Reflection

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The National Labor Relations Act: Making Sense of Historical Narratives

Diane F. Frey, PhD

Introduction

Private sector workers in the U.S. have rights to organize into unions and to engage in collective bargaining with their employers through rights that were established in 1935 with the passage of the National Labor Relations Act (NLRA). The NLRA established a series of rules to govern the rights of workers to organize and bargain with their employers, to engage in lawful strikes and also established prohibited practices that interfere with worker association rights. To oversee the implementation and enforcement of the law, the NLRA also created a federal agency overseen by a board (National Labor Relations Board) appointed by the President with confirmation required by the U.S. Senate. The Board was empowered to create a national administrative infrastructure to conduct union representation elections, hear complaints from workers and unions and to require that employers bargain once workers voted to organize into independent (non- company dominated) unions (Lichtenstein 2002 p. 37).

The new law stood in sharp contrast with legal doctrines in the U.S. prior to its passage. Many historians argue that the prior legal institutions in the U.S. supported the employer’s absolute power to rule over the workplace. There were no rights to speech, assembly or petition and thousands of unionists were fired, blacklisted or violently attacked for their organizing activity (Lichtenstein 2002 p. 31). The employer’s absolute power was backed up by judicial rulings that repeatedly affirmed that employers and individual workers were free to come to agreement on individual contracts outlining the pay and working conditions that were acceptable to both parties. The “free labor” of individual workers was the legal and conventional practice of the land but workers consistently tried, despite the many obstacles, to overcome their weaker individual position by organizing and combining with other workers to gain greater power and voice with employers.

The NLRA is often called the “Magna Carta of Labor” in the U.S. because it dislodged these older institutional arrangements and in so doing created a changed balance of power between workers and employers leading to explosive growth in union membership, collective bargaining and, along with other New Deal era programs, contributed to the economic recovery in the U.S. For the first time, the law created and implemented permanent institutions situated “within the very womb of private enterprise, which offered workers a voice, and sometimes a club, with which to resolve their grievances and organize themselves for economic struggle” (Lichtenstein 2002p. 36). The NLRA is also often called the “Wagner Act” because Senator Robert Wagner sponsored it.

NLRA as Historical Evolution of Pre-Existing Labor Policy

It can be argued that the passage of the National Labor Relations Act (NLRA) resulted from evolving and contentious labor policies in the US. Nevertheless, the new law had to be constructed within the confines of existing legal frameworks including the U.S. Constitution. The

Constitution, for example, established separate powers to be exercised by the country’s president, legislative branches and judiciary. It also limited the powers of the federal government to interfere with economic policy matters within the borders of states unless the matters concerned commerce among and between the states (interstate commerce). In this light we can point to the attempted reversals of anti-union laws and the adoption of legislation that became precursors to the NLRA.

One such attempted reversal was efforts to correct the anti-union impact of the Sherman Anti-Trust Act. Originally the law was meant to stop industry monopolies from restraining market competition but was instead used by employers with the support of the Supreme Court against unions as “obstructions of the free flow of commerce” (Cooke 1985 p. 5). In response Congress passed the Clayton Act in 1921 and it explicitly exempted unions from coverage under the Sherman Anti-Trust Act. Despite the law’s passage, the Supreme Court continued to apply the Sherman Anti-Trust Act against unions that engaged in concerted activity such as boycotts, pickets and strikes (Cook 1985 pp. 5-6).

Another example of an attempt to reverse anti-union labor relations policy was the use of “yellow dog contracts” in which employers would insist as a condition of employment that their workers sign an individual employment contract agreeing not to join or act on behalf of a union. The contracts had long been upheld by courts, including the U.S. Supreme Court, in 1908 as wholly suitable under its principles of ‘freedom to contract’ (Cooke 1985 p. 6). If a union tried to organize the workers of an employer into the union, the employer would simply allege that the union was inducing workers to violate their individual employment contracts. Despite the Supreme Court’s support for them, several states passed laws outlawing the use of yellow dog contracts and in 1898 Congress passed the Erdman Act, which forbade employers in the railroad industry from using yellow dog contracts.

A key turning point in the evolution of labor policy in the U.S. came during World War I when then U.S. President Wilson established a War Labor Board to resolve labor disputes (Cooke 1985 p. 8). An essential element motivating President Wilson’s actions was the urgent necessity of labor peace during the war. The notion of labor peace and its value was extended with the passage of the Railway Labor Act of 1926. The law was enacted to “promote industrial peace, support collective bargaining, and protect workers’ rights to organize” (Cooke 1985 p. 8). The fundamental assumption underpinning the Railway Labor Act was the belief that industrial peace could be achieved through collective bargaining and that collective bargaining disputes could be peacefully resolved through orderly mediation and arbitration procedures. Among the provisions of the Railway Labor Act was the provision that non-unionized railway workers would elect representatives for collective bargaining and that companies were prohibited from creating their own company sponsored and dominated unions (Cooke 1985 p. 8).

The Supreme Court upheld the Railway Labor Act in March 1937 including its prohibition against company unions. In its ruling, the Supreme Court found that the U.S. Congress had a legitimate reason to regulate the employment relationship between railroad operators and employees because rail transportation impacted “interstate commerce” which is ‘of public concern’ and for which the Congress has a right to regulate and further that the federal government had a legitimate interest as a matter of public concern in avoiding interruptions of interstate

commerce through rail strikes. The Court supported the federal government’s interest in avoiding “interruptions of interstate commerce resulting from disputes concerning pay, rules, or working conditions on the railroads, by the promotion of collective bargaining between the carrier and the authorized representative of its employees, and by mediation and arbitration when such bargaining does not result in agreement” (Justia 2015)

Another indication of shifting labor relations policy and a precursor to the NLRA was the Norris-LaGuardia Act of 1932. The law removed the previous legal regime upon which the Supreme Court and other courts had relied for issuing injunctions against unions for engaging in concerted activities such as boycotts, picketing and strikes (Cooke 1985 p. 9). The Norris- LaGuardia Act forbade courts from interfering with union activities as long as those activities were not violent or fraudulent. In addition, the Act made yellow dog contracts unenforceable in the courts. The Supreme Court upheld the law (Cooke 1985 p. 9). The Court upheld Norris-LaGuardia because Congress has the authority to enact laws in such a way that the law specifically “disapproved of its [the court’s] prior interpretations of the Clayton Act” (Henderson & Henderson 1946 p. 190)

The final legislative precursor to the NLRA and its immediate legislative antecedent was the National Industrial Recovery Act (NIRA) of 1933. NIRA was a “New Deal” law introduced within the first 100 days of Roosevelt’s presidency. The multi-purpose law was intended to help end the US economic depression. The law established ‘fair competition codes’ that would be agreed upon by private companies, and if adopted by the President, would become federal law rather than a private code. The codes were to regulate corporate competition so that it would not contribute to the downward economic spiral leading to the depression. The codes were also to provide labor standards such as minimum wages and maximum working hours.

One part of NIRA, Section 7(a), provided that all fair competition codes would recognize the right of private sector workers to form or join unions of their own choosing and to engage in collective bargaining. In one sense, Section 7(a) simply extended rights that existed in the Railway Labor Act to other private sector industries. Unlike the Railway Labor Act, which was premised on the value of labor peace, and the critical impact of railroad transportation on interstate commerce, NIRA’s Section 7(a) was premised on the depression-era imperative of increasing the purchasing power of workers through collective bargaining (NIRA 1933 title). Empowering workers to organize and have the rights to collective bargaining would lead to increased individual worker purchasing power and thus greater overall demand in the economy for consumer goods and would, as a result, hasten the end of the depression (Cooke 1985 p. 9).

The NIRA gave rise to the NLRA for two reasons. First, the Supreme Court declared the NIRA, including its section 7(a), unconstitutional in 1935 (Cooke 1985. p.10). In a famous Supreme Court case, Schechter Poultry Corp v. United States, the Court’s nine justice unanimously found that NIRA illegally regulated commerce within a state and this violated the Constitution’s limitation on federal powers because the poultry company’s business was entirely within the confines of one state, New York. The court also found that the President did not have the constitutional authority to enact legislation which is what his formal approval of fair codes amounted to because the authority to enact legislation rested with Congress.

Second, even before the law was declared unconstitutional it was widely recognized to have important flaws that prevented it from working effectively to achieve the policy goals behind its passage (Cooke 1985 pp. 9-10). NIRA lacked specifics in terms of defining legal and illegal behavior on the part of employers and failed to create any mechanisms to interpret or enforce its provisions (Cooke 1985 pp. 9-10). President Roosevelt had created a National Labor Board under NIRA to interpret and enforce section 7(a) of the new law but employers remained firmly resistant and the Board was unable to enforce its interpretations and rulings. In fact, Wagner had already introduced a Labor Dispute Bill to address NIRA’s flaws before the Supreme Court had declared it unconstitutional (Gross pp. 64-65).

Just one month after the Supreme Court declared the NIRA unconstitutional Congress overwhelmingly passed the NLRA (Cooke 1985 p. 10). In the evolutionary policy view, the NLRA’s drafting, passage and employer resistance can be explained in relation to its immediate legislative predecessor the NIRA. Senator Robert Wagner, the chief sponsor of the NLRA had begun working on its drafting months before the Supreme Court ruled the NIRA unconstitutional. Wagner sought to address the weaknesses that were emerging from the NIRA before the Supreme Court ruled on the law. Wagner drew extensively from the Norris-LaGuardia Act and the Railway Labor Act in drafting the NLRA (Gross 1974 p. 133).

In the NLRA Wagner addressed structural, substantive and procedural weaknesses of the NIRA. First, he reframed the law as more centrally within the federal government’s jurisdiction as part of interstate commerce among the states (Gross 1974 p. 144). Also, the NLRA, unlike NIRA section 7(a) was based on premising the law as necessary because labor strife has a detrimental impact on interstate commerce (Gross 1974 p. 144). This brought the NLRA more in line with the Railway Labor Act. In contrast, NIRA had been drafted based on its New Deal policy goal of increasing worker purchasing power to hasten the end of the depression. Further Wagner drafted the law to be a substantively specific in the rights it granted workers as well as specific in defining prohibited practices of employers by defining five explicit unfair labor practices (ULPs). In addition, the law established a 3-member Board (NLRB) specifically charged with interpreting and enforcing the law as well as explicit enforcement procedures. All of these elements were absent in the NIRA.

The NLRA’s Passage and Constitutional Challenge

The legislation enjoyed wide support in Congress, partly because organized labor’s influence was growing and it enthusiastically urged passage (Gross 1974 p. 142). In addition, Congressional Representatives believed they could vote in favor of the bill even if they personally opposed it because they believed there was little chance the Supreme Court would uphold it (Gross 1974 pp. 142-143). Corporate opposition led by the National Association of Manufacturers entailed an unsuccessful strategy to subvert the draft legislation through the addition of amendments that would make it unpalatable to supporters (Gross 1974 p. 140). President Roosevelt only publicly endorsed the legislation three days before NIRA was declared unconstitutional and signed it into law on July 5, 1935 (Gross 1974 p. 144, 147).

Despite the new law’s wide public support, quick passage by Congress and signature into law by Roosevelt, employers openly flouted the law. Indeed, employers continued to refuse to recognize or bargain with unions after workers voted, continued their reprisals against union activists and leaders and engaged in the widespread use of company spies to infiltrate unions to wreak havoc and dissention within union ranks (Cook 1985 pp. 11-12). The employer’s refusal to obey the new law was based on the widely held belief that the Supreme Court would declare the NLRA unconstitutional just as they had the NIRA (Gross 1974 p. 149. President Roosevelt waited two months after signing the legislation into law before he began naming appointments to the new labor board (NLRB) established in the law (Gross 1974 p. 149).

It was a reasonable belief, even among staff at the newly created agency, to expect the Supreme Court to declare the NLRA unconstitutional since the Court had struck down NIRA and many of the President’s other New Deal laws (Gross 1974 p. 149). Five out of nine of the Supreme Court Justices who would ultimately hear the challenge were committed ideologues, so unmovable that the President launched a strategic threat to appoint more justices to the Supreme Court so that the five would no longer compose a majority able to block his New Deal Agenda. Roosevelt claimed that the five-member block of justices was infusing the U.S. Constitution with their own radically conservative ideas. Also, feeding the burgeoning pessimism was the continued vocal corporate opposition to the new law trumpeting its likely demise.

Although the NLRA was signed into law July 5, 1935, it was not until February 9, 10 and 11 of 1937 that the Supreme Court heard arguments on five test cases on its constitutionality (Gross 1974 p. 223). The key argument for the government in support of the law was showing the “connection between strikes and interferences with interstate commerce” (Gross 1974 p. 173). If such a connection could be made then the law would be constitutional under the commerce clause. In contrast, opponents argued that the law unconstitutionally deprived employers of their liberty and property destroying “the freedom of individual employers and employees to bargain with each other equally and individually in regard to their own private relations and private occupations” (Senate Document Number 52 cited in Gross 1974 p. 191). The offending parts of the law opponents targeted were its compulsory requirement that employers bargain with employees and the law’s ability to compel an employer to reinstate with back wages an employee the employer had terminated (Gross 1974 p. 191).

In addition to other legal conflicts over the law, the key question for the Court to decide was whether the federal government had a constitutional right to compel employers to bargain with employees and reinstate them under the commerce clause (Gross 1974 p. 173). Staff and leaders of the new agency began planning their strategy and focused on the law’s application to manufacturing (Gross 1974 p. 191). Evidence was presented from labor relations experts indicating that employer refusals to recognize unions and bargain had created “industrial strife in the nation’s basic industries” and that strikes (coal 1902, steel 1919 etc.) had seriously impaired commerce and that employer activities committing unfair labor practices had significantly contributed to the strife and industrial conflict (Gross 1974. 191). Evidence was also presented that collective bargaining was working “satisfactorily” and that government intervention in labor had actually been a regular in major labor disputes for the previous fifty years (Gross 1974 p. 191). Economic evidence was presented to show the progressive concentration of manufacturing

industry ownership, its role in national and international commerce and links to strikes. The final piece of evidence was the interstate nature of operations of the manufacturing.

In February of 1937 the Supreme Court ruled that the NLRA was constitutional (Cooke 1985 pp. 13-15). There is tremendous debate about the underlying causes and reasons that the Supreme Court upheld it (Gross 1974 pp. 223-227). Among the factors identified for the decision were Congressional hearings held in 1936 that increased public awareness and disapproval of employer anti-union tactics; organizing drives and strikes that sharply increased in 1936 and 1937; elections in the U.S. that soundly supported the President and his new Deal agenda and even perhaps the President’s threat to add more justices to the court if the block of five justices continued to impede the President’s New Deal policy agenda. After the decision was issued, the federal government began more actively and effectively implementing the law. In sum, the labor policy change represented by the NLRA, although major, was built upon the legal infrastructure and laws that came before it.

NLRA as Convergence of Changed Social Conditions and Forces

Another historical view would claim that the previous narrative does not give sufficient weight to the tremendous societal changes that underpinned evolving U.S. labor laws. One such narrative comes from historian Nelson Lichtenstein who examined the episodic growth and decline of U.S. labor unions (Lichtenstein 2002). For Lichtenstein, the seismic shifts giving rise to the NLRA resulted from a confluence of elements including structural changes to the U.S. economy, shifting public opinions about capitalism, the role of government, unions and ideas about workplace democracy.

During the early 1900s, capitalism in the U.S. was undergoing a transformation towards newer consumer sensitive industries such as auto-making and other durable and non-durable consumer goods. Companies engaged in what Lichtenstein characterizes as over-zealous competition. There was overproduction of goods and fierce competition among producers in which producer price cutting invariably led to a cycle of worker wages cuts. The impacts of this mode of capitalist competition included rising inequality between the rich and the working class and not surprisingly declining consumption of goods as wages stagnated. Stagnant sales would often lead to a further cycle of price and wage cuts and a growing downward economic spiral. (Lichtenstein 2002 p. 21-24). The Great Depression resulted during which from 1929 to 1934 the gross national product (GNP) fell 29%; construction declined 78%, manufacturing declined 54% and investment fell by 98% (Lichtenstein 2002 p. 24).

It was not however, the Depression itself that directly paved the way for the passage of the NLRA as well as other New Deal laws. Rather, it was the meaning that the American public and social actors made of the depression and from this meaning there came to be a series of actions that seemed reasonable and necessary given the circumstances. As a result of the depression, many people “began to think that American capitalism had failed” (Lichtenstein 2002 p. 24). Contrary to traditional views that government should refrain from direct engagement in the laissez-faire capitalist economy, there was now widespread and urgent belief that the state needed to continually regulate and restructure capitalism to make it sustainable. The legitimacy of government

intervention was also supported by a growing consensus that corporate managers wielded too great a power with little accountability to workers, shareholders or community (Lichtenstein 2002 p. 24).

In this light government was essential to save rather than replace the failing capitalist system and Keynesian policy prescriptions would guide government intervention. Central to Keynesian policy was the need to jumpstart the economy by boosting aggregate demand through a sharp upward shift in purchasing power and consumption by the working class (Lichtenstein 2002 p. 24). Lichtenstein argues that in setting the goal of boosting worker purchasing power, union interests converged with government interests (Lichtenstein 2002 p. 24). Labor unions were also seen as essential to enforcing new labor standards that had been enacted establishing maximum work hours and minimum wage standards (Lichtenstein 2002 p. 25). In response to the depression, the importance of consumption became equal with that of production and the shift was supported with an ideological framing that there was “an American standard of living that was becoming a right of citizenship” (Lichtenstein 2002 p. 26).

In addition to consumption, ideas about poverty, insecurity and fear also shifted during the depression. Between one half and one third of the U.S. population had lived in conditions of poverty and insecurity at the time the depression began. What changed is the fact that poverty and insecurity were transformed from the realm of private family conditions to visible, political problems within the “entire political culture” (Lichtenstein 2002 p. 26). Poverty became synonymous with the powerlessness and humiliation that resulted from chronically insecure employment and was deemed to breed “deference, subordination and bondage” and negated the citizenship rights of a society built on republican democracy (Lichtenstein 2002 p. 26). Poverty of this kind became seen as a kind of industrial slavery and was viewed as intolerable.

Ideas and actions based on them were also transforming unions as well as the government. U.S. unions were historically built on the narrow basis of skilled crafts such as carpenters, electricians within the American Federation of Labor (AFL). The economy in the U.S. was increasingly characterized by large production facilities with unskilled factory labor doing many different kinds of work within the production process. Moreover, the new unskilled factory workers were largely immigrants while the AFL’s skilled membership was predominantly northern European and ‘the elite’ of the working class. The AFL operated on a basis of narrowly organizing to secure exclusive jurisdiction over each craft within its ranks and so would seek to carve out and organize thin slices of workers within industrial settings leaving the remaining workers unorganized. Further, the AFL had been long opposed to the involvement of government in regulating its relationship with employers (Lichtenstein 2002 pp. 39-40).

The divisions within the U.S. working class only seemed to sharpen in 1935 when a dissident group within the AFL established the Committee for Industrial Organization (CIO). The CIO began aggressive organizing and mobilizing of non-craft industrial unions across the country (Lichtenstein et al 2000 p. p. 477). Between 1936 and 1937 strikes including new tactical sit-down strikes impacted nearly five million workers (Lichtenstein et al 2000 pp. 477-478). Ultimately rather than continued division, the AFL and CIO became a new social and electoral block both supporting election of Roosevelt as well as urging passage of the NLRA (Domhoff 1990 p. 99).

An analysis of the underlying social and economic transformation of the U.S. during the 1930s and its impact on social actors sharpens the clarity with which we can see the passage of the NLRA. The law, if considered as words written on paper, is flat and without much explanatory power. It is the deeper shifts and transformations that animated and mobilized workers, Wagner and other members of Congress, the President and ultimately the Supreme Court to construct and then uphold a significant new law. The law was remarkable because it rearranged the rights of workers and obligations of employers to engage in collective bargaining. Perhaps even more remarkable, is that all of these changes were accomplished by building upon the pre-existing legal regime.

References

Domhoff, G.W. (1990) The Power Elite and the State: How Policy is Made in America, New York: Aldine De Gruyter.

Cooke, W.N. (1985) Evolution of the National Labor Relations Act in Union Organizing and Public Policy: Failure to Secure First Contracts, Kalamzoo, MI: W.E. Upjohn Institute for Employment Research

Gross, J.A. (1974) The Making of the National Labor Relations Board: A Study in Economics, Politics and the Law Volume I (1933 – 1937) Albany: State University of New York Press.

Henderson, J. M. & Henderson, W.H. (1946) ‘Labor’s Peace Time Responsibility Under the Norris-LaGuardia Act’, California Law Review, 34:1.

Justia U.S. Supreme Court website, last accessed 9/1/15, available at: https://supreme.justia.com/cases/federal/us/300/515/case.html

Lichtenstein, N. (2002) State of the Union, Princeton University Press, Princeton New Jersey.

Lichtenstein, N., Strasser, S. & Rosenzweig, R. (2000) Who Built America, Brier, S. & Brown J. (eds) Boston, New York: St Martins.

National Labor Relations Board Website, https://www.nlrb.gove/who-we-are/our-history

National Industrial Recovery Act, (NIRA) HR 5755 An Act to encourage industrial recovery, to foster fair competition and to provide for the construction of certain useful public works, and for other purposes as agreed in conference, last accessed September 1, 2015, available at: https://archive.org/stream/nationalindustri00unit/nationalindustri00unit_divu.text

Starr, I. (1936) ‘National Labor Relations Act’, St. John’s Law Review, 2:10:2, Article 32, pp. 358-372.