The first major strike in the US was held by union workers at GM : The Indicator from Planet Money The brutal unemployment situation in the US today is making a lot of people think again about labor unions. Which had their first major victory after a 1936 strike.
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Jobs, Labor And The 1936 GM Strike

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Jobs, Labor And The 1936 GM Strike

Jobs, Labor And The 1936 GM Strike

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Hey, everyone. It's Cardiff. This is THE INDICATOR FROM PLANET MONEY.

So this morning, the July jobs report was released by the Bureau of Labor Statistics. And the report showed that last month, the economy recovered about 1.8 million jobs, plus the unemployment rate fell from 11.1% to 10.2%. Now, that's obviously better than if the economy were not gaining jobs and way better than if it were losing jobs. But what is worrying about the July jobs report is that the pace at which the labor market is improving has actually started to slow down. It has slowed down from the months of May and June, when the unemployment rate was falling faster. And this slowdown is happening even though the unemployment rate right now is still higher than it was at its worst point after the last big recession of more than a decade ago. And the labor market still has 13 million fewer jobs now than it did before the pandemic started, so it's a long way to go. We're going to have more coverage of the labor market on Monday, but today we are doing something a little different. We are starting a series that we're going to run every Friday through the end of the summer in which we re-air one of our favorite episodes from the past. And because today is jobs Friday, the episode we chose is a story about how a union action changed the relationship between American workers and the companies that employed them. Here it is.


STACEY VANEK SMITH: Back in 1937, General Motors signed the very first contract with the United Auto Workers union. It was the culmination of weeks of drama. GM did not want its workers to unionize, so workers staged a sit-in strike inside the GM factory. Production ground to a halt.


UNIDENTIFIED REPORTER #1: An historic strike began when GM workers barricaded themselves in the automobile assembly plants for 44 days. They provided their own entertainment, slept in and ate in while the work stoppage cost GM $1 million a day.

GARCIA: Officials did try everything to stop the strike. They even turned off the heat in the factory. And remember; this is winter in Michigan.

VANEK SMITH: At one point, a riot broke out, and this standoff was just captivating the world.


UNIDENTIFIED REPORTER #2: What observers describe as the most crucial battle in American labor history, involving nearly 100,000 men, has practically shut down the entire American motor industry. From Michigan, where the strike started, we bring you these actual pictures of a riot in progress. What happens when a crowd of strikers goes crazy, when destruction becomes the order of the day?


GARCIA: In the end, though, GM's CEO signed a contract with the United Auto Workers union.


UNIDENTIFIED REPORTER #3: And that handshake means the strike that shook a nation is over.

VANEK SMITH: Labor and the auto industry would never be the same. Chrysler and Ford followed suit signing union agreements of their own. This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.


GARCIA: And I'm Cardiff Garcia. Today on the show - what this major union victory meant for workers, what it meant for the auto industry and why unions over time kind of lost their mojo.


UNIDENTIFIED REPORTER #4: After six long weeks of idleness, it's home today and back to work tomorrow.


VANEK SMITH: That moment when the auto industry shook hands with the union, U.S. business was forever changed.

HARLEY SHAIKEN: Without question, a historic milestone.

VANEK SMITH: Harley Shaiken is a labor economist at Berkeley.

SHAIKEN: That modest contract - one page - was labor's Magna Carta.

GARCIA: In the decades after that contract was signed, the UAW bargained for things like pensions and health care benefits and paid vacation and famously high salaries. That's according to Gary Burtless, an economist with the Brookings Institution.

GARY BURTLESS: U.S. auto workers were among the princes of industrial labor in the United States. They received very high wages, very good fringe benefits.

VANEK SMITH: A union job became a ticket to the middle class, and those high union wages spread out across the economy. People had more purchasing power. The U.S. economy grew. Companies got wealthier. More of them unionized. Unions were riding high, and everybody wanted to be a union worker.

GARCIA: Yeah. More and more workers started up unions in their industries. Unions spread across the country. And by the mid-1950s, more than a third of all U.S. workers were in a union. That is today's indicator - more than a third.

VANEK SMITH: And then the oil crisis descended. It was the early 1970s. Gas prices spiked. And suddenly, everybody wanted a small, fuel-efficient car. U.S. automakers were not so good with the small, fuel-efficient cars. And foreign competitors like Volkswagen and Toyota started to get a foothold in the U.S. market - a market that the Big Three U.S. automakers had just totally owned before then.

BURTLESS: And consequently, the Big Three lost a lot of sales, lost a lot of profitability. And without those huge profits, Ford, GM and Chrysler just could not afford to pay such outsized wages to their workers.

GARCIA: Suddenly, Americans were actually buying a lot of foreign cars. And those foreign cars cost less, partially because they weren't dealing with the high salaries and benefits that the Big Three were dealing with. The good deals that unions had negotiated when times were good started to drag on U.S. automakers.

BURTLESS: Manufacturers and their unions could not turn on a dime. They couldn't change the arrangements.

VANEK SMITH: Oh, they were less nimble in a way.

BURTLESS: Yes, exactly. They were less nimble in responding to the demands of the market.

VANEK SMITH: After that, labor in the U.S. just kind of lost its mojo all over the country, says Gary. And this happened for a couple of reasons. First, companies across the U.S. watched this thing unfold in the auto sector. And they thought, we don't want to deal with that. They started fighting unionization like never before, sometimes intimidating workers or firing workers who tried to unionize - even though that was not legal - and also lobbying hard against unions, pushing through legislation to weaken them.

GARCIA: Companies in all kinds of industries were also seeing more competition from overseas, just like the automakers had experienced. And companies were starting to equate unions with an inability to compete.

BURTLESS: And so they fought unions much, much harder using much stronger methods - some would say coercive methods.

VANEK SMITH: At the same time, says Gary, workers themselves started to back away from unions and from trying to organize employees in the companies they worked for. This happened both because companies could be so vicious to workers who tried to unionize and also because, in some cases, unions were seen as cumbersome to workers with these sort of onerous regulations that would just drag a company down.

BURTLESS: Industry in the United States is very dynamic. We always have companies that are growing, expanding, becoming more profitable. And at the same time, we have businesses like Sears, whose operating model has proven to be less successful. And it happens that in a lot of the shrinking industries, unions have been very important. And businesses have been much more fierce in resisting unionization than their counterparts were in the 1950s and '60s, when it was very plain that unions - and very successful unions in many growing industries - were not an impediment to companies being very successful and expanding. But nowadays, I think, in many workers' minds and in many businessmen's minds, the notion that you would be both unionized and growing and flourishing seem to be incompatible.

GARCIA: Politically, in the time after the oil crisis, the way people and companies saw unions had just shifted. Today, says Gary, there are more retired members of the United Auto Workers than working members.

VANEK SMITH: Last year, union membership dipped to its lowest level since that contract was signed between the UAW and GM in the '30s. According to the Labor Department, just over 10% of U.S. workers are unionized. And in fact, Cardiff, we should probably say that you and I are both in a union.

GARCIA: Yeah, full disclosure.

VANEK SMITH: Yeah. So a lot of workers at NPR are in SAG-AFTRA.

GARCIA: And cue the old-timey audio.


UNIDENTIFIED SINGERS: (Singing) When they smile and say, no raise in pay, sit down, sit down.

GARCIA: This episode of THE INDICATOR originally aired in February of 2019. It was produced by Darius Rafieyan and edited by Paddy Hirsch. THE INDICATOR is a production of NPR.


UNIDENTIFIED SINGERS: (Singing) Sit down, sit down.

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