Economists and politicians treat the famous American Wagner law differently. Some refer to it as the most advanced and call it the pinnacle of liberal labor legislation. Others consider this law one of the reasons for the unsuccessful struggle against the most severe unemployment that prevailed in the 30s in the United States. One way or another, the historical context and the emergence of Wagner's law on labor relations is an interesting management case that is quite suitable for study in economic schools.
Historical clarifications
The expression "Wagner's law of 1935 in the USA" often appears in business literature. This is no coincidence. If you search simply for "Wagner's law", you will most likely find another law - German. It also refers to the economic sphere and describes the growth of national production. The author of the German law issued in 1892 was Adolf Wagner. The name of the US senator who proposed the Wagner Act in 1935 was Robert Wagner.
It all started with the Great Depression
Adoption of new legislative initiatives,relating to the social sphere are best seen in the historical context. The Wagner Act was passed in the United States in 1935. This date explains a lot: the country was at the peak of the Great Depression - the strongest global economic crisis of the 30s of the last century.
Three years earlier, Franklin Roosevelt had taken the presidency for the first time, having won the US elections on the crest of promises to take urgent measures to eliminate the most severe social and economic upheavals. At that time, the unemployed in the country alone accounted for 47% of the entire working-age population. Roosevelt and his team announced the start of an extensive New Deal anti-crisis program, part of which was eventually the Wagner Act.
Franklin Roosevelt's New Deal
The anti-crisis program included many parallel actions in the economy and social sphere. The National Industrial Recovery Administration was established to deal with the development of fair competition, output quotas, market prices, wage levels, etc.
The banking system has undergone the toughest reforms: for example, the artificial devaluation of the dollar, the ban on the export of gold and the complete closure of small banks.
Changes in the social sphere were initiated as a preventive measure in potential conflicts and unrest of workers in enterprises. The authors of the Wagner law counted on the growth of the average income and the cessation of numerous protest rallies. Reconciliation between the two sidestrade unions as intermediaries has become the main "behavioural" idea.
The essence of Wagner's law
The official name of the act is the Labor Relations Act. The main goal of the authors was to minimize mass conflicts between workers and their employers. Against this background, a new federal body was even established to monitor and control workers' claims - the National Labor Relations Administration. The decisions of this body had the force of law - the new officials had enough authority.
Later, however, it turned out that the main goal was not achieved in the end. But in any case, the law has changed a lot.
First of all, he gave the workers the right not only to organize their trade unions, but also allowed strikes, picketing and other protests to defend their interests. In addition, the law prohibited employers from dealing with people outside the union system.
By the way, the Wagner Act bypassed the railway and aviation industries. It also did not apply to government employees.
What the unions got
The trade unions have a real holiday. They have the right to choose models of contracts and terms of work contracts to dictate to entrepreneurs.
According to the intention of the authors, the Wagner law (1935) regulated the inequality between workers who were not members of any professional associations. The new practice of collective labor agreements has become mandatory for all companies. Now theyconcluded them only with independent trade unions. Moreover, no one had the right to interfere in the work or criticize the activities of the latter. If a union member was not hired, this was considered discrimination with corresponding pen alties under the new law.
What entrepreneurs got
Surprisingly, the Wagner Act was unprecedentedly harsh on entrepreneurs. Socialist parties around the world applauded the Roosevelt administration for passing it.
Employers now faced severe pen alties for "dishonest work behavior" - a new concept introduced in the law. It included violating the rights of workers, harassing trade unionists, hiring strikebreakers, etc. The National Labor Relations Administration was responsible for monitoring and sanctioning.
Companies were now forced to negotiate with unions over wage levels, he alth care, pensions and other social issues. They endured boycotts and a new kind of strike - "legal" strikes where unions invited workers to strike at other factories.
Employers were not allowed to hire people who were not union members. Unions have really started to rule the roost.
The entrepreneurs have switched roles with the workers: now they have begun to protest. Their protests were expressed not in street rallies, but in lawsuits and the hard work of corporate lawyers. Two years after the adoption of the law, the groupsteel companies filed a lawsuit over the inconsistency of the Wagner Act with the US Constitution. The suit was lost.
Criticism of the law
In the US, the Wagner Act was criticized not only by entrepreneurs. The American Federation of Labor, which is the largest labor organization in the country, filed charges against the main body for implementing the law, the National Labor Relations Administration. Officials were accused of lobbying the interests of a new competitive organization - the Congress of Industrial Trade Unions, formed on the wave of the implementation of new guidelines and eventually becoming its main beneficiary.
Many economists called Wagner's law the main obstacle in the fight against unemployment during the crisis. However, not only this act, but the entire New Deal of Roosevelt is criticized. Many rightly believe that the Great Depression of the 1930s ended not because of the presidential anti-crisis program, but because of World War II, which began in 1939.
It's all over World War II
By 1943, the economic situation in the US had changed radically. GDP growth, falling unemployment and other indicators of well-being have turned the needs and principles of labor relations in the opposite direction. Some amendments were made to the Wagner Act, in particular, they introduced restrictions on the actions of trade unions. Most of all, these restrictions applied to workers in the military industry, which was quite understandable.
And in 1947, when the US became the dominant economic power, Congress passedthe new Taft-Hartley law, which practically canceled the Wagner law. In the socialist world, the new law was called "anti-worker".
The rights to strike were limited, and they were completely prohibited for civil servants. The "national security threat" argument could have led to significant restrictions or the postponement of major strike events.
The "closed shop" rules that prohibited the hiring of non-union workers were finally abolished. The free speech reference now allowed company representatives to criticize unions in full voice.
How to treat the law in the end depends on the point of view. In any case, this is an excellent example for the study of managerial actions that are closely related to the historical context. "There is a time for everything" - this is perhaps the most appropriate summary for Wagner's law, the most interesting episode in the fight against the global crisis.
