Money  /  Antecedent

UAW Strikes Built the American Middle Class

Today’s strikers are seeking to renew the broadly shared prosperity that earlier UAW work stoppages created.

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.