Paul Sancya/AP Photo
United Auto Workers members attend a rally in Detroit, September 15, 2023.
“Record corporate profits should be shared by record contracts for the UAW,” President Biden said on Friday as the United Auto Workers began their first-ever strike against all three legacy automakers. That was likely the most pro-union utterance an American president has ever made in support of striking workers, but it wasn’t quite the most consequential.
The most consequential pro-labor strike intervention by a presidential administration—not directly by the president himself, and not an utterance as such, but a finding—came amid the UAW’s 1945-1946 strike against General Motors. The head of the UAW’s 320,000-member GM division, then-union vice president Walter Reuther, was making demands of the company that no other strike in American history has made, before or since. Reuther was seeking a 30 percent raise for his members, whose wages hadn’t exactly thrived during the wage-price controls of World War II. That wasn’t what made the strike exceptional, of course. What did was that the demand for the raise was accompanied by a demand that the company not raise prices as it raised wages, because the UAW contended GM was so flush that it could afford the wage hike without having to raise the price of its cars.
And to verify that contention, Reuther had one other proposal: GM should “open its books” so that the public could see just how many millions the company had stocked away.
Enter, at this point, the Truman administration. It appointed a fact-finding commission to determine just how much GM could actually afford.
General Motors responded with apoplexy. No damn union, no damn government, was going to get a peek at its bank accounts. Undaunted, Truman’s fact finders assessed what evidence was available and released a statement saying that the company could raise its hourly wage by 19.5 cents (remember, we’re talking 1945 dollar values here) without having to raise its prices.
That was less than the GM strikers were demanding, but it still was a substantial raise. With that presidential blessing, Reuther said that the 19.5-cent raise was their target. Unfortunately, the one other union that represented GM workers—the United Electrical Workers (UE), which had 30,000 members under contract at GM—suddenly announced that it had been negotiating (secretly) with the company, and had settled for an 18.5-cent raise. As the Steelworkers and other industrial unions also began to settle for 18.5 cents, Reuther’s GM strikers, after peacefully picketing for 113 days, were compelled to settle for that, too.
(Side note: The UE leaders were either members or fellow travelers of the Communist Party, while Reuther and his cadre were either members or former members of the Socialist Party. By undercutting Reuther, the Communists, in the UE and UAW, hoped to block Reuther’s rise to the UAW presidency.)
Reuther’s demands had touched a third rail of American capitalism: co-determination. They’d been rooted in two distinct strains of left-wing thought, the first being a left version of Keynesianism. Reuther believed that the key to keeping the economy perking along was boosting the public’s purchasing power. In 1945, many unionists, business leaders, and academics feared that the abrupt cessation of wartime spending would plunge the nation into another depression. Reuther argued that the way to avoid that and forestall future depressions was to boost wages to the point that consumption would never dip to the abysmal levels of the 1930s.
In the mid-20th century, even non-union employers in major industries had to meet many of the standards set by their unionized competitors.
But Reuther also believed that corporate managers, left to their own devices, would behave like the narrow-minded capitalists that they in fact were, and would seldom if ever agree to contracts that met those Keynesian requirements. His “open the books” demand embodied a move toward what he believed was the preferred and necessary form of corporate governance: a company run by representatives of management, the workers, consumers, and the government.
That model never came to the United States (though it is close to the model that governs Volkswagen in Germany). But it frightened American corporate leaders, who noted both Reuther’s ability to command widespread and favorable media attention, and Truman’s bolt-from-the-blue pronouncement of what GM could afford to do.
The UAW workers didn’t win that particular strike, but they managed to win a good share of the ongoing class war. Reuther’s second demand, for co-determination, was never met, but four years later, his first demand—boosting wages to the point that they boosted consumption—was not only met, but met to the point that it altered the shape of the American economy for the next 40 years.
IN 1950, THE UAW, WITH REUTHER AS ITS PRESIDENT (he was elected by the union just a few months after the 1946 strike ended), signed a contract with GM that not only raised wages substantially, but included a host of innovative provisions. GM agreed to provide workers with yearly cost-of-living adjustments, with another yearly adjustment that increased their pay by the same percentage that the nation’s productivity had increased during the year. Workers also received health insurance and defined-benefit pensions. In subsequent contracts over the following decade, GM agreed to assume all health care costs by eliminating worker co-payments, and to provide workers with what Reuther termed a guaranteed annual income, by agreeing to top off workers’ unemployment insurance benefits during periods when plants were closed to install new machinery, so that their out-of-work income matched their on-the-job income. (In recent decades, as the domestic auto industry and the union movement have both been in decline, most of these contractual features have been eliminated.)
What made these mid-century contracts so fundamentally important was that they weren’t limited to General Motors. Once one of the Big Three had agreed to these provisions, the UAW got the other two to follow suit. They were largely matched by contracts won by the Steelworkers, the Electrical Workers, the Machinists, and other manufacturing unions, which was significant, because in the mid-20th century unionized manufacturers employed roughly five times the share of American workers that they do today. In 1945, roughly 2.5 percent of American workers belonged to the UAW. Today, the number of UAW members at GM, Ford, and Stellantis constitutes less than 0.1 percent—one one-thousandth—of the U.S. workforce.
In the mid-20th century, even non-union employers in major industries had to meet many of the standards set by their unionized competitors. A study by Princeton economist Henry Farber showed that workers at non-unionized companies in an industry that was at least 25 percent unionized had wages 8 percent higher than workers at non-unionized companies in industries where fewer than 25 percent of workers were unionized.
The UAW was hardly the only union pushing the envelope in the years following World War II, though none pushed it more than Reuther’s Auto Workers. The immediate postwar period saw a strike wave without precedent, and with union strength in many key industries approaching 50 percent—nearly ten times its level in the private sector today—they won record gains. As John Kenneth Galbraith documented in The Affluent Society, the after-tax family incomes of the lowest-income quintile of Americans increased by 42 percent in the 1940s; of the second-lowest, by 37 percent; of the third-lowest, by 24 percent; of the second-highest (aka, the fourth-lowest, whichever you prefer), by 16 percent; and of the highest, by 8 percent. Among the wealthiest 5 percent of families, after-tax income actually declined by 2 percent.
Two factors other than unionization contributed to this redistribution. First, FDR’s mandated desegregation of wartime defense factories, which he ordered to forestall union leader A. Philip Randolph’s plan for a 1941 March on Washington; second, the highly progressive tax rates set during World War II and kept in place for many years thereafter.
Those were the days.
JUST AS THE 1946 GM STRIKE SET IN MOTION the broadly shared prosperity that the nation enjoyed in the decades following World War II, so did the UAW’s sit-in strike at GM factories in the winter of 1936-1937 create the industrial-union movement that was able to reshape the nation’s economy in those postwar years. By seizing control of key GM factories in Flint, Michigan, just before New Year’s Eve that winter, and barricading themselves so they couldn’t be ousted absent a bloody attack by the National Guard or the Army (which had been standard government practice before the New Deal), the UAW’s GM workers had set the standard for labor action just as surely as their strike of 1946 prodded unions to greater militance a decade later.
Taking control of a factory, of course, was illegal both then and now. But the desperation of industrial workers in the midst of the Depression was such that, for a time, there was no stopping them. As GM and kindred companies routinely spied on and had thugs beat up workers with pro-union sentiments, and as the newly created right to collective bargaining had yet to be ruled on by the Supreme Court, workers weren’t inclined to observe niceties. The UAW, still very small, employed a handful of organizers—largely Communists, Socialists, and the occasional Trotskyist—who devised strike plans in necessarily secret meetings. But, as Irving Howe and Jack Widick wrote in their 1949 book The UAW and Walter Reuther, “it would be an error to overestimate the amount of calculation in the 1936-37 sitdowns, since most of them were simply the result of desperation. [And] they spread like a hungry fire.”
Inside the plants the workers occupied in Flint, the workers made sure that no machinery was damaged, or even scratched. Outside, supporters had to battle police and company thugs to get food and water to the sit-downers. The CIO, with which the UAW was affiliated, had made massive contributions to the campaigns that led to Franklin Roosevelt’s re-election as president and Frank Murphy’s first-time election as Michigan governor just two months before. Both elected leaders chose to disregard precedent, by declining to send in the National Guard or the Army to break the strike. After a six-week occupation, GM agreed to recognize the UAW. For the next several months, sit-downs became the tactic du jour in labor relations, at the conclusion of which most of American heavy industry was unionized.
Today, a good chunk of mainstream media is filled with stories about the feared deleterious effect of the current UAW strike against the Big Three, which, in a smart strategic move, is starting at a small scale but with a promise to grow steadily larger until the companies agree to come to terms. There’s precious little recognition of the fact that it was precisely the UAW’s strikes of the ’30s, ’40s, and ’50s that were the spark that turned America during the postwar decades into the first nation in human history to have a middle-class majority (or if not quite that, at least a level of broadly shared prosperity that had never been seen before).
The UAW strikes built the America to which, with various modifications, today’s Americans aspire. We should keep that in mind as today’s UAW strikers seek to help restore the mass prosperity for which their forebears fought and won.
