Thoughts on Labor Day
From the stacks

Thoughts on Labor Day September 2, 1946

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It says in the good bookthe Bible, the Constitution or Adam Smiththat "man cannot live by wage rates alone." The rate is a sheer fiction unless there are "hours worked" to go along with it; and the more of these hoursthat is, within the limits of decency, say forty or lessthe more it signifies. But the rate is set down, not in units of value which remain the same from everlasting to everlasting, but in terms of dollars whose power to purchase may beand just now isa wasting asset. Labor, then, a dominant interest in the American commonwealth, must shape its program toward a multiple objective. It must work for a stable economy with permanent and high prosperity; it must hold and advance wage rates for the sake of that permanent prosperity; it must stand firm and even take the offensive against limitation of production and the degradation of the dollar.

The various fronts on which labor must fight are vitally linked. In particular, to carry on as if the money wage were the ultimate goal is to confuse trade-union strategy. For in our industrial culture money is no more than a means of measure. Now, as in the past and always, a man's wage is and must be his own fair share of the total of goods which the nation produces.

This share is a product of two terms, not of one. Together they fix the worker's living standard so that on the wage front a double, rather than a single, strategy is called for. In respect to the advance of wage rates, the national labor force may be divided into groups by industry or by craft. For those who do the same work, or work for the same employers, can best stand together. But in respect to guarding the purchasing power of the dollar the interests of all groups are alike, and all crafts must maintain a united front. If each is to attain its own goal, it must not betray the objective of the others. A series of separate movements to advance wage rates, if unattended by any campaign to increase production and hold the price front, may be futile; for business sets wages down as costswith a profit addedand higher rates get reflected in higher prices which other crafts must pay.

To succeed, the labor movement must be a consumer's movement as well. It is axiomatic, then, that the value of a day's work lies not in the dollars by which it is counted, but in the good things of life which it will buy. To advance wages without advancing prices or more strictly for wages to advance at a higher rate than profitsis not the absurdity a large section of the press holds. It is good American doctrine, the only way through which the increased industrial efficiency of a new age can be distributed to that great body of consumers known as labor.

THE NEED FOR LARGE PRODUCTION

Real wages are most easily and rapidly advanced when production is increasing. And since the sum of the parts cannot exceed the size of the whole, an abundance must be produced if the shares of the crafts and of their members are to be increased in quantity. Labor, let us say it with a couple of "therefores," has a stake in all that makes for larger and larger production. The union is a partner in all enterprises which make for progress.

For that reason restriction of output is a luxury which labor can ill afford. In a number of trades there are, at least on occasion, the best of excuses for not breaking one's neck and for stretching the task out. Labor has bitter memories of "working itself out of a job"; of seeing high productivity followed by a slump ill which goods are unsalable. The volume of work is limited; fairness to fellow workers demands that it be made to go around. But however valid at any moment are the reasons which prompt them, such restraints are unfair to other crafts. For they use more labor than is necessary, increase the costs of the resulting services, impose a price for idleness and waste upon the consumer. This becomes a tax which one group of workers imposes upon others.

If specific restraints were casual or exceptional, they might be overlooked. But, as in all human affairs, an act tends to be repeated, to become a custom, to be vested as of right. So, with labor, as with other economic groups, practices which are mischievous come to be frozen into a pattern. Thus the rules of some of the building trades spread a great deal of labor over a very little work; it is demanded that musicians be hired as stand-bys even when there is nothing for them to do; itinerant trucks are required to pay for the services of local driverseven if they are not usedwhen passing through certain cities.

Such practices have become widespread enough to enrich the language with the term "featherbedding," As already suggested, the evils to which such rules are addressed are often genuine enough; there are more members in the trade than there is work for, and security is among the highest of human values. But rarely, if ever, is such a remedy effective and in the long run it aggravates the mischief. For it does not find employment elsewhere for workers not needed in the trade and, by imposing a cost for unnecessary labor, it raises the price and restricts the market.

BUSINESS FEATHERBEDDING

For the prevalence of such practices labor is not alone, or even chiefly, to blame. It only follows where the most respectable economic groups have blazed the way. If there is stand-by labor, we also have an abundance of functionless capital. The railroads today charge shippers interest on "sums invested" which are there because of machinations in the distant past. In public utilities the law allows the operating companies a "fair return" on their investment; yet the capitalization upon which the return is paid is often not monies actually put to work, but the values of the properties as derived from their capacities to pay dividends. And, generally by pyramiding corporate structure upon capital structure and then protecting the merger from competition, three or four capital items are there to claim dividends where none was before. An inventory of all the sums of capital which currently bear interest, over the investments actually necessary to get our industrial work done, would reveal an alarming amount of featherbedding.

Nor is management as distinguished from capital in any position to make charges or to hurl brickbats. There are numerous and colorful instances, but no statistics, of the number of stand-bys in the managerial group. A would-be aluminum producer gives up his own business and becomes "consultant" to a large corporation at a better-than-living wage. His real contribution to his new master has been to forsake his own business; his worth is measured by value subtracted from the national total. Officials of huge corporate empires are in fact, however it may legally be set down, their own employer's. They fix their own salaries at the expense of their disenfranchised stockholders and, with a keen eye to the indispensable character of their own services, vote themselves bonuses. The super-wage slave can hardly complain of the teamster's bit of gravy while clinging as of right to his own velvet.

Nor was there during the war years equality of sacrifice among economic groups. The employment, the movement, the earnings of labor were governed by more rigid formulas than were the earnings of capital. The letting of war contracts was on a far more elastic basis than the increase of wages. Wages were held in check lest there be inflation, but no such fear restrained the procurement of materials of war. If labor was- sometimes represented on boards, representatives of the employers and of the public were there to effect a balance. In the letting of contracts and the stimulation of production, representatives of big business were on both sides of the bargain. In the War Department the people's money was signed away by corporate executives disguised as Army officers; and the War Production Board was in fact a house of delegates from the managerial group. The renegotiation of con- tracts and the excess-profits taxwhich passed into eclipse at the earliest decent momentdid not begin, to set things right. Privilege, manifest in the un- checked pursuit of gain at public expense, was rampant.

The meaning of all this is clear. Labor has no monopoly on strikes, stoppages, self-interest. We can present the most respectable precedents for every restrictive practice in which it has engaged. But labor, in its own interest, should remember that its affairs must be carried on in the open; the affairs of capital, while perhaps they should, do not get such public airing. When labor joins with capital to restrict production it gets very few of the gains and most of the blame. It trades its own public standing and long-run interest for a very petty share of the fruits of exploitation. The hodcarriers who prevented the use of ready-mixed concrete in Chicago did not get a speculative profit out of the increased cost of homes. The moral is plain. Organized labor has the interest and the power to impose upon the national economy a cease and-desist order against making the good things of life scarce. It should not confine its objective and impair its moral position by tolerating sabotage of production in its own ranks.

Two basic questions must be put: What do labor unions owe to each other? And what do they owe the public? The questions are really one; for workers and their families are the larger part of the public and, in respect to holdingand presently increasingthe purchasing power of the dollar, the interests of labor and of the consumer are identical.

BREAK DOWN THE BARRIERS

The need is for a return to common sense, the "old- time religion," the "American way," Break the barriers which hold opportunity in leash, which barricade industries against the newcomer and which make access to the market a special privilege. The mine workers serve their brethren in other trades very poorly when they attempt to impose rust upon Big Inch and Little Inch in the fear that to make oil and gas more plentiful will decrease the demand for coal and for men to mine it. And if the railroads see a menace in a great job-creating enterprise such as the St, Lawrence Water- way, the Brotherhoods who cause trains to move will be unfair to labor in general if they go along. It is the state of industry in generalits vitality or impotencewhich creates the situation within which the leaders of the various unions must wage their several battles. If industry is healthy, expanding: dynamic, the gains will be material; if the hand of paralysis has been laid upon it, heroic efforts can secure only small gains.

A dynamic economy is a changing economy. As it grows, new industries emerge and old ones expand or decline. Wherever it moves t o restrict output, labor has lapsed from a broad to a myopic, from a healthy to a pathological, view. At such times it has tried t o keep alive trades which were dying rather than to make the most of new employment and to ease the transfer of the unwanted from decadent into growing trades, The case for unemployment insurance is unquestioned and there must be no backward step from a scheme of social security which covers all the great hazards of life. But social securitya necessity in our current societyis for labor a defensive rather than an offensive weapon. And even so good a thing as full employment is not to be accepted sight unseen. We demand, and have a right to demand, full employment with an increasing real wage, not full employment at any price, And the full employment that brings with it an ever-advancing standard of life can come only by freeing industry of the shackles which hold enterprise in bondage. In so far as social security is a substitute for the honest earnings of the individual, the size of the need for it is an index of sickness in the national economy.

One cannot be a good trade unionist without being a good citizen. If a worker is to advance not only his wage but its purchasing power as well, he must make public matters his own affair. A host of questions which affect the wealth of the nation await his attention. A large part of the economy has escaped the rule of free enterprise and is headed for established privilege. Since the great depression and increasingly during the war, industry after industry has been operating at government expense. And now that the war is over, many of these have yet to demonstrate their ability to get back on their own. Even more: Far more numerous are the businesses which in one way or another have been permitted to assess their own subsidies against the government. Milk inspection, decreed to protect the public health, has been used to create a sheltered market for the elect. Housing has been priced out of the reach of the American people by a host of restraints imposed by building codes, suppliers of materials, real-estate boards. The patent, intended to protect the inventor, is now most usually employed to "fence in" privileged preserves. By joining international cartels, American concerns are assured of exclusive access to the American market and swear away our opportunity to build up trade overseas. Industries are thus insulated against competition, new blood, newer ways. And like all things which are freed from the necessity of making good, they no longer feel the goad which makes for progress. If real wages are to advance, a long neglected task of making dynamic that which has become sterile awaits labor.

A FUTURE OF ABUNDANCE

The total product is fixed by no iron law. It depends upon the knowledge of men and the wisdom and good faith with which that knowledge is put to work, For man does not live in a prison-house, in which a niggardly nature has provided a limited amount o f wealth which is less than enough t o go around, I n - stead, the resources whence come our livings are the great unknown. The gifts of nature are of value to us as they can be turned to account. As we are free to ask new questions, we acquire new knowledge; as knowledge is made practical, technologies turn into resources that which before was only stuff, Indians once starved on Texas plains where oil now flows in such profusion that government action is needed to make it scarce, And our science, and the useful arts in which it finds expression, are still in their infancy. One great threat to labor is an attitude which would hold in check the creation o f plenty lest in an avalanche o f goods the privileged b e threatened with financial insolvency, Its inheritance awaits American labor if its crafts will recognize their community of interests with each other and with the publicand if it will let its mind and its program be bold.

A word is necessary as to the practical problems of orienting labor to its responsibilities. Voluntary action in the present decentralized control of the labor movement does not seem likely. It would require new leadership of the particular unions which have established restrictive practices over a period of years to enter frequently of the industry. This cannot be expected without outside pressure if, as is usually the case, the leadership is old and lacking in flexibility.

Legislation setting rules of the game or freeing the
Anti-Trust Division to bring about correction of these
practices is perhaps the most promising avenue of approach. However, this is not a prospect for the immediate, future. The present strength of the anti-labor
coalition makes the most progressive elements of labor afraid to .sponsor such legislation. Yet such legislation is necessary if the anti-labor coalition is not to have a strong and valid argument against certain labor practices, under the cloak of which it can secure popular support for broad restrictions on the entire labor movement. Perhaps the election of a Congress more favorably inclined to labor's cause will release the more progressive organized-labor elements from their ties to the few segments of the labor movement which have followed the big-business pattern of restricting production and thus impeding the free functioning of our economy. But whatever the solution is and however indefinite the date at which it may be attained, those who believe in labor and in labor's cause must realize that practices restricting production are a liability of which labor must rid itself at the earliest possible moment.

Dr. Walton Hamilton, professor at Yale Law School, author and frequent New Republic contributor, has worked at various times and in various capacities for the federal government.

Judge Thurman Arnold, whose best known book is The Folklore of Capitalism, has been Mayor of Laramie, Wyoming, a colleague of Dr. Hamilton at Yale, Assistant Attorney General in charge of the Anti-Trust Division, a judge on the federal bench and is now in private law practice in Washington, D. C.

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