even though our kitchen looks nothing like hers.
The Treaty of Detroit
Unions bargain like it’s still 1950. That’s the year the United Autoworkers settled a landmark collective bargaining agreement with General Motors that set the postwar pattern for labor relations. It’s often called the “Treaty of Detroit.”24 The agreement covered an unprecedented five-year period. It guaranteed there would be no work stoppages during that time. It gave wide latitude to management’s rights to direct its business, setting product prices, for example. It guaranteed workers’ wages that would keep pace with the cost of living and rise with productivity. It included a private welfare system of employer-paid pensions, health insurance, and other fringe benefits. This probably sounds awesome to a modern reader. But it involved significant trade-offs that have only worsened with time, and it was not the goal with which the union started.
The union began the postwar period with an audacious demand: a 30 percent wage increase accompanied by no rise in the price of cars.25 This demand was put forth by Walter Reuther, then a vice president of the union, a few weeks after the Japanese surrender that ended the Second World War. At the time, people were understandably worried that the country would return to an economic depression once wartime spending on production was phased out. Reuther was convinced that the key to staying out of a Depression was to put more money in workers’ pockets so that their rising living standards would drive the demand for consumer goods and keep the factories humming.
This was a demand for income redistribution. It’s the demand that earned Reuther the sobriquet “the most dangerous man in Detroit.” He was so christened by George Romney (father of Mitt), who headed the auto industry association, because “no one is more skillful in bringing about the revolution without seeming to disturb the existing forms of society.”26
Workers who had long experienced price increases in food, shelter, and consumer goods that eroded whatever wage gains they were able to win rallied to the cause. The strike, which began on November 21, 1945, was the first time that the UAW completely shut down production at all of GM’s facilities. Workers at Ford and Chrysler stayed on the job, so that GM would lose business to its competitors and be more likely to settle what the union hoped would be a pattern for the other car companies.
But the UAW was not the only union on strike. The bitter winter of 1945–46 saw a strike wave that put two million workers on picket lines. All the strikes were motivated by the same kind of worker demands for a bigger slice of the pie.
When the Steelworkers signed a deal with U.S. Steel that gave its members an 18½ cents an hour raise, with a corresponding rise in the price of steel, a pattern was set. Most strikes came to an end within a few weeks of the steel settlement, with similar raises. The GM strike lasted 133 days, the longest of all the strikes that winter. For their efforts, the GM workers got a penny more an hour than the Steelworkers, but GM still raised the price of its cars.27
That was a one-year contract. Most collective bargaining agreements were one-year deals back then, and they were fairly bare bones. They were basically an agreement over what that year’s wage rates would be, with a dispute resolution process spelled out for the period of a truce in which the union promised not to strike.
For every year that followed, the UAW would single out one of the Big 3 auto companies for strike preparation and wage and benefit demands that aimed for significant, permanent improvements in workers’ standard of living. In 1949, Chrysler bore the brunt of a 104-day strike after refusing to match Ford’s fully paid pension. Out of this annual turmoil came the Treaty of Detroit. General Motors wanted five years of labor peace, and the UAW made them pay for it with pensions and health insurance.
Unions had begun to negotiate fringe benefits during the Second World War. After the War Labor Board froze wages to combat inflation, it exempted fringe benefits from the restrictions. This “Little Steel Formula” gave unions wiggle room to make some material gains for their restive members.28 Many unions emerged from the war years with employer-sponsored health insurance and other benefits.
But not so much the CIO unions. Union leaders like Walter Reuther, who were more social democratic in their outlook, viewed health care and enhanced retirement benefits as the purview of the federal government. They wanted to win these things as universal rights for all Americans, as a part of a renewed New Deal.
This vision was frustrated by the Republican congressional victories in the 1946 midterms, but even congressional Democrats didn’t feel the same urgency of the Depression years to put money in workers’ pockets even at the risk of incurring the wrath of the ruling class. At their 1946 convention, CIO leaders vowed not to wait “for perhaps another ten years until the Social Security laws are amended adequately” and to use their collective bargaining power to address their members’ health and retirement security.29 The UAW believed that by forcing all the auto companies to pay for the same benefits for their employees, these benefits would be taken out of competition. Reuther’s hope was that by loading these additional payroll costs onto the auto companies’ bottom line, it would give them a financial incentive to lobby the government to assume these responsibilities.
Think about that. The celebrated Treaty of Detroit was a five-year deal to make progress on a ten-year problem. And yet the private welfare system it built up has been a source of pride for union leaders and members for generations. Pensions and “Cadillac” health care plans and a host of other fringe benefits are the “union difference.” Bargaining for them is for many the sine qua non of what unions do.
Today, many unions face round after round of concessionary demands to cut back member benefits. The “union difference” of substantially higher payroll costs gives employers a strong incentive to offshore, outsource, and fiercely resist union organizing efforts. And we’re stuck with the trade-off to win that private welfare system: long-term contracts that give management wide leeway to do what they want while we are saddled with severe restrictions on protest activity.
Most union activists view our job as organizing as many new members and new shops as we can to increase density and get back to an era where the Treaty of Detroit framework still works. I say that the framework has become a trap, that we should critically evaluate it and be willing to blow it up.
Mandatory Subjects of Bargaining
The corporate executives at General Motors fiercely resisted the union’s attempt to have a say on its business decisions, and they won. Today, there are few unions that would even dare to offer an opinion on how their employer profits or how they should bill the public, and fewer still that view co-determinism or joint decision-making as a legal right or even an achievable goal.
Labor law hasn’t helped. The National Labor Relations Act’s directive to employers to bargain with certified union representatives “in good faith” over “wages, hours and other terms and conditions of employment” is as broad as it is vague. There is no statutory requirement to actually reach an agreement, only to meet and respond to proposals.
The benefit of the NLRA is in restraining and enjoining Unfair Labor Practices (ULPs). Bargaining in bad faith only occurs when one party refuses to meet or refuses to respond to a so-called mandatory bargaining proposal. ULPs over the failure to bargain in good faith can bring significant leverage as remedies include orders to meet more frequently, the furnishing of budgetary and other documentation to justify a bargaining position, and orders to cease, or even reverse, any changes made prior to reaching agreement or impasse.
Unfortunately, the obligation to bargain in good faith has been drastically narrowed by the Supreme Court’s artificial invention of “mandatory” and “permissive” subjects of bargaining. “Permissive” subjects are those that either party can simply refuse to discuss with no legal repercussions. Of course, the Court has privileged “managerial decisions, which lie at the core of entrepreneurial control” in this way.30
The road to this dichotomy also came through auto negotiations, albeit in a much more obscure event. Just three years after the Treaty, a UAW local in a contentious round of bargaining with an auto parts supplier rejected management’s wage