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The Brotherhood
How America prospered when workers and management were partners .

By Reviewed by H.W. Brands
Sunday, April 27, 2008

THE BIG SQUEEZE

Tough Times for the American Worker

By Steven Greenhouse | Knopf. 365 pp. $25.95

AMERICAN-MADE

The Enduring Legacy of the WPA: When FDR Put the Nation to Work

By Nick Taylor | Bantam. 630 pp. $27

In 1914 Henry Ford appalled his fellow automobile manufacturers by raising wages to $5 per day. This was twice the industry standard, and it prompted cries that Ford was spoiling workers for everyone else in the business. He countered that it was good not only for Ford Motor but for the American economy as a whole. "Our own sales depend in a measure upon the wages we pay," he said. "If we can distribute high wages, then that money is going to be spent, and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous, and their prosperity will be reflected in our sales. . . . Country-wide high wages spell country-wide prosperity."

Ford's insight furnished the basis for much of American prosperity during the 20th century. Prior to Ford, employers had attempted to beat down wages, assuming that their workers' incomes had little connection to their companies' sales. Workers and customers were deemed to be separate, non-overlapping groups. But Ford, who intended to sell a car to every family in America, saw his workers as part of his customer base. If they couldn't afford cars, he couldn't sell them Fords.

More employers caught on, some voluntarily, others under the duress of strikes. By the 1950s, the American model of industrial economy was fairly perfected. Employers paid high wages; workers spent those wages on the goods they and other workers produced. Blue-collar workers gained a solid footing in the middle class, which became the center of gravity of American life. The economy as a whole grew steadily, year after year.

In The Big Squeeze, Steven Greenhouse picks up the story at this point, describing the postwar "social contract" by which management and labor acknowledged their interdependence. Greenhouse's focus is labor; he stresses the role of unions in ensuring that workers received their share of the growing pie. Yet he makes clear that management was an essential partner in the deal -- that General Motors' "Engine Charlie" Wilson, for example, was the necessary counterpart to Walter Reuther, the president of the United Auto Workers. The social contract, moreover, had the blessing of government. As Dwight Eisenhower explained it, "An American working man can own his own comfortable home and a car and send his children to well-equipped elementary and high schools and to colleges as well."

The social contract survived the turbulence of the 1960s, but it began to fray in the '70s, when rising oil prices and broader inflation eroded the purchasing power of workers. The contract broke down completely during the '80s. Deregulation of key industries, including airlines, trucking and telecommunications, played a part in its demise, as intensified competition among firms prevented them from passing the cost of wage hikes along to customers.

Government hostility to unions was no less crucial in destroying the mid-century model. From the 1880s to the 1930s, government had sided with capital in workplace disputes; from the New Deal to the 1980s, it had tilted toward labor. Ronald Reagan -- who, ironically, was the only president to have been the head of a union (the Screen Actors Guild) -- signaled the shift when he fired 11,000 air traffic controllers amid a 1981 walkout.

Developments of the 1990s scattered the ashes of the old model to the winds. Globalization intensified competition further, setting American workers against foreigners delighted to receive a tenth of what the Americans made. The emergence of new attitudes toward stock ownership -- and new modes of executive compensation -- created conditions in which management felt compelled to pump up share prices, often at the expense of workers.

Greenhouse has covered the labor beat for the New York Times for more than a decade, and his reporting skills serve his book's readers well. He alternates vignettes from the lives of individual workers with passages revealing the broader economic and political forces shaping workers' predicament. His story offers some reason for hope; Costco and Patagonia supply enlightened counterpoints to the dark force of Wal-Mart.

His recommendations for change -- a higher minimum wage, better enforcement of laws against employers' cheating on wages, universal health insurance, mandatory retirement accounts in addition to Social Security, renewed government support for labor unions, transition training for workers laid off by outsourcing, a recommitment to public education -- are reasonable and appropriate. But the current plight of American workers has been decades in the making, and absent a catastrophic failure of the system, it is hard to imagine how government will summon the will to effect the changes Greenhouse proposes.

Nick Taylor recounts the one time in American history when the system did fail catastrophically, and what the failure prompted the government to do. Taylor's American-Made is bigger than its title suggests; he provides a succinct survey of the Great Depression and particularly its consequences for workers. Thirteen million Americans were unemployed, a figure that multiplied via family and other dependent connections into perhaps 35 million men, women and children in a population of 130 million who lacked regular income. Upon his 1933 inauguration, Franklin D. Roosevelt persuaded Congress to extend relief -- money and food, primarily -- to the afflicted. But relief was a stopgap until jobs reappeared. When the Depression continued and the private sector failed to create the needed jobs, Roosevelt and the New Deal Congress established the Works Progress Administration in 1935.

The primary purpose of the WPA was to put people to work; a secondary aim was to strengthen the physical and social infrastructure of America. The 8 million persons employed by the WPA built roads, bridges, libraries and schools; they served school lunches and operated kindergartens; they performed plays, concerts and circuses; they produced paintings, sculptures and books. They constructed Timberline Lodge on Oregon's Mt. Hood and National Airport in Washington.

Taylor's style is similar to Greenhouse's; he interweaves personal stories with explanations of policy. His manner is brisk; chapters of four and five pages fly by. He treats Roosevelt sympathetically, but his hero is Harry Hopkins, the WPA's founding director. This former social worker distinguished himself by spending $5 million -- a large amount in those days -- during his first two hours in federal office. "I'm not going to last six months here," he predicted, "so I'll do as I please." But the crisis persisted, and Hopkins remained.

Taylor notes that the WPA was as controversial as most other New Deal programs. The work was inefficient; critics charged that the initials stood for "We Piddle Around." Even the best projects proved expensive. Yet the expense was never so great, Roosevelt and Hopkins held, as that of letting the country's human capital lie idle.

A warm glow of history enshrouds the WPA, which Taylor does little to dispel. But no one should want to see the WPA experiment repeated, for the reason that it would require reliving the economic circumstances that made it necessary. All the same, the WPA experience demonstrates that democracy can act decisively in a national emergency. We're not there yet; Steven Greenhouse's "squeeze" hasn't become suffocating. But if it does, we'll have the lesson of FDR and Hopkins to fall back on. ยท

H. W. Brands teaches at the University of Texas at Austin. His next book, "Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt," will be published in November.

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