The Politics of Economic Security: Employee Benefits and the Privatization of New Deal Liberalism

Journal of Policy History

Volumn 16, Issue 1, 2004, Pages 34-65

  Klein, Jennifer ^a  

^a YALE UNIVERSITY   (United States)

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EID: 34248057979     PISSN: 08980306     EISSN: 15284190     Source Type: Journal    
DOI: 10.1353/jph.2004.0002     Document Type: Article

References (150)

1. Generally, the historical work on welfare capitalism fixes this phenomenon in time, seeing it as one point along a modernization trajectory. Welfare capitalist programs proliferated among large employers during the 1910s and 1920s but collapsed during the Great Depression. The modern welfare state supplanted premodern welfare capitalism. See, for example, Stuart Brandes, American Welfare Capitalism, 1880-1940 (Chicago, 1970)
2. David Brody, “The Rise and Decline of Welfare Capitalism,” in Workers in Industrial America: Essays in the Twentieth Century Struggle, 2d ed. (New York, 1993)
3. Irving Bernstein, The Lean Years: A History of the American Worker, 1920-1933 (Boston, 1960), 144—88;
4. Roy Lubove, The Struggle for Social Security, 1900-1935 (Cambridge, Mass. 1968)
5. James Patterson, America's Struggle Against Poverty, 1900-1994, 3d ed. (Cambridge, Mass. 1994)
6. Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1929-1939 (New York, 1990).
7. More recently, Sanford Jacoby and Elizabeth Fones-Wolf have shown how welfare capitalism flourished after the New Deal and World War II. Sanford M. Jacoby, Modern Manors: Welfare Capitalism Since the New Deal (Princeton, 1997)
8. Elizabeth Fones-Wolf, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-1960 (Urbana, 1994)
9. Andrea Tone, whose book covers the Progressive Era and ends in the 1920s, argues similarly that welfare capitalism needs to be seen as a political strategy to counter state expansion.
10. Tone, The Business of Benevolence: Industrial Paternalism in Progressive America (Ithaca, 1997).
11. Beth Stevens, “Blurring the Boundaries: How the Federal Government Has Influenced Welfare Benefits in the Private Sector,” in The Politics of Social Policy in the United States, ed. Margaret Weir, Ann Shola Orloff, and Theda Skocpol (Princeton, 1988): 123—48;
12. Robert Zieger, American Workers, American Unions, 2d ed. (Baltimore, 1994).
13. See, for example, Marie Gottschalk, The Shadow Welfare State: Labor, Business, and the Politics of Health Care in the United States (Ithaca, 2000).
14. On physicians as a dominant factor in shaping health policy and health system structure, see Paul Starr, The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry (New York, 1982)
15. for an analysis and critique of Starr, see Jennifer Klein, “Open Moments and Surprise Endings: Historical Agency and the Workings of Narrative in Paul Starr's The Social Transformation of American Medicine,” and other essays in “20th Anniversary Retrospective on Paul Starr's The Social Transformation of American Medicine,” Journal of Health Politics, Policy, and Law (forthcoming, 2004)
16. For neo-institutionalism, see Theda Skocpol, “Bringing the State Back In: Strategies and Analysis in Current Research, in Bringing the State Back In, ed. Peter Evans, Dietrich Rueschmeyer, and Theda Skocpol (New York, 1985)
17. Theda Skocpol, “The Limits of the New Deal System and the Roots of Contemporary Welfare Dilemmas,” in The Politics of Social Policy in the United States;
18. Sven Steinmo and Jon Watts, “It's the Institutions, Stupid! Why Comprehensive National Health Insurance Always Fails in America,” Journal of Health Politics, Policy, and Law 20, no. 2 (1995): 329— 72.
19. Jennifer Klein, “The Business of Health Security: Employee Health Benefits, Commercial Insurers, and the Reconstruction of Welfare Capitalism, 1945— 1960,” International Labor and Working-Class History 58 (Fall 2000): 293—313;
20. Idem, “Managing Security: The Business of American Social Policy” (Ph.D. diss. University of Virginia, 1999).
21. Interdepartmental Committee to Coordinate Health and Welfare Activities, Proceedings of the National Health Conference, 18, 19 July 1938 (Washington D.C. 1938).
22. Mary Gerstel, “Chicago Committee for Adequate Medical Care,” presented in “Local Initiatives for Organized Medical Care: A Chicago Symposium,” Medical Care, vol. 1, no. 2 (April 1941): 164-65;
23. U.S. Congress, Senate, Committee on Education and Labor, Hearings to Establish a National Health Insurance Program, S. 1620, 76th Cong. 1st sess. part 3, 2 and 29 June and 13 July 1939 (Washington D.C. 1939), testimony of Florence Greenberg, p. 877.
24. Correspondence of Harriet Silverman, boxes 1 and 2, Group no. 1763, Harriet Silverman Papers, Yale University Manuscripts and Archives. Among its key planks, PNHC called for compulsory health insurance included under the Social Security Act, protection of workers on the job, establishment of people's health centers, and abolishing discrimination against African Americans. See Silverman, “Increased Social Security for the People,” 1940, folder 11, box 1, and
25. “People's National Health Committee, Philadelphia Chapter,” folder 9, box 1, Silverman Papers.
26. M. C. Crew and Elmer Daniels, “The Chicago Teachers Union Medical Center Plan,”
27. Petro Lewis Patras, Chairman, Hospitalization Committee, Chicago Post Office Clerks’ Union, “Search for Health Security,” both in the Chicago Symposium, Medical Care (April 1941): 162-64;
28. Andrew Beimiller, “Medical Care for Wage Earning Groups,” American Federationist (September 1938): 1056.
29. William Green, editorials, American Federationist 43 (February 1936): 134-35, and (March 1936): 216, 246;
30. William Trufant Foster, “Hospital Care in the Workers’ Budget,” American Federationist (April 1936): 390-93;
31. Harold November, “The Security of the American Worker,” American Federationist (June 1936): 602-15;
32. “From the Executive Council's Report to the Tampa Convention,” American Federationist (December 1936): 1258-63;
33. Green, “Toward Social Security,” American Federationist (February 1937): 131;
34. Beimiller, “Medical Care for Wage Earning Groups,” 1054–59;
35. Editorial, American Federationist 43 (June 1936): 578;
36. Alan Derickson, “Health Security for All? Social Unionism and Universal Health Insurance, 1935-1958,” Journal of American History 80 (March 1994): 1338;
37. Raymond Munts, Bargaining for Health: Labor Unions, Health Insurance, and Medical Care (Madison, 1967), 5;
38. David Rosner and Gerald Markowitz, “Hospitals, Insurance, and the American Labor Movement,” Journal of Policy History 9, no. 1 (1997).
39. Elizabeth Faue, Community of Suffering and Struggle: Women, Men, and the Labor Movement in Minneapolis, 1915—1954 (Chapel Hill, 1991)
40. Annelise Orleck, Common Sense and a Little Fire: Woman and Working-Class Politics in the United States, 1900-1965 (Chapel Hill, 1995), chaps. 5, 6;
41. Joshua B. Freeman, Working-Class New York (New York, 2000).
42. Michael R. Grey, New Deal Medicine: The Rural Health Programs of the Farm Security Administration (Baltimore, 1999)
43. Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America’ s Public-Private Welfare State (Princeton, 2003), chaps. 4-5.
44. Greenbelt Health Association News (1 April 1940), file 17, box 1, Harriet Silverman Papers.
45. Clarence O. Skinner, Alternate Industry Member, “The Fringe Issues,” in Trends in Union Demands (New York, 1945).
46. Philadelphia Transportation Company Case No. 3056-AR (11 Feburary 1943), in National War Labor Board, Termination Report, 1:384; On labor trying to use the state to obtain collective-bargaining demands, see James B. Atleson, Labor and the Wartime State: Labor Relations and Law During World War II (Urbana, 1998), 72.
47. Robert H. Zieger, The CIO, 1935-1955 (Chapel Hill, 1995), 150.
48. Archibald Cox quoted in Katherine Van Wezel Stone, “The Post-War Paradigm in American Labor Law,” The Yale Law Journal 90 (June 1981): 1514;
49. Atleson, Labor and the Wartime State, 55–59;
50. Nelson Lichtenstein, The Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Labor (New York, 1995), 181-82.
51. William J. Graham, “Complete Group Protection for Employees: Its Need and the Prospect of Achievement,” 3-4, file 11, box 33b, Acc. 1984-050, William Graham Papers, RG 4, Historical Collection, Equitable Life Assurance Society Archives (hereafter ELAS).
52. William J. Graham, “Incidental Notes on a Group Annuity Retirement Plan to Supplement Federal Old Age Benefits of the Social Security Act” (address to Milwaukee chapter, National Association of Cost Accountants, file 1, box 18D, Graham Papers, ELAS;
53. Graham, “Social Security,” radio address, 17 December 1936, file 2, box 18D, Graham Papers. 24. The National Underwriter, 19 March 1943, 2; The National Underwriter, 16 July 1943, 6.
54. “#x0024;12.00 Every Thursday,” Economic Security Bulletin, National Association of Manufacturers, vol. 5, no. 3 (March 1941)
55. Hagley Museum and Library;
56. “Keeping Up with the Social Planners,” The National Underwriter, 1 January 1943, 10.
57. The National Underwriter, 5 November 1943;
58. Robert D. Eilers and Robert M. Crowe, eds. Group Insurance Handbook (Homewood, Ill. 1965), 65-66;
59. The Spectator, September 1946.
60. On compulsory health insurance bills, see, for example, Derickson, “Health Security for All?” JAH;
61. Colin Gordon, “Why No National Health Insurance in the U.S.? The Limits of Social Provision in War and Peace, 1941-1948, Journal of Policy History 9, no. 3 (1997): 277-310;
62. Daniel Hirsfield, The Lost Reform: The Campaign for Compulsory Health Insurance (Cambridge, Mass. 1970)
63. Daniel M. Fox, Health Policies, Health Politics: The British and American Experience, 1911—1965 (Princeton, 1986).
64. Journal of American Insurance, May 1947, 5;
65. National Underwriter, 9 January 1948, 6, and 13 February 1948, 2. Although Blue Cross was supposed to be an intermediary between patients and hospitals, it increasingly functioned as the advocate of the hospitals.
66. At the end of the war, Blue Cross had 19 million subscribers. Health Benefit Plans Established Through Collective Bargaining, Bulletin No. 841, United States Bureau of Labor Statistics, August 1945 (Washington D.C. 1945).
67. Howell J. Harris, The Right to Manage: Industrial Relations Policies of American Business in the 1940s (Madison, 1982)
68. Sanford Jacoby, Modern Manors;
69. Andrew Workman, “Manufacturing Power: The Organizational Revival of the National Association of Manufacturers, 1941-9145,” Business History Review 72 (Summer 1998): 297-317;
70. Nelson Lichtenstein, Most Dangerous Man in Detroit, chap. 13;
71. Idem, “Taft-Hartley: A Slave-Labor Law?” Catholic University Law Review 47, no. 3 (Spring 1998)
72. David L. Stebenne, Arthur J. Goldberg: New Deal Liberal (New York, 1996), chap. 3.
73. Businessweek, 13 May 1950.
74. Other historians have argued that this moment had long since passed for organized labor. See, for example, Steven Fraser, Labor Will Rule: Sidney Hillman and the Rise of American Labor (New York, 1991)
75. Alan Brinkley, The End of Refor m: New Deal Liberalism in Recession and War (New York, 1995).
76. Derickson, “Health Security for All?” 1345;
77. Lewis quoted in Steven Fraser, Labor Will Rule, 563;
78. Munts, Bargaining for Health, 30–41;
79. Edward Berkowitz, “Growth of the U.S. Social Welfare System in the Post-World War II Era: The UMW, Rehabilitation, and the Federal Government,” Research in Economic History 5 (1980): 236;
80. Melvyn Dubofsky and Warren Van Tine, John L. Lewis: A Biography (New York, 1977), 458-68.
81. Berkowitz, “Growth of the U.S. Social Welfare System,” 236.
82. Ivana Krajcinovic, From Company Doctors to Managed Care: The United Mine Workers Noble Experiment (Ithaca, 1997), 29—38.
83. Berkowitz, “Growth of the U.S. Social Welfare System,” 236-37;
84. Krajcinovic, From Company Doctors to Managed Care, 54;
85. Starr, Social Transformation of American Medicine, 315–18;
86. Krajcinovic, From Company Doctor to Managed Care, 33–37, 51-54.
87. Nelson Cruikshank, “Labor Looks at the Problem of Health Services,” Statement to the President's Commission on Health Insurance Needs of the Nation, 7-8 October 1952, file: Pres. Commission, box 11, M66-15, Nelson Cruikshank Papers, SHSW. For the United Steelworkers version of this ideal model plan
88. see Alan Derickson, “The United Steelworkers of America and Health Insurance, 1937-1962,” in American Labor in the Era of World War II, ed. Sally M. Miller and Daniel A. Cornford (Wesport, 1995): 75;
89. Munts, Bargaining for Health, 64–66.
90. Berkowitz, “Growth of the U.S. Social Welfare System,” 233–47.
91. Barkev Sanders and Margaret Klem, “Services and Costs in a Prepayment Medical Care Plan: Comparison with Other Plans and with the General Population,” Medical Care (July 1942): 221;
92. Margaret Klem, Prepayment Medical Care Organizations, SSB, Bureau of Research and Statistics, memorandum 55 (Washington D.C. 1945).
93. “What the Labor Health Plan Offers You and Your Family,” Baltimore, box 5, Cruikshank Papers;
94. Summary of Legislation Relating to Health and Welfare Funds, 9 September 1954, box 5
95. Minutes of the Meeting of the AFL-CIO Committee on Social Security, 26 November 1957, p. 3, Box 8
96. Executive Council Report, 17 August 1959, Box 8
97. Representative Wolverton introduced such a bill in the House, HR 7700, in 1954, and Senator Hubert Humphrey introduced a bill, S. 2009, in 1959.
98. CIO News, 9 December 1946, 2.
99. NAM, Industry's View on the Lewis Coal Royalty, March 1945
100. Outstanding American Companies Insuring Their Employees Through Equitable (New York, 1946), file 5, box 2A, Insurance Affairs/Group Operations, Acc. 82- 45,RG 4, ELAS;
101. Robert William Dvorsky, “The Development of Negotiated Health Insurance and Sickness Benefit Plans of the Steel, Automobile, and Electrical Equipment Industries” (Ph.D. diss. University of Pittsburgh, 1956)
102. Derickson, “The United Steelworkers of America and Health Insurance,” 74. Sanford Jacoby shows how nonunion companies were willing to spend extraordinary amounts of money on welfare benefits to stave off unionism—often more than they would have had to spend had they been negotiating with a union.
103. See Modern Manors, chaps. 2-5.
104. The National Underwriter, 23 April 1948, 1, 23 and 29 April 1949;
105. NAM, Minutes: NAM Labor-Management Relations Committee, 20 March 1947, p. 4, box 3, Industrial Relations Division, Acc. 1412, NAM Collection;
106. “Summary of War Labor Board Decisions Affecting Management Functions,” 1945, box 3
107. “NAM Position with Regard to Employee Benefit Programs,” 28 February 1947, box 75, Acc. 1411, NAM Collection.
108. The National Under writer, 27 August 1943, 3;
109. The Spectator, September 1943, 64;
110. National Industrial Conference Board, Company Group Insurance Plans, Studies in Personnel Policy, No. 112, 1951, p. 48;
111. Albert Handy, “Private Pension Plans and the Federal Revenue Act,” New York University Law Quarterly Review (1939): 5;
112. Research Memorandum: Employee Rights in Benefit Plans, Arthur L. Berger, Esq. to Jennifer Klein, August 2000 (in author's possession)
113. Jay Conison, “Suits for Benefits Under ERISA,” 54 University Pittsburgh Law Review 1 (Fall 1992).
114. Harry A. Millis and Emily Clark Brown, From the Wagner Act to Taft-Hartley: A Study of National Labor Policy and Labor Relations (Chicago, 1950), 561-68.
115. Jacob Perlman to Wilbur Cohen, “Growth and Characteristics of Union-Management Health and Welfare Plans,” 15 June 1948, file 2, box 46, MSS 789, Cohen Papers. Perlman found that even after the passage of Taft-Hartley “several industry spokesmen asked that the National Labor Relations Act be amended [again] to make it clear that employers are not required to bargain about pension plans and other benefits of a ‘social security nature’” (26).
116. On the Taft-Hartley impact on welfare capitalism, see Sanford Jacoby, Modern Manors, 200, and Michael Brown, Race, Money, and the American Welfare State (Ithaca, 1999).
117. Statement, Enders M. Voorhees, U.S. Steel Corporation, Before the Presidential Steel Board, 22 August 1949;
118. Text of the Presidential Steel Fact Finding Board's “Findings and Recommendations: General Summary,” September 1949, both in box 202, Acc. 1411, NAM Collection.
119. “Claims Expense Limitation,” n.d. box 3, Acc 1984-050, ELAS;
120. Metropolitan Life Insurance Company, Tailored to Fit: A Group Insurance Plan Designed for the Employees of Your Company (New York, 1953), box 19 06 04, Group Insurance, Metropolitan Life Insurance Company Archives;
121. Tailored to Fit: A Group Insurance Plan Designed for the Employees of Your Company Employee Security Founded on Group Insurance Safeguards Employee Morale and Loyalty (New York, 1952)
122. Health Insurance Association of America, Source Book of Health Insurance Data (New York, 1959, 1963, 1965, 1967, 1972-73, 1980-81)
123. Ford UAW-CIO, Workers Security Program, Part II: Health Security Program, 1949, p. IV-1, WPR Library.
124. The story of private pensions essentially mirrors that of health insurance. As with health insurance, the labor movement at first sought entirely independent pension funds. After losing on this issue, they often supported the idea of a jointlyrun board of trustees, equally staffed by management and labor. Most corporations managed to block even this goal, for as management saw it, pensions involved the investment of company assets (not workers’ compensation) over an extended period of time. Even the United Automobile Workers had to make significant concessions and accommodations to managerial control. Throughout the 1950s and 1960s, union demands for access to pension plan information and control were fiercely resisted and denied by management. As with health insurance, unions or workers’ representatives usually had to depend on employer-provided cost estimates, budget and forecasting, and benefits formulas. The ground rules of welfare capitalism remained in place: employers maintained control over benefits formulas, final eligibility rules, long-term service requirements for vesting, and how the pension would be funded. Employers’ discretion in pensions extended not only to benefits but to investment of the pensions reserves as well. Teresa Ghilarducci, Labor's Capital: The Economics and Politics of Private Pensions (Cambridge, Mass. 1992), 23-24, 29-30;
125. Steven A. Sass, The Promise of Private Pensions: The First Hundr ed Years (Cambridge, Mass. 1997). 56.
126. On the use of tax policy to buttress welfare capitalism, see Brown, Race, Money, and the American Welfare State, part II, and Christopher Howard, The Hidden Welfare State: Tax Expenditur es and Social Policy in the United States (Princeton, 1997).
127. NAM, “Review of Position on Collective Bargaining of Health, Welfare and Pension Plans,” Action of Collective Bargaining Subcommittee, 23 June 1952, box 105, Acc. 1411, NAM Collection. These firms included Kohler, Thompson Products, Cone Mills, Lone Star Steel, Sears Roebuck, and Timkin Roller Bearing Company—also key players in campaigns for right-to-work laws.
128. See Nelson Lichtenstein, State of the Union: A Century of American Labor (Princeton, 2002), 138.
129. David Witwer, “Westbrook Pegler and the Anti-Union Movement,” paper delivered at the Organization of American Historians Conference, Los Angeles (April 2001)
130. Rick Perlstein, Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (New York, 2001), chap. 2.
131. U.S. Department of Labor, Legislative History of the Welfare and Pension Plans Disclosure Act of 1958, as Amended by Public Law 87-420 of 1962 (Washington, D.C. 1962)
132. William J. Isaacson, “Employee Welfare and Pension Plans: Regulation and Protection of Employee Rights,” Columbia Law Review 59, no. 1 (1959): 104.
133. U.S. Senate, Welfare and Pension Plans Investigation: Final Repor t of the Committee on Labor and Public Welfare Submitted by its Subcommittee on Welfare and Pension Funds Pursuant to S. Res. 225 and S. Res. 40, 84th Cong. 2d sess. 16 April 1956, 2, 54, 136. The subcommittee included another labor-liberal, Senator James Murray of Montana. The committee itself was staffed by Democratic liberals, including Murray, Herbert Lehman, Pat McNamara, and John F. Kennedy.
134. Legislative History, 14; 45—49;
135. Senate Final Report, 7;
136. Isaacson, “Employee Welfare and Pension Plans,” 103–4.
137. Senate Final Report, 158–59.
138. Senate Final Report, 7, 158–59.
139. Senate Final Report, 54.
140. Stebenne, Arthur J. Goldberg, 160–63;
141. Lichtenstein, The Most Dangerous Man in Detroit, 348–49.
142. Reuel Schiller, “From Group Rights to Individual Liberties: Post-War Labor Law, Liberalism, and the Waning of Union Strength,” Berkeley Journal of Employment and Labor Law 20, no. 1 (1999): 6, 8-9.
143. Senate Final Report, p. 8.
144. Stebenne, Arthur J. Goldberg, 160–63, 441. These senators supported a national ban on the union shop.
145. Legislative History, 91–95;
146. Isaacson, “Employee Welfare and Pension Plans,” 124;
147. Sass, The Promise of Private Pensions, 192–93.
148. On Landrum-Griffin and the substitution of individual rights over group rights, see Schiller, “From Group Rights to Individual Rights.” Tax recodification occurred simultaneously with the Disclosure Act hearings and the McClellan Hearings. The new code made permanent some of the wartime tax breaks and added others. It included a formal exemption of health and accident benefits and sick pay and a new tax credit for retirement income. The tax code would be structured to sustain that political settlement: private benefits, private welfare state supplementation.
149. Julian Zelizer, Taxing America: Wilbur Mills, Congress, and the State, 1945— 1975 (New York and Cambridge, 1998), 93.
150. Klein, “Managing Security,” 506.