic product. It comes in three or four flavors. And the high-quality stuff is being made in mills that the United States doesn't have, right? And that's what industry increasingly wants. So profitability starts to go down. The management-union relationships start to fracture. But they still try to hold this together all the way through the '60s.

What really begins to change it, there were two kind of Wild Card episodes. So the first one is the students revolts of the nineteen-sixties, and the second one is the unionization of the public sector in the nineteen-seventies. How do these two events undermine this model from without rather than from within? Start with the student revolt. How does that fit into this story? Free speech at Berkeley, and all this stuff?

RON SCHATZ: Yeah. This was the baby boomers are coming into college. A small number of students from UC Berkeley went to Mississippi and Alabama in Nineteen-Sixty-Four to persuade Black people to register to vote. And then when they get back afterwards, in the fall of '64, and the University is shutting down the rights for students. The students mobilize for a free speech movement. The Free Speech Movement unites the socialists and the most radical people, and the Republicans and the Democrats, because they were all against these new policies of the administration of the University.

And so we get the student protests of the kind never happened in the United States before. And this is just in Berkeley. But once the United States enters the war in Vietnam, increases the number of soldiers and the number of deaths rise, and number of men that are drafted, suddenly the protests are immense. And then the anti-war movement and the student movement become intertwined.

MARK BLYTH: So how do the Labor Board guys get involved in this? How do they mediate this conflict?

RON SCHATZ: They were appointed as the presidents and the provost and the leading deans at each of these major universities. And they used the same system of conflict resolution that they built during the-- in industry, in the nineteen-forties and '50s. They created similar parallel systems in the major universities, including, I would imagine, here, from Brown. They created parallel systems so that students had representation and faculty committees had representation on the Board of Trustees.

And several of them, most notably Robben Fleming at University of Michigan, are particularly skilled at resolving these kind of conflicts. And Fleming is interesting, because Michigan is also where SDS was founded, and he had influence building this kind of conflict resolution systems at universities throughout the country. What they first did in industry, they now did in higher education.

But, jumping to the other questions you ask, by the '70s, the economy was going-- became very difficult. There was high inflation and stagnation. So a new word is created, "stagflation." Stagnation and inflation. They shouldn't happen. That can't happen, according to Keynes, but it does. And they are not able to come up with a system to resolve that one.

MARK BLYTH: But they are asked to do that in exactly that moment, aren't they? And this is when it begins to break apart, even within this network. And it's the dispute over unionizing the public sector, in New York in particular. What's different about that? These guys have been very pro-union their whole lives. But then it comes to basically Mayor Lindsay in the '70s and the budget crisis in New York. And they began to say, hold on a minute. Wait a minute, what's going on here? What's the difference in the public sector?

RON SCHATZ: There, the Labor Board people acquire comparable positions in New York City-- and in other major highly-unionized cities, but New York is foremost. How they used to bring together representatives of unions and companies to reach compromises, and who pays for it? Well, those who make profits out of it. But in this case, it's the taxpayers. And it didn't seem to David Cole or George Taylor or John Dunlop that it seemed right that the taxpayers should be paying for this.

This is happening at the same time the unions have become much-- for the first time, becoming extremely militant-- much more militant. People like Al Shanker and the Teachers Union. The public sector union leaders were more ferocious than any of the others in the private sector had been for years. Taxes will go up, inflation is happening. There is going to be resistance to this whole system of conflict resolution that had been working in the private sector. It was not working anymore in the public sector, and the same time there's resistance in the private sector because of new imports from Japan.

MARK BLYTH: Mm-hmm. So their profits are being squeezed, the magic has gone away. You have stagflation and you still got strong unions, particularly in the public sector. At the end of the book, someone appears. He makes an appearance earlier on, but then he comes in at the Nixon administration as the next Secretary of Labor after Dunlop, and that's George Shultz.

So we think of George Shultz as, you know, Reagan's right-hand man. The guy who negotiates with the Soviets. And he is. And he ends up being one of the longest-serving cabinet members in the Reagan administration, et cetera. And he's known for his foreign policy.

But he's this really interesting bridge figure, because in the nineteen-seventies, as Secretary of Labor-- and I have to find that word you use in the book, just to share it with everyone-- he blames management for price gouging and calls them a bunch of "crepehangers." Which, neither of us can remember what that word is, but it's a great insult. I'm going to use it from now on. How does George Shultz go from someone who's blaming management for inflation to someone who's working in the Reagan administration that effectively breaks the American unions? Tell us about Shultz's journey.

RON SCHATZ: Oh, he's a fabulous character. I thought of writing a biography of him. Unfortunately, Shultz chose his own biographer. [CHUCKLES] And has all his papers not available to anyone else except to that fellow. So until they open up his papers, when-- and I have to see, once the book comes out, is there more to say?

But Shultz background was as Labor Relations mediator or arbitrator at MIT. And then later, he was Secretary of Labor in the Nixon administration, where he-- amongst other things, besides the usual jobs of this Secretary of Labor-- he was also asked to go south and help integrate the public schools in the former Confederate states, which still were not integrated at all.

Shultz uses the same techniques of building the two sides together. In this case-- in South Carolina city, for example-- you'd get the president of the Manufacturers Association and you get the president and the leaders of the NAACP. And say, all right, judges are going to require integration. Now, do we want this to happen peacefully? And he persuades both sides that it's in their both interest to do this peacefully. He's doing that.

Likewise, it is Nixon's administration-- and particularly, George Shultz and his right-hand man, Arthur Fletcher-- who create affirmative action in American industries, and also in universities, by the way. It's all-- it's out of that administration.

Shultz knew when to leave. He retired from the administration just before Nixon was obliged to resign. He becomes a CEO of a great international building corporation based in San Francisco.

But then, Reagan asks him to come back in Nineteen-Eighty-Twoat the peak of the new Cold War, when both sides, the Americans and the Soviets, were both afraid that the other was going to start a nuclear war. And Shultz, over time, uses his negotiating and mediation skills with Soviet leaders. And he had the great fortune to have new younger leaders in Gorbachev and Shevardnadze, and persuaded them that Reagan was a man they could trust, despite his reputation. And he, in turn, persuaded Reagan that, for his own interests and for the nation's interests, they ought to make deals with the Soviets. And because most of the Reagan administration people were much more to the right.

MARK BLYTH: Right.

RON SCHATZ: Shultz is a conservative. A Republican. But he'd had experience resolving conflicts with, negotiations with the Soviet Union when he was the Secretary of Treasury in the Nixon administration. He knew that you can make deals with the Soviets, and they would stick to a deal which they considered worthwhile for them. And that leads us to what seemed to be the end of the Cold War. No. [SCOFFS] You and I might look at Putin and say, wait a second. Did it end? But that's another question.

MARK BLYTH: Right. That's another story. But it's a fantastic coda. And I just want to end on this part, because it seems that maybe we live in a world now where we could use a lot more mediation. One of the things I take away from the book is precisely this notion, that if these individuals with this particular skill set were so important, and doing these things which we attribute to institutions and rules and all the sort of stuff, it's really about those individual skills. Is part of the reason we're so polarized and so angry just now because we just don't have those types of skills available to us anymore? You think that's part of what's going on?

RON SCHATZ: Yeah, I've been asked that question before. And it would seem that. Which is not to say, you know-- let's consider marriages. If a couple, man and woman, or two men, or two women, are not happy with each other, they go to a mediator. The skills have been moved to that area. But we don't have it in industry, or in the public sector. Well, why? I mean, this was a unique generation. I don't think they created successors. Maybe their time was just unique. They came at a time, because of the experiences they'd had in the Depression, the experiences they'd had in the war, the necessity of resolving conflicts because of the Cold War-- that may be part of the story here.

And then, too, underneath the story I'm telling you, is the rise of the new conservative movement. So that the conflicts in the Congress and the local levels are of intensity not seen for a very, very long time. Sometimes, people ask, well, why don't you have them again? It was a unique time.

MARK BLYTH: Yeah. All right. That's a sad note, but it's nonetheless probably an appropriate note in which to end it. It's a great book. I recommend it to everyone. It's the best labor history I've read in a very long time. Ron Schatz, thank you very much for writing it and for coming on the podcast.

RON SCHATZ: Well, thank you for inviting me.

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MARK BLYTH: This episode was produced by Dan Richards and Kate Dario. I'm Mark Blyth. You can listen to more conversations like this by subscribing to the Rhodes Center Podcast wherever you listen to podcasts. We'll be back soon with another episode of The Rhodes Center Podcast. Thanks.