Chapter VIII: Labor Organizations and Collective Bargaining

As modern capitalistic production caused the growth of a distinct wage-earning class and brought about a sharp separation between employers and laborers, and as the latter were thrown upon their own 69 resources under the prevailing theories of free competition and free contract, it was inevitable that they should organize to secure their interests as a class. The growth of labor organizations has been greatest in those countries where the laborer has been forced to depend mostly upon his own efforts for protection and improvement, namely, in England and the United States. On the continent of Europe, on the other hand, where the individual has been accustomed to look to the government for the redress of industrial grievances, there has been a much less vigorous and spontaneous development of such organizations. They are a product of the nineteenth century and had their origin in modern machine production.

The growth of labor organizations in the United States has proceeded hand in hand with the industrial development of this country, and has been especially rapid since the Civil War. Two distinct types of trade unions may be noted--the local and the national (or international) unions. The former, which comprises members who live and work in the same locality, is the primary unit, and dates back to the beginning of the century. Each local union, even when subordinate to a national organization, is a self-governing unit, and is absolutely democratic. Its relation to the national body has been well compared to that of one of our states to the United States. The first national union was not formed until 1850, but now these far surpass the locals in importance. Their government is representative, as they are made up of local unions. The great majority of the national trade unions are bound together in the powerful federal organization, the American Federation of Labor. The membership of this body numbers considerably over 1,000,000, while the railroad unions, which are not connected with it, claim about 125,000 more. Probably not far from 1,500,000 persons in the United States belong to labor organizations, which is about 10 per cent of the total working population or about 15 per 70 cent of those engaged in trade and transportation, manufacturing and mechanical pursuits. While this does not seem a very large proportion and is not as large as the membership of British trade unions, yet it must be remembered that they constitute on the whole the elite of the labor world and exercise an authority and power out of proportion to their numbers. Many other workmen, who do not themselves belong to the unions, follow their lead and are directly affected by their actions.

Historically the two most important national organizations in this country have been the Knights of Labor and the American Federation of Labor, and they represent such different principles that it will be worth while to describe them. The Knights of Labor was organized in 1869 as a local union of seven garment cutters and had a meteoric career, counting a membership of 730,000 in 1886, the year of its greatest strength. It was a national amalgamation of mixed local assemblies composed of workers of all trades who lived in the same locality. It held the theory that the interests of all members of the laboring class are identical and must be cared for at the same time, if possible, by political action, by co-operation, and by education. In 1886, however, it entered upon a series of disastrous strikes; later it came into conflict with trade unions which had not joined its ranks and were opposed to its policies; and finally it became entangled in politics. As it lost in influence and strength its place was taken by the American Federation of Labor, which was its very opposite in organization and government. This latter body is a “confederation of trade and labor unions,” each trade being organized separately into local unions which are given great autonomy, these unions alone being represented in the national body. Only matters of general interest come before it, all local trade matters being left to the local unions. In 1903 it claimed a membership of 1,745,000.

More important than the history of labor organizations is a knowledge 71 of their objects and methods. The primary purpose is of course to control the conditions of labor and to substitute the principle of collective bargaining for individual contract. As one of the most effective ways to secure this result they aim at a more or less complete monopoly of the labor market. This they may do by bringing all workers in a trade within the union or by preventing non-union men from working. The first of these is called the inclusive method,[15] and if successful makes the union the sole seller of the kind of labor controlled by its members. It is a monopoly of the laborers against the employers and is sought to be enforced by inducing men to join the union either by persuasion or coercion, the latter finding expression in the strikes against the employment of non-union men and the insistence upon the “closed shop.” The other form of monopoly consists in the exclusion of new members from the trade and in a control of employment; this is a monopoly of a small group against their fellow-workmen. It is enforced by regulating the entrance to the trade, making it difficult or expensive, or by limiting the number of apprentices. Sometimes, as in the Chicago Building Trades in 1900, they have united with their employers by means of “exclusive agreements” to raise wages and prices of the finished products at the same time, and thus jointly to mulct the public. Such efforts to monopolize the labor market have their counterparts in the organization of capital, as we have seen. In practice such a labor monopoly has sometimes been used to improve and elevate conditions, just as sometimes a capitalistic monopoly has reduced prices below the competitive point. In general, however, we must condemn monopoly on principle in the competitive field and insist that freedom and opportunity be given to all on as equal terms as possible. Of the two 72 forms of trade union monopoly, the former alone, which endeavors to make it all comprehensive and to enforce generally union conditions, can be economically justified.

“The establishment of a standard rate of wages may perhaps be said to be the primary object of trade union policy. Without the standard rate the trade union, such as it is, could have no existence.”[16] The purpose of the union is to substitute collective bargaining for individual agreements and thereby to improve the condition of its members. But if a single bargain is to determine the pay of a large number of men, there must be a common standard. In every employment on a large scale the men are necessarily grouped together and their pay is determined by a common rule. This is true even in non-union shops. It is generally assumed that the standard rate of labor organizations means a uniform wage for each member, but this is not the case; it means rather a uniform rate of pay to all for the same performance. In the case of piece work, it could manifestly not mean anything else; but a large number of labor leaders object to piece work. They insist that a standard wage means a minimum wage, and that by the establishment of such a minimum the whole standard of efficiency and the plane of competition are raised, as the employers cannot then afford to hire any but competent workmen. The question immediately presents itself as to what is to become of the older or partially disabled men, who are no longer able to earn the standard or minimum wage? In England they are practically guaranteed a subsistence by the union; in this country the union not infrequently exempts them from the provisions as to the standard wage. When the rule is enforced there is certainly a real hardship for these men. But from the employers there comes the more serious complaint that the effect of 73 the standard wage is to reduce to a dead level the efficient and the inefficient; that it is a maximum wage and that the efficient and industrious are prevented from earning more than a fixed amount. There is undoubtedly a great deal of truth in this charge; the man who hastens the pace is said to be taking “blood money,” and sometimes a maximum wage is set which the members are forbidden to exceed. On the other hand, it may fairly be said that while the union regulation of wages does tend to produce greater uniformity, the union rate is usually higher than the competitive rate would be, that is, wages are leveled up, not down; and finally, that territorial variations make the local rate conform to local conditions.

A reduction in the hours of labor has been even more strenuously urged by progressive labor leaders in the United States than an increase in wages. “Organize and control your trade and shorten your hours,” is their contention, “and wages will take care of themselves.” Their arguments in favor of a general shortening of the working day are twofold. In the first place, owing to the intensity and strain of work under modern machine methods, the worker cannot work efficiently more than eight or nine hours a day. The work is too exacting and the strain on the attention too great; it is a noticeable fact that most of the accidents in industrial establishments occur in the last hour or two of the working day. Not only that, but the laborer is entitled to his share of industrial progress in the form of more leisure, giving him time for a better family and social life, affording opportunity for intellectual improvement, and permitting the development of more rational and higher wants. With the improvement in the condition of the laboring classes, will go the elevation of society as a whole.

The second argument in favor of shorter hours put forward by the trade unionist, is economic rather than social. He argues that a “reduction 74 of hours will diminish the supply of labor in the market, and so will raise its price. It will make room for the unemployed, and so will remove the depressing influence of their competition.” There is involved in this contention the familiar lump-of-labor argument of the trade unionist: there is just so much work to be done, and if some men do each a little less there will be more for others. By shortening the hours of labor of everybody employment will be made more general, and the work will be better distributed. Now the economists in general have supported the trade unions in their demands for a shorter working day, but they have done so because they believed that the product of industry would not thereby be diminished. They have seen that when the hours of labor were reduced the laborer was less rapidly worn out physically, that he could work more rapidly for a short time, and that his increased leisure and pay, if rationally used, made him a more intelligent and efficient worker. In other words, a reduction in the hours of labor from 15 a day to 12, to 10, and even in some cases to 8, was not attended by a parallel reduction in the output, but the latter remained about the same. This is the great economic justification of the shorter working day, and as long as this can go on without materially affecting the product of industry it must be approved. If, however, the latter is decreased there will be less to divide and then the relative disadvantages of a smaller dividend must be weighed against the advantages of increased leisure. Of course the point to which the number of hours can be reduced without lessening the product can only be determined by experiment, and will differ in different trades, but it is inevitable that until this point is reached the pressure of the trade unions for shorter working days--or for more holidays or half-holidays--will not be successfully resisted.

Turning now from theory to fact, we find that there has been a great 75 improvement in the condition of labor in this respect. At the beginning of the nineteenth century the almost universal working day was, as McMaster tells us, from sun to sun. As factories grew up the habits of agricultural labor were carried over into industrial occupations, and working days of 16 and 18 hours were not uncommon. In 1903 the average length of the working day in the United States was 9.6 hours. This great reform may fairly be credited to the efforts of organized labor itself, for without their insistence and struggles it is unlikely that it would have been voluntarily granted by employers.

The limitation of output results almost necessarily from the above-mentioned practices of the unions: reduction of hours, prohibition of piece work, and the standardization of wages all tend to restrict the output of the individual worker. But some of the unions have gone further and have directly limited the amount that could be produced during a given period by the laborer. This has been particularly true of British unions and is the subject of common complaint by English employers and writers, but illustrations may easily be found in the United States. Thus in Chicago in 1900 “the lathers limited a day’s work to twenty-five bundles of lath, for which they received $3; they had formerly done thirty-five bundles for a daily wage of $1.75. Plasterers were limited to thirty square yards a day; the steam fitters were permitted to lay only ninety feet of steam pipe per day; but the plumbers had the most objectionable rules and restricted materially the amount of work that could be done in a day.”[17] These rules were defended by the unions on the ground that they were necessary in order to secure careful work and to prevent the “rusher” for setting the pace for a fair day’s work. The practice 76 has not been uncommon, especially in the sweated trades, for an unscrupulous employer to pay a few particularly able workmen to put extra speed into their work and so set a pace that the other workmen would be compelled to maintain. This was especially objected to by the unions in the case of team work. They claimed that when all the workmen had come up to the new standard, particularly in piece work, the wages were reduced so that even by working at the higher rate of speed, they could only make a fair wage. One of the rules of the Chicago carpenters’ union provided that “any member guilty of excessive work or rushing on any job shall be reported and shall be subject to a fine of $5.” Whatever the excuse it is clear that such limitations cannot be economically justified. Not only does such dawdling undermine the industrial efficiency of the worker, but it is unfair to the employer. If the latter bargains for the union rate of wages and the normal working day, he is entitled to a full return of the laborer’s best efforts. Otherwise there is no fairness in collective bargaining. “So far as labor leaders are concerned,” said Mr. John Burns, the English trade unionist, “we are all strongly opposed to the restriction of production; we are all in favor of better and more conscientious work.”

Laboring men have never been quite able to divest themselves of their old antipathy to labor-saving machinery. They generally regard the introduction of a new machine as a displacer of men, a creator of unemployment, a depresser of wages. Some unions have successfully resisted the introduction of machinery into their trades, as the stone cutters in Chicago,[18] but in general they have recognized the impossibility of this attitude. In general they now demand that when machinery is introduced it shall be operated by union men and their wages shall be fixed so as to give the workers a share of the 77 increased production.

The policies and methods of the trade unions thus far discussed are those of a militant nature, but the fraternal objects of these associations, though less conspicuous, are none the less important. Labor organizations generally; have insurance and benefit features, by which sick, injured, or unemployed members are assisted. This is particularly true of the English organizations, which developed these features before the rise of the militant new unionism. They often possess large funds and have been rendered thereby more conservative and responsible. The educative effect of trade unionism among the members is marked; some of them possess libraries and all of them promote discussion and thought upon economic problems, while the administration of their affairs often gives valuable training. The older unions did much to encourage co-operation among their members, but today the tendency is to limit their activities to the essential one for which they are organized, namely, collective bargaining.

Intelligent unionists realize that they can secure the various objects for which they strive only by substituting collective bargaining for contracts between employers and individual laborers. Where this plan is accepted by employers, representatives of the two sides agree upon wage scales, usually for a year; during this period the chief task of union officials is to see that the agreement is lived up to, and if possible to add to their membership and strengthen the union. In the United States relatively few trades have adopted this method as a general practice, the employers still being able to dictate wages and conditions of employment in most of them, while the unions are still struggling for recognition, if not for existence. Employers insist, in refusing to make collective bargains with the unions, that, as they run all the risks, they must be permitted to manage their business as they see fit and without interference from the business agent of the 78 union. In reply the unions insist that hours, wages, and conditions of employment are as much their business as that of the employer. The latter also urges that the trade unions as at present organized are too irresponsible and before they ask for collective bargaining should be incorporated, so that they could be sued for breach of contract if guilty of such. As yet, however, the unions have preferred their present position of irresponsibility and immunity and have almost invariably refused to be incorporated.

“In the minds of a large section of the public,” writes President Hadley,[19] “labor unions are chiefly associated with strikes. It is believed by many who ought to know better, that such organizations exist for the purpose of striking, and that if the organizations were suppressed, industrial peace would be secured. The first of these ideas is a distorted one; the second is wholly unfounded.” Strikes are, however, a necessary concomitant of collective bargaining. If the representatives of a union cannot come to terms with an employer, they may compel their members to refuse to sell their commodity, labor; such a concerted refusal to work is a strike. The “right to quit work” has been regarded as a sacred one by trade unionists, but it involves social consequences of great importance. For the workingman, it means loss of wages and demoralizing idleness; to the employer, idle capital, loss of profits, and depreciation of plant; and to the consuming public, inconvenience and annoyance together with curtailed production. Quite aside from all acts of violence and lawlessness, by which they are too often accompanied, there is involved an enormous money waste. According to a report of the Department of Labor, losses from strikes and lockouts in the United States from 1881 to 1900 amounted to $449,342,000 or an average loss per establishment involved of about $3,500.

The public is awakening to the realization that it suffers the 79 greatest injury as the innocent third party to every industrial dispute, and is insisting that the industrial peace be kept or more reasonable methods of settling differences be found than a strike or lockout. Such a method is found in conciliation and arbitration. In the older and more strongly organized unions strikes are infrequent and methods of joint discussion and agreement are increasingly resorted to. Boards of conciliation are often provided for, which endeavor by means of conference and concession to prevent a dispute from arising; they succeed best where both employers and employes are organized. Should the dispute come to a head, however, provision is usually made for its reference to a board of arbitration, which may be selected by the disputants themselves or may be created by the state; in the latter case the acceptance of the award may be voluntary or compulsory. In the United States most of the successful boards have been those selected by the parties to the dispute; the state boards have usually the power only of investigating the causes of the trouble, but this in itself has proved of considerable value in more than one instance, notably in the case of the Anthracite Coal Commission. Compulsory arbitration is being given a thorough trial in Australasia and seems to be meeting with success there. In this country, however, the trade unions are strongly opposed to compulsory or enforced governmental arbitration. Writing of Great Britain, Mr. and Mrs. Webb assert that the principle of arbitration, having been found inconsistent with collective bargaining, is fast going out of favor. It would seem from the experience of both England and the United States that the chief virtue in these methods lies in the habit of joint conference and conciliation between the representatives of labor and capital.