Wagner Act

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Wagner Act

United States 1935

Synopsis

The National Labor Relations Act of 1935, known popularly as the Wagner Act, was New Deal legislation designed to maintain industrial production by preventing labor strife. It protected the right of workers to organize and bargain collectively with their employers or to refrain from all such activity. The act generally applied to all businesses involved in interstate commerce except agriculture. The enforcement arm of the act was the National Labor Relations Board (NLRB), which conducted secret-ballot elections to determine whether employees sought union representation. The NRLB also investigated and remedied unfair labor practices by employers and unions. Shortly after the adoption of the statute, several companies challenged its constitutionality, including the Jones and Laughlin Steel Corporation of Aliquippa, Pennsylvania. This steel company, which had discharged workers because of their union activity and to discourage membership in the union, challenged the act as an attempt to regulate all industry that thereby usurped the reserved powers of the states. In a 1937 decision, the Supreme Court declared the act to be constitutional and the right to organize to be fundamental.

Timeline

1920: League of Nations, based in Geneva, holds its first meetings.
1925: European leaders attempt to secure the peace at the Locarno Conference, which guarantees the boundaries between France and Germany, and Belgium and Germany.
1930: Naval disarmament treaty signed by the United States, Great Britain, France, Italy, and Japan.
1933: Newly inaugurated U.S. President Franklin D. Roosevelt launches the first phase of his New Deal to put depression-era America back to work.
1935: Germany annexes the Saar region after a plebiscite. In defiance of Versailles, the Nazis reintroduce compulsory military service. The Allies do nothing, and many western intellectuals maintain that it is only proper for Germany to retake its own territory and begin building up its army again.
1935: Italians invade Ethiopia, and the response by the League of Nations—which imposes sanctions but otherwise fails to act—reveals the impotence of that organization.
1935: Second phase of New Deal begins with the introduction of social security, farm assistance, and housing and tax reform.
1938: The U.S. Fair Labor Standards Act establishes a minimum wage.
1940: Hitler's troops sweep through Western Europe, annexing Norway and Denmark in April, and in May the Low Countries and France. At the same time, Stalin—who in this year arranges the murder of Trotsky in Mexico—takes advantage of the situation to add the Baltic republics (Latvia, Lithuania, and Estonia) to the Soviet empire, where they will remain for more than half a century.
1945: April sees the death of three leaders: Roosevelt passes away on 12 April; the Italians execute Mussolini and his mistress on 28 April; and Hitler (along with Eva Braun, propaganda minister Josef Goebbels, and Goebbels's family) commits suicide on 30 April.
1950: North Korean troops pour into South Korea, starting the Korean War. Initially the communists make impressive gains, but in September the U.S. Marines land at Inchon and liberate Seoul. China responds by sending in its troops.

Event and Its Context

Although the United States had experienced serious economic downturns in the past, nothing approached the economic catastrophe that was the Great Depression. Following the stock market crash of 1929, the economy continued to worsen throughout the early 1930s, affecting almost every person in the country. Resentment against the economic system rose, and much of the prestige of business disappeared. In this climate, President Franklin Delano Roosevelt embarked on a frenetic mission to fix the economy with his New Deal programs.

A common belief had developed among Roosevelt administration officials and the general public that an increase in mass purchasing power would permit full production and lead to full employment. The organization of labor and collective bargaining would create this buying power by balancing the so-far unrestrained power of the corporations. It appeared to be good public policy to take measures to promote greater equality of bargaining power in order to increase wages.

National Industrial Recovery Act

Amid a flurry of optimistic projections, Congress passed the National Industrial Recovery Act (NIRA) in 1933. NIRA established economic planning agencies, including the National Recovery Administration (NRA). This agency encouraged labor and business to collaborate on codes of "fair practice" to stabilize the economy and, through section 7(a) of the NIRA, guaranteed the right of workers to bargain collectively through independent unions and to enjoy, under the codes of fair competition, minimum standards for wages, hours, and working conditions. NIRA stimulated an upsurge in trade union membership, but the lack of enforcement provisions and the administrators' disagreements about the section's requirements ensured that few employers were willing to recognize and bargain with the unions.

By the end of 1933, the failure of the NRA was already becoming clear. Labor representatives had participated in the construction of fewer than 10 percent of the 557 NRA codes and had begun to deride the agency as the "National Run Around." Large companies obeyed the codes when it was in their interest to do so and ignored them when convenient. Employers remained free to spy on, interrogate, discipline, discharge, and blacklist union members. A great strike wave in 1933 and 1934 that included citywide general strikes and factory takeovers offered ample evidence that the act had not created peace in the workplace. These violent confrontations occurring between workers trying to form unions and the police and private security forces defending the interests of antiunion employers led many Americans to suspect that revolution was near. In 1935 the NRA finally died when the Supreme Court declared it unconstitutional in Schechter Poultry Company v. United States on the grounds that Congress had delegated legislative authority to the executive branch.

Introduction of the National Labor Relations Act

In 1935 Roosevelt presented Congress with a series of reforms that would constitute the Second New Deal, but these programs did not include any measures to help workers organize. The paternalistic Roosevelt, not a strong supporter of unions, worried that labor's militant new spirit would accelerate the violent confrontations of 1933-1934. He preferred instead that workers rely on his social programs. Concern about his survival in the upcoming 1936 elections also led the president to resist measures that might antagonize business interests. Meanwhile, in 1934 Robert Wagner, a Democratic senator from New York with a long history as a friend of labor, had introduced the NLRA bill to protect the rights of workers to organize and bargain collectively. Wagner had played a leading role in drafting the NIRA and had insisted on the inclusion of section 7(a).

When complaints about the NRA had grown loud, Roosevelt established a seven-member National Labor Board with New Deal supporter Wagner as the chair. Although it set up rules providing that a majority of workers in any plant could bargain for all workers, that secret elections be held to determine bargaining units, and that good faith efforts be made to secure agreements, the board had no power to enforce its decisions. These enforcement difficulties led Wagner to ignore Roosevelt administration opposition and introduce the NLRA on 28 February 1934.

The Wagner bill was based on the theory that continuing strikes interrupted and slowed the flow of interstate commerce and thereby harmed the general welfare. In a speech on the Senate floor, Wagner argued that it would also raise purchasing power through its provisions. The bill stated that employees shall have the right to self-organization; to form, join, or assist labor organizations; to bargain collectively through representatives of their own choosing; and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection. The bill contained the teeth that the NIRA had lacked in the form of an enforcement arm. It provided for a permanent labor board to prevent unfair labor practices that interfered with the right of employees to organize or discriminated against union members. This National Labor Relations Board (NLRB), composed of employers, employees, and members of the public, would have the power to arbitrate labor disputes as well as prevent unfair labor practices.

Roosevelt sabotaged the bill in 1934, wavered in 1935, and supported it unequivocally only after the Supreme Court had gutted his recovery program and overturned the NIRA. The bill's proponents included the American Federation of Labor (AFL), a few professors, and Frances Perkins, the head of the Department of Labor and the only administration official who spoke on behalf of the bill. Chief opposition to NLRA came from chambers of commerce and manufacturer's associations throughout the country as well as the conservative Liberty League. The National Manufacturers Association (NAM) insisted that the bill was constitutionally void on the grounds that manufacturing and production were not a part of interstate commerce, that the bill interfered with liberty of contract as guaranteed by the Fifth Amendment, and that it violated the Fifth Amendment by conferring judicial power on an administrative agency whose procedures violated due process of law.

The NLRA received Senate approval on 16 May 1935, passed the House of Representatives on 19 June 1935, and was signed by Roosevelt on 5 July 1935. Hope of avoiding greater labor unrest may have led some members of Congress to vote for the bill. In late August 1935 Roosevelt appointed the members of the NLRB. J. Warren Madden, a professor of law at the University of Pittsburgh, served as chair. The rest of the board consisted of John M. Carmody, a member of the National Mediation Board, and Edwin M. Smith, a former member of the National Labor Board. Charles Fahy, former chair of the Petroleum Labor Board and assistant solicitor of the Department of Labor, served as general counsel.

Key Provisions of the NLRA

Sections 7, 8, and 9 of the NLRA would have the greatest impact upon labor and would prompt businesses to file Supreme Court challenges to the law. Section 7 defines the right of employees to unionize and bargain collectively. It protects such activities as filing grievances, on-the-job protests, picketing, and strikes. Section 8 defines employer unfair labor practices by making five types of conduct illegal: employer interference, restraint, or coercion directed against union or collective activity; employer domination of unions; employer discrimination against employees who take part in union or collective activities; employer retaliation for filing unfair labor practice charges or cooperating with the NLRB; and employer refusal to bargain in good faith with union representatives. Threats, warnings, and orders to refrain from protected activities are forms of interference and coercion that violate section 8. Disciplinary actions, such as suspensions, discharges, transfers, and demotions also break the law. Failures to supply information, unilateral changes, refusals to hold grievance meetings, and direct dealings with employees constitute further violations. Although this section focuses heavily on unfair business practices, it also prohibits union unfair labor practices, which include failure to provide fair representation to all members of the bargaining unit. Women and African Americans had traditionally experienced union discrimination, and this provision protects these groups. Section 9 provides that unions, if certified or recognized, are the exclusive representatives of bargaining unit members. It prohibits the adjustment of employee grievances unless a union representative is given the opportunity to be present and establishes procedures to vote on union representation.

Jones and Laughlin

The NLRA immediately created a wave of anger in the business community. Several companies prosecuted under the act challenged its legality in federal court. Among the protesting businesses were the Fruehauf Trailer Company of Detroit (for discharge of employees for belonging to the AFL); the Friedman-Harry Marks Clothing Company in Richmond (for discharge of employees for attending a organizational meeting of the Amalgamated Clothing Workers); the Associated Press (for discharge of an employee who had attempted to bargain collectively); the Washington, Virginia, and Maryland Coach Company (for discharge of employees who had requested union recognition), and the Jones and Laughlin Steel Company.

Headquartered in Pittsburgh, Pennsylvania, Jones and Laughlin had a large plant in nearby Aliquippa that became the object of the NLRB prosecution. Vertically integrated with 19 subsidiaries, it owned and operated ore, coal, and limestone properties; lake and river transportation facilities; and terminal railroads located at its manufacturing plants. The fourth largest steel and pig iron company in the nation, Jones and Laughlin employed 33,000 men mining ore, 44,000 men mining coal, 4,000 men quarrying limestone, 16,000 men manufacturing coke, 343,000 men manufacturing steel, and 83,000 men transporting its product. The company had about 10,000 employees in its Aliquippa plant, which was located in a community of about 30,000 persons.

Following the Schechter decision, Jones and Laughlin resumed efforts to prevent unionization. In June 1935 the company held elections for representatives under its employee representation plan at its Aliquippa plant. All of its other plants in Michigan, Minnesota, Pennsylvania, and West Virginia operated on an open-shop basis. Harry Phillips, president of the local Beaver Valley Lodge No. 200, which was affiliated with the Amalgamated Association of Iron, Steel and Tin Workers of America, joined with other union officials in urging employees to boycott the formation of this company-run union. The company pressured employees to vote by sending company police to the homes of workers and discharging 20 employees for refusing to participate. In July, Jones and Laughlin began to fire the active members of the Amalgamated Association. Several were officers and others were leaders of particular groups. Of the dismissed employees, two were motor inspectors, one was a tractor driver, three were crane operators, one was a washer in the coke plant, and three were laborers. Phillips, the union head, was fired for failing to answer a whistle while in the restroom. Marlin Dunn, a charter member of the union, lost his job for leaving his crane keys on a bench in violation of company rules, and union vice president Angelo Volpe was terminated for operating his crane in response to head signals from his helper rather than the mandated hand signals. When the union complained about these dismissals, Jones and Laughlin replied that all the men had been fired for cause. The union filed a charge of unfair labor practice with the NLRB on 28 January 1936.

When the Jones and Laughlin case came before the NLRB in March 1936, the company officials raised many of the arguments first presented by the NAM. They tried to establish that only raw materials entered the Aliquippa plant and only manufacturing operations took place within the plant. The company's attorney then moved for dismissal on the grounds that the NLRB lacked jurisdiction over manufacturing enterprises. The attorney representing the NLRB countered by introducing evidence showing the interstate nature of the company's operations. The board also introduced testimony by experts in labor relations who argued that a substantial proportion of strikes were caused by the refusal of employers to recognize the right of employees to organize and bargain collectively. On 9 April the NLRB found Jones and Laughlin guilty of unfair labor practices, ordered it to reinstate the 10 fired employees with back pay for time lost, and mandated the posting for 30 days of notices that the corporation would not discharge or discriminate against members of the labor union. Jones and Laughlin refused to comply. The NLRB responded by filing a petition of enforcement in the Fifth Circuit Court of Appeals in New Orleans in the belief that this court would favor the board in the expected appeal by the company.

Jones and Laughlin appealed. In a surprise decision, the Fifth Circuit denied the NLRB's petition on 15 June on the grounds that the board had no jurisdiction over a labor dispute in a steel plant engaged only in manufacture, since the Constitution does not grant the right to regulate employer-employee relations in production or manufacture. The NLRB now appealed to the Supreme Court, and oral arguments began 9 February 1937. Jones and Laughlin argued that that if the discharged men had to be rehired, then all freedom of contract and right to manage a business would be lost.

The company's argument failed. On 12 April 1937 the Supreme Court reversed the appeals court in a 5-4 decision read by Chief Justice Charles Evans Hughes. Justices Hughes, Louis Brandeis, Benjamin Cardozo, Harlan Stone, and Owen Roberts found that Jones and Laughlin had indeed fired the workers for engaging in union activity. They also found the NLRA to be constitutional because it aimed to reach only what burdened or obstructed interstate commerce rather than to influence such commerce. They declared the steel company guilty of unfair labor practices that ignored a "fundamental right" of workers. Stating that employees had as much right to organize themselves as Jones and Laughlin had to organize its business, the Court added in strong language that the company's coercive and discriminatory activities were the "proper subject for condemnation by competent legislative authority." The four dissenting justices, George Sutherland, Pierce Butler, James McReynolds, and Willis Van Devanter, cited grounds of commerce and due process. The power of Congress to regulate industry and the relationships of employers to employees had been sustained.

Impact of Jones and Laughlin

The successful prosecution of the Jones and Laughlin case ensured the survival of the NLRA and galvanized union organizing. The number of complaints presented to the NLRB rose by 100 percent, and successful union campaigns began in the automobile, steel, electrical, manufacturing, and rubber industries. Membership in U.S. labor unions soared: by 1941 there were two and a half times as many Americans in unions as had been the case in 1935. By 1945 union membership reached 35 percent of the workforce.

Key Players

Roosevelt, Franklin Delano (1882-1945): After defeating Herbert Hoover for the presidency in 1932, Roosevelt developed the New Deal to bring the nation out of the Great Depression. The experimental programs of the New Deal did not rely on any particular formula for relief but simply offered hope of improvement. Roosevelt's laws would transform the role of the federal government in the workings of the nation's economy.

Wagner, Robert Ferdinand, Sr. (1877-1953): As a New YorkState senator, the German-born Wagner gained a reputation for being a friend to labor as chair of the Factory Investigating Commission, appointed after the tragic 1911 Triangle Fire. He helped push through the most effective worker's compensation law in the nation as well as new laws prescribing safety and sanitary conditions in the workplace, restricting child labor, and limiting the hours of working women. Wagner served a brief stint as a state court judge who refused to issue injunctions against striking workers and made history by enjoining an employer from breaching a union contract. He entered the United States Senate in 1927 and took a leading role in constructing the New Deal.

Bibliography

Books

Aikin, Charles, ed. National Labor Relations Board Cases. New York: John Wiley, 1939.

Bernstein, Irving. A Caring Society: The New Deal, the Worker, and the Great Depression. Boston: Houghton Mifflin, 1985.

Cortner, Richard C. The Wagner Act Cases. Knoxville:University of Tennessee Press, 1964.

Gross, James A. The Making of the National Labor Relations Board: A Study in Economics, Politics and the Law.Albany: State University of New York Press, 1974.

Millis, Harry A., and Emily Clark Brown. From the Wagner Act to Taft-Hartley: A Study of National Labor Policy and Labor Relations. Chicago: University of Chicago Press, 1950.

National Labor Relations Board. Legislative History of the National Labor Relations Act, 1935. Washington, DC: United States Government Printing Office, 1948.