Guilds and Unions

1
Guilds and Unions

• Business is initially organized into guilds.
• Guilds have a Master, Journeymen, and
  Apprentices.
• The interest of these threes are connected, and
  in fact early unions admitted Masters (who are
  employers today) into their ranks.

2
Early Strikes

• 1741 strike of New York bakers. Strike was over
  the price of bread set by the municipal
  authority.
• 1806 strike of cordwainers in Philadelphia.
  Journeymen struck against the masters in the same
  guild.
• Prior to the cordwainer strike, the separation of
  labor and capital was not clear.
• Ruling of the court The strike of journeymen
  represented a criminal conspiracy.

3
Forming Unions before the Civil War

• Commonwealth vs. Hunt (1842) ruled that unions
  did not necessarily represent a criminal
  conspiracy.
• The National Trade Union collapsed after the
  panic of 1837. In other words, economic crisis
  could easily destroy worker solidarity.
• By 1860 only 5,000 workers belonged to unions.
  The majority of white males were either
  self-employed or employed in small business.
  Large scale operations were not prevalent.
• Initially labor is not regarded as a property
  right. Mechanic lien laws were not adopted until
  the early 19th century. Such laws recognized the
  property rights of labor.
• An integrated labor market is not possible
  without adequate transportation. Labor markets
  were not integrated till the later 19th century.

4
Political Rights and Labor

• Prior to 1860, the right to vote was restricted
  to free, white, adult males who also owned
  property. This is a remnant of English law.
• Historically the right to vote (or ones status
  as a citizen) was tied to the ownership of
  property. The idea that skill and effort can be
  thought of as property, and hence allow one to
  fully participate in society, gradually takes
  hold in the 19th century.
• This process begins in Massachusetts and New York
  in the 1820s and gradually spread to all states.
  One should note that Western states tended to be
  more liberal than Eastern states.
• Why would political rights be restricted to
  land-owners? Or why would laborers not be
  allowed to participate? The answer lies in the
  mobility of labor vs. the mobility of land.

5
The National Labor Union

• The National Labor Union first met in 1866. Its
  main objective was the establishment of the 8
  hour work day for government workers. This was
  signed into law by Andrew Johnson in 1868.
• With such political success, the NLU turned to
  the issue of Greenbackism. The idea was to
  monetize the debt. In effect, increase the
  supply of money to pay the debt created by the
  Civil War. Such a plan would lower interest
  rates (due to an increase in the money supply)
  and make it easier for labor cooperative to
  acquire needed capital. This movement failed.
• The political focus of the NLU continued. The
  NLU formed the National Labor and Reform Party,
  who in 1872 was soundly defeated in national
  elections. Political losses spelled the death of
  the union.

6
Noble Order of the Knights of Labor

• Organized in 1869 by Uriah Stephens
• Went public in 1878, after nine years as a secret
  organization.
• After winning some strikes, especially a railroad
  strike against Jay Gould, the Knights fell apart
  in 1886 after a series of violent and
  unsuccessful strikes.
• The problem for the Knights was a lack of focus.
  Rather than focus on issues directly impacting
  workers, the Knights called for the end of
  capitalism and the reformation of society.

7
The American Federation of Labor

• The AFL was a craft union. Craft unions were
  locally rooted, concerned mainly with the
  improvement of union members position, even if
  this meant that workers outside the union did not
  benefit.
• The AFL was founded by Samuel Gompers, whose
  tactics included restricting membership to craft
  workers, accumulate large strike funds, and
  practice voluntarism.

8
AFL and Voluntarism

• The AFL had long utilized the method of
  "voluntarism", which former AFL President Samuel
  Gompers had described as "rewarding our friends
  and punishing our enemies" (Donahue 1992, pp.
  12). Rather than supporting either of the major
  political parties, the AFL had supported
  individual politicians from both parties. This
  was considered a wise course of action given the
  large number of "one-party states". Since many
  of the regulations regarding unions were centered
  at the state level, avoidance of party
  affiliation enhanced the AFL's efforts (Donahue
  1992, pp. 12-13).

9
The AFL and CIO

• The AFL dominated labor for 50 years. In 1935
  the Congress of Industrial Organization (CIO) was
  founded. The CIO was a collection of industrial
  unions (rather than craft unions).
• Although the CIO was focused on social issues,
  for example trade liberalization, in 1955 it
  merged with the AFL and the focus on labor issues
  and non-aligned political activity became the
  dominant theme.

10
Craft Unions

• Craft Unions - Workers who share a common skill.
• The American Federation of Labor (AFL) is a
  collection of craft unions. Craft unions were
  locally rooted, concerned mainly with the
  improvement of union members position, even if
  this meant that workers outside the union did not
  benefit.
• Craft unions increase wages by limiting access to
  the unions and to the required skills.

11
Industrial Unions

• Industrial Unions - Workers employed in a common
  industry
• The Council of Industrial Organization (CIO) is a
  collection of industrial unions. Industrial
  unions tend to be organized over a wide
  geographic area. Furthermore, success is only
  achieved if the union is inclusive. All workers
  must participate in the union for the union to
  bargain successfully.
• Industrial unions, via strikes, negotiate for
  higher wages.

12
The CIO and Trade Liberalization

• From the CIO in 1943, specifically the director
  of research J. Raymond Walsh....
• " '...almost unanimous consensus of informed
  opinion for over a century... had held that
  obstacles to trade were invariable costly to a
  nation. Unfettered trade enabled every nation to
  realize the highest standard of living
  specialization in producing things with the
  greatest efficiency induced maximum
  productiveness. Nothing less than national
  defense considerations could justify, in the CIO
  view, 'artificial obstacles' in the way of free
  international trade." (from the U.S. Congress
  (1943) as reprinted (Donahue 1992, p. 9)

13
More from the CIO

• "Without 'free trade'... at least half of the
  American people would be doomed to a life of
  poverty. The nation would be consumed by crime,
  civil disorders, race riots, violence, forcing an
  end to all civil and individual liberties.
  America's roads would be clogged with masses of
  wandering, homeless people, threatening the
  existence of the family as an institution and
  giving rise to a generation of juvenile
  delinquents. Sickness and disease would plague
  the population. Demagogues would harangue the
  people and mislead and confuse them. The crisis
  would convulse the nation, threatening private
  property and democratic political institutions
  alike" (Donahue 1992, p. 23).

14
Sherman Anti-Trust Act and Labor Unions

• Section I of the Sherman Act Every contract,
  combination in the form of trust or otherwise, or
  conspiracy in restraint of trade or commerce...
  is hereby declared to be illegal.
• Problem A union calling a strike is a restraint
  of trade (be definition). Initially the Supreme
  Court argued that labor unions violated the
  Sherman Act.
• In 1914 the Clayton Act was passed. Section 6 of
  this act declared that labor is not a commodity
  or article of commerce and that labor unions
  should not be considered as illegal combinations
  or conspiracies in restraint of trade.

15
More on the Sherman Act

• Problem with applying the Sherman Act to labor
• Business can avoid the Sherman Act because
  competition can be restricted via price
  leadership, mergers, high entry costs, etc. All
  of these actions are not necessarily violations
  of the Sherman Act.
• Labor cannot avoid market competition without a
  union, since there are no scale economies, entry
  and exit is perfectly free.
• The Wagner Act (1935) was need to legitimize the
  actions of labor unions.

16
The Wagner Act

• The Wagner Act (National Labor Relations Act) was
  passed in 1935. Under its terms
• labor had the right to organize.
• labor could elect by secret ballot its own
  bargaining agents.
• labor could bargain collectively.
• employers could not interfere with the process by
  punishing union members.
• the National Labor Relations Board was
  established and given authority to judge and
  arbitrate outcomes.
• Note Only when politicians had an incentive to
  support labor did governments attitude towards
  labor change.

17
The Rise of the Tertiary Sector

• Tertiary Sector - Service sector (teachers, civil
  servants, health care, etc..)
• Primary Sector - Agriculture, mining, fishing,
  etc
• Secondary Sector - Manufacturing
• Why does the tertiary sector increase?
• Technological change reduces the number of
  workers required in the primary and secondary
  sector.
• Rapid increase in educational attainment produces
  a labor force ill-suited for the jobs available
  in the primary and secondary sector.

18
Tertiary Sector and Unions

• Review Table 28.5
• Review Table 28.6
• How does this impact unions in the United States?
  
• As employment in manufacturing declines (in
  relative terms), membership in unions follows.
• Unions have sought to expand to the tertiary
  sector, especially for public services.