1942: Labor Arbitration

National War Labor Board.

The dominant role in labor arbitration during 1942 was played by the National War Labor Board. This board, created by the President on Jan. 12 and composed of 12 members with equal representation to the public, organized labor, and employers, began operations under the chairmanship of William H. Davis. As chairman of the National Defense Mediation Board of 1941, which had virtually suspended operations at the end of the year because of the refusal of the C. I. O. members to participate in its work, Mr. Davis brought to his new post much experience with the causes of war labor disputes and the most stubborn obstacles to their settlement. Despite the formidable difficulties in its way, the board, by reason of its mere existence and the major policies it pursued, was able to make a substantial contribution to the maintenance of industrial peace.

Several factors proved of great assistance to the board. Of these the most important was the American entry into the war in early December 1941. This fact settled the entire contentious issue of war production. For, with our active participation in the war, it was clear that a large and increasing proportion of the country's industrial capacity would be converted to war uses and that increasing output for the use of our own armed forces as well as for our allies would henceforth be the major concern of the American people. In response to this situation, labor pledged itself to keep from striking and to submit all issues to the newly-established labor board. The board carried on its duties, consequently, under conditions in which strikes and lockouts were interpreted as attacks on the Government's war program.

Wages.

In handling the difficult problem of wages, the board was assisted by the administration's policy of price stabilization. On April 27, the President, in a message to Congress, urged the immediate stabilization of wages as an essential element in the program to prevent the usual war inflation and to keep down the cost of living. This policy opened the way for the board to dispose of the numerous demands for wage increases which were then pending before it. The policy also persuaded the board to abandon its practice of settling each case on its own particular merits and to adopt a general method of wage determination. This method was the heart of the Little Steel decision announced on July 16. The decision was based on the principle that the purchasing power of wages in January 1941 should be maintained. It provided, therefore, that the total of wage increases between that date and the middle of 1942 should not exceed 15 per cent, the amount by which the cost of living had risen in the same interval. Except in unusual cases, this formula was generally applied by the board and it acted to restrain the rate of wage advances.

Closed Shop.

The issue of the closed shop, the rock on which the Defense Mediation Board had split the year before, was likewise subjected to a general formula. This was the 'maintenance of membership' clause which, with few exceptions, the board ordered in all cases involving the closed shop. Maintenance of membership was a compromise arrangement. It provided merely that those employees who were members of a union when a contract was signed were required to retain their membership for the life of the contract. Thus, this device denied unions the closed shop, which would have forced all employees to become members, and compensated them for surrendering the right to strike by protecting them against a wholesale resignation of members.

Expansion of Arbitration.

Since the board had wide jurisdiction and a full docket of cases, in order to keep itself from being swamped it pursued the policy of insisting that only controversies which could not be settled by agreement should be submitted to arbitration. In many cases where the disputants were unable to agree upon a third party, the board itself would appoint an arbitrator. This practice resulted in a great expansion of arbitration throughout American industry and, in the view of some observers, closely approached insistence upon compulsory arbitration.

Authority of the National War Labor Board.

On the whole, the board's authority and decisions were rarely challenged. On the few occasions when they were, the recalcitrant employers or employees either yielded shortly to persuasion or the Government took over the plants. The most spectacular controversy of this kind arose in the dispute between the board and the Montgomery-Ward Company. Among other reasons this company refused to abide by a board decision on the ground that it was not a war industry and, hence, not under the board's jurisdiction and that it could not be compelled to accept maintenance of membership. After long private and public discussion the company agreed to yield if ordered to do so by the President as a war measure. When, at the instance of the board, the President so directed, the company signed a contract with the union embodying the provisions required by the board.

This question of the board's authority was, anyhow, settled in early October by the adoption of a price stabilization law and a comprehensive executive order issued by the President. Under their terms, the board received jurisdiction over all disputes in all industry, war or non-war, and over all employees earning less than $5,000 a year. Clothed with this vast authority the board showed no disposition voluntarily to limit its powers. But in a series of cases involving demands by municipal employees, including those of New York City, the board was obliged to rule that it lacked authority to intervene in these disputes.