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Modern manors: welfare capitalism since the New Deal.

Sanford Jacoby, Modern Manors: Welfare Capitalism Since the New Deal. (Princeton: Princeton University Press 1997)

IN MODERN MANORS, Sanford Jacoby analyzes how three major American companies -- Kodak, Sears Roebuck, and Thompson Products (later Thompson-Ramo-Wooldridge or TRW), nurtured and maintained their union-free status for most of the current century through the adoption and elaboration of welfare capitalism. It is a richly documented, award-winning book (garnering the Philip Taft Prize for the best book in US labour history for 1998), with a set of highly-persuasive arguments, including two which hold significant lessons for workers, unions, companies, and anyone else interested in the historical and current struggles between labour and capital. First, when companies go to great lengths and expense to win the trust and loyalty of their respective workforces (while simultaneously demonstrating their equally consistent and insistent beliefs that unionism was not right for their companies), they can be successful in their efforts to win that loyalty and defeat unionism. Second, in the American context, the successes of major firms like Kodak, Sears Roebuck, and TRW, paved the way for the gradual defeat of the union model by the welfare capitalist model from the late 1940s to the present.

Jacoby begins his book by addressing the fairly standard belief that welfare capitalism in the US came to a screeching halt in the 1930s when large corporate capital understood that it did not require the bread and circuses of welfare policies and programs to meet the needs of its workforces and hold off the spectre of unionism. According to Jacoby, this scenario is not quite what took place. Instead of being "dead and gone," welfare capitalism went "underground" in the 1930s where it reshaped itself. This transformation took three forms: the continued search for, and implementation of, "hard" and "soft" welfare programs that buttressed "employment" rather than job security; the active incorporation of and utilization of social science-based ideas and methods such as attitude surveys and nondirective interviewing with the express purpose of ferreting out the belief and thoughts of their workforces to promote worker identity with their employers and to undermine unionism; and a decidedly more public/political face to promoting welfare capitalism, strengthening private enterprise, and enlarging the non-union sector in American industry. How each of Kodak, Sears Roebuck, and TRW contributed to the development of these aspects of welfare capitalism takes up the remainder of Jacoby's book.

By the 1920s everyone who owned a camera was aware of Kodak. Started in 1881 in Rochester, New York, Kodak grew to become one of "the largest and most profitable firms in the United States" by the 1930s. By this time Kodak was also among the leaders in the welfare capitalism movement in the United States -- a position stemming from personal views of founder and majority owner, George Eastman, who believed it important to treat employees well, from Eastman's ever-increasing personal wealth which allowed him ample financial room for workplace and external philanthropy, and, most importantly, from the expense, the techniques, and the secrets attached to the labour process of making photographic film. "The plant's film-making machines," Jacoby writes, "were costly to stop and start, and thus operated continuously. Were a labour dispute ever to have shut down the plant, it could have inflicted serious damage to Kodak's revenues and profits."

It was factors such as these that "led Kodak to spend substantial sums to secure the loyalty of its workforce." The first steps in this direction were taken in 1897 when the company introduced an employee suggestion system with a monthly prize, followed over the years with the introduction of dining halls, smoking and reading rooms, an assembly hall for concerts and dances, as well as the establishment of a comprehensive recreation program. In the 1920s, Kodak added a sickness plan, a medical department, a "contractual, nondiscretionary and fully insured" pension plan (introduced mainly because it "would retire workers after ... their period of usefulness and replace them with more efficient workers"), and two departments which looked after securing housing lots and mortgages for Kodak employees. "Employees should be encouraged to buy their own homes." Eastman told his industrial relations chief that "nothing stabilizes a work force like having them own real estate."

Along side these programs were two others that arguably had greater long-term impact in securing the loyalty of Kodak employees. The first was the introduction in 1912 of a profit-sharing program tied to stock dividends and paid to workers on the basis of their annual earnings and length of service -- the latter aspect having the important employment stabilizing effect of holding

workers to their jobs. The second program, instituted in the 1920s and designed to ease shop floor tensions and enhance employees' perception of Kodak as a good and fair employer, eliminated the powers of the foreman to directly fire a worker. Now, workers were to be "sent to the employment manger with a written disciplinary report. The manger was allowed to rescind the discharge and reassign workers to other jobs." At the same time a complaint system was put in place that allowed workers to "freely state and discuss any complaints or grievances and whereby same can receive considerate, unprejudiced, and prompt attention."

Why did company "spend so much time and money on its welfare programs?" According to Jacoby, apart from the financial incentives that made it cheaper for employers "to give workers fringe benefits than to have them purchase it privately," there was the company's "implicit contract with [its] employees" that in "return for steady work and excellent benefits, the company asked employees to keep company secrets, accept technological change, trust their supervisors, and stay away from unions." Workers did, it seems, adhere to each of these company wishes. With regard to unions, Kodak did not confront any real threat until the 1940s when the United Electrical Workers (UE) made efforts to organize sections of its Rochester workforce. This attempt was answered by the company through wage increases, a retiming of work standards, the opening of a new cafeteria, and the payment of a record wage dividend. As Jacoby writes: "The drive ended ... and nothing more was heard of the UE at Kodak." (91) (Much to the chagrin of Kodak management one Kodak plant just outside Toronto was organized during this period.)

While in a very different sector, service, and under different organizational pressures, a far-flung set of department stores with different types of employees, for example, mail order and retail, the content of Sears's welfare capitalist measures was strikingly similar to that of Kodak. First, like the film processing giant, Sears attended to the employment security desires of its workforce. Consistently strong economic performance allowed for this. Second, the company provided a full measure of standard welfare policies and practices, with the "weightiest" being profit-sharing and which gained the reputation as being "one of the nation's most generous." In contrast to Kodak's, this profit-sharing plan operated as a pension plan designed, company president Robert E. Wood declared, "to encourage savings and stability." But this was "hoopla," Jacoby suggests. The major purpose of the profit sharing plan was to "keep employees around until mandatory retirement and then ease them out of the door with an annuity." Some workers understood how the plan kept them somewhat helplessly glued to the company. As one worker related in the 1940s the profit-sharing system was a good thing "but they take advantage of it terrifically. They know damn well that that's the only thing that keeps most of the people on here. If it weren't for that turnover would be terrific." (109) Sears let it be known that if a union ever darkened its doors, the profit-sharing plan would be terminated. As one labour organizer stated, this was the "golden handcuffs approach" to employment stability.

Sears's welfare capitalist measures did not stop here. Indeed, company efforts to promote loyalty and control their workforce were extended through the systematic use of attitude surveys and nondirective interviewing. According to Sears management, such methods were benign in their intent: they were used simply as a means of gauging and judging the "morale" of its workforce and then acting to rectify any problems or dissatisfactions such surveys and interviews uncovered. Jacoby's interpretation, however, differs from that of Sears management. For him, such practices were, and to this day are, used by Sears management for purposes more subtle and insidious than simply attempting to "deal with [morale] problems before they kindled pro-union sentiments." Rather, Jacoby writes, the "program was clearly deceptive and manipulative (nondirective interviewing, for example, sought to change an employee's behaviour without his or her knowledge or consent.)" (140)

Sears was thus at the forefront of utilizing the methods of the social sciences in its efforts to operate its business free from external encumbrances like unions. In the end, however, as the continual struggles with unions (principally the CIO's Retail, Wholesale Department Store Employees' Union) indicate, not all of Sears employees were won over to the notion that the company was the best representative of their interests. Female employees, for example, had many points of discontent with their jobs and their opportunities for advancement. This was due to the consistent and systematic favouritism shown to male employees who enjoyed greater benefits than female employees. Men were also given the "big ticket" jobs that allowed them the opportunity to earn higher incomes through commissions. Men's longer-service with the company, large numbers of female employees were part time and women were let go when they married, also meant that the company's welfare programs, especially the profit-sharing program, benefitted them to a much larger degree than women. So, too, Sears managers turned a blind eye to their male employees tactics of resistance and discrimination regarding female employees who desired to move into the better-paying and career-enhancing jobs. This form of male solidarity worked to the company's clear advantage in dividing one group of employees against another.

The third company examined by Jacoby -- TRW -- adds an industrial manufacturer to the mix of processor and retailer. Founded in Cleveland in 1901 by Charles Thompson, the company initially manufactured auto parts for new and used cars but expanded its product line into the aircraft engine parts during World War I and jet aircraft and missiles after World War II. A mass production plant with a "high division of labor," TRW's workforce was consciously composed of a mixture of men from "more than a dozen ethnic groups which prevented any one of them from constituting a majority." This mixture did not, however, include black men and black or white women -- a situation that changed only during World War II when a shortage of white men forced the company to alter its policies and large numbers of women and black men were hired on at TRW.

Crawford brought this "hodgepodge" of workers together by promoting the image of the company as a "brotherhood" where all workers, regardless of their job, were friends and workers. He kept his finger on the pulse of his workers by walking around the plants as much as time allowed him -- a practice he insisted other senior management indulge in as well, and by the regular use of large-scale attitude surveys described by Crawford as a way for him "to get into the shop and swap ideas." Again, the underlying rationale for such surveys was quite different than what was put forward in Crawford's public pronouncements. For, along with revealing departmental and worker discontent, "the company's major objectives were promoting catharsis-- `getting things out in the open -- and creating the impression that malcontents were a minority."

As with Kodak and Sears, however, it was the "hard" welfare measures that were more important to securing the loyalty and cohesion of TRW workers. One of these measures was the company's establishment of group bonuses. Reminiscent of modern-day teams, workers were paid on the basis of an hourly rate plus the amount of work put out by members of that workers' group. Unlike contemporary work groups or teams which characteristically number in the tens, work groups at Thompson "typically included 60 to 125 workers" with some reaching 400 in number. By the 1940s "group bonuses accounted for more than 20 per cent of employees earnings." A second "hard" benefit related to seniority, with the firm displaying strong support for its long-term employees. All things being relatively equal, those workers with long-term service got the better, higher-paying jobs, and, in the event of layoffs, kept their jobs.

As opposed to Kodak and Sears, however, these welfare capitalist measures did not completely spare TRW from the reality of unionism. From the 1930s through to the end of the next decade, TRW used all of its resources -- including the rampant, illegal use of company unions -- to combat UAW efforts to organize its plants in Cleveland, Detroit, and Toledo, Ohio. When the dust settled at the end of the 1940s, TRW emerged bruised but essentially unbroken: the UAW had organized its plants in Detroit and Toledo, but were unsuccessful in the more important production centre of Cleveland. This outcome set the stage for future TRW industrial relations policy in that any new plants opened in the 1950s and beyond came with company unions and many of the accompanying welfare capitalist policies and programs. More than Kodak and Sears, TRW had survived the onslaught of industrial unionism and the lessons learned were as important to like-minded employers as were those offered by Kodak and Sears.

The final chapters of the book take up these lessons. Throughout the 1950s and 1960s, company officials from each of Kodak, Sears, and TRW used their experience and their positions as important corporate players to actively and successfully change labour laws in the United States, from Taft Hartley in 1947 to alterations in Labor Board guidelines allowing the company to make partisan representations to their employees during union organizing drives. As importantly, they responded to union demands for more expansive benefit programs (both in terms of levels and kinds) by pressing the various constituents of corporate US through organizations such as the National Assembly of Manufacturers to adopt pension plans, health plans, and the like. Company-based plans, advocates like Kodak's Marion Folsom argued, would give workers a minimum level of protection and service while simultaneously safeguarding private enterprise from the anticipated incursions associated with the welfare state. In these ways, companies in the welfare capitalist realm were instrumental in enlarging the economic, political, and social boundaries and legitimacy of capitalist production in the 1950s and 1960s -- boundaries that had been challenged by industrial and a revitalized craft unionism in the 1930s and 1940s.

As these developments and processes indicate, American capitalists quickly became very impatient with the many restrictions of unionism. This impatience only grew when the new realities of an emerging global economy washed up on US shores in the 1960s and 1970s. Unionized firms began to openly chafe under the perceived restrictions of unions. According to Jacoby, the "web of rules" characteristic of unionized workplaces (for example, job classifications, job ownership, seniority) placed significant roadblocks in the way of companies responding to the new dynamics of international competition. Indeed, these companies found the path to "flexibility" strewn with resistance and lethargy.

We know the story of the defeat/decline of American unionism in the 1970s and 1980s. Hundreds of thousands of unionized workers lost their jobs in the orgy of downsizing and modernization and closures and relocations that took place during this period. But these were simply the more obvious manifestations and odious results of American industry's search for solutions to the crisis of capital accumulation. Another set of developments took their cue from the experiences of companies like Kodak, Sears, and TRW by adopting "human resource" policies and programs that had their bases in the welfare capitalist models and human relations theories of the 1930s. In this vein, it is fair to say, as Jacoby does, that the schemes of worker participation and workplace teams so popular today took as much from the examples of firms like TRW as they did from Japan -- or they could have if they had looked in their own backyards.

Such experimentation did not take place right across the board. Rather, it was the non-union sector that "proved to be better suited than its [unionized] rival to the postindustrial realities of the 1970s and 1980s." It was also this sector where the behavioural sciences made the greatest headway and impact. According to Jacoby, the reasons for this lay partly in the resistance put up by unions to the use of attitude surveys who worried about their intended use. Jacoby tells the story of one union official who told a conference of personnel experts: "Whereas you gentlemen present yourselves to the workers as specialists and as technicians and as detached professionals, they sort of chew at the end of their cigars, or spit after they have swallowed a little tobacco from the end of their cigarettes, and say, `Yes, but who is paying you.'" This hostility was "ill-timed," according to Jacoby, since it meant that unions failed to appreciate that the increasingly educated, female, white-collar workforce was attracted to the "personal and participative orientation" of the behavioural science influenced non-union sector. When, in the 1970s unions finally began to pay attention to the "quality of working life," it was a case of too little, too late. Indeed, the "new non-union model" was striking in how similar it was to the practices identified by Jacoby as defining modern welfare capitalism.

The final argument in this superbly researched and argued book is precisely that modern welfare capitalism emerged as the most dynamic model of labour capital relations because where its policies and practices were pursued vigorously and consistently, it was able to offer workers what they wanted and needed. In the years directly after the New Deal this was employment and post-employment economic security. In the new era of postindustrial capitalism, it is a workplace that is free of adversarialism and that is open to, recognizes, and rewards, the cut and thrust of individual achievement. There is little or no room in this scenario for promotion via seniority or pay and benefit increases coming via the signing of collective agreements.

Reading this book leaves much to ponder. One can question Jacoby's analysis regarding how workers at each of Kodak, Sears, and TRW really received the overall ideological message of their employers. This is especially difficult to discern in the case of Kodak as Jacoby does not provide much first-hand information on the perceptions and attitudes of these workers regarding that companies efforts to win their loyalty. If Kodak did not know the value of these programs, neither do we. This query is of less significance in the cases of Sears and TRW where we do learn more about worker responses to their welfare capitalist practices. In both instances, the loyalties of workers were secured only after battles with unions -- a fact which suggests that workers do make deeply personal and potentially long-term choices even if those choices are made in contexts where the forces of persuasion and coercion fundamentally favour one side over the other.
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Publication:Labour/Le Travail
Article Type:Book Review
Date:Sep 22, 1999
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