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From Exit to Voice in Shopfloor Governance: The Case of Company Unions

Published online by Cambridge University Press:  13 December 2011

David Fairris
David Fairris
Affiliation:
David Fairris is an assistant professor of economics at the University of California, Riverside.
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Abstract

The company union movement in the United States during the 1920s cannot be understood entirely in terms of employers' efforts either to block independent unionization or to foster greater worker loyalty through the paternalistic provisions of “welfare capitalism.” Company unions were institutional mechanisms by which workers voiced their concerns about shopfloor conditions to employers instead of exiting the firm. Evidence suggests that company unions led to both enhanced shopfloor productivity and safety, and were thus mutually beneficial for labor and management. Interestingly, however, the process by which they emerged was filled with conflict, historical contingency, and unintended consequences. Company unions were neither an inevitable nor even an intentional replacement for voluntary quits as a mechanism for addressing workers' shopfloor discontent.

Type
Articles
Information
Business History Review , Volume 69 , Issue 4 , Winter 1995 , pp. 494 - 529
Copyright
Copyright © The President and Fellows of Harvard College 1995

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References

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27 The estimated coefficient on the interactive term, weighted by the average level of joint administration, is less in absolute value than the estimated coefficient on the reduced turnover variable. These results are available upon request from the author.

28 Union membership reached a peak of 5,047,800 in 1920, but fell rather dramatically over the next three years to 3,622,000 in 1923. By 1930 union membership accounted for only 10.2 percent of the nonagricultural labor force; it had stood at 19.4 percent in 1920. See Bernstein, Irving, The Lean Years: A History of the American Worker 1920–1933 (Boston, Mass., 1960), 84.Google Scholar

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30 The average monthly separation rate in manufacturing fell from 10.1 over the period 1910–18 to 4.9 in the years 1920–29, while the quit rate alone declined by half—from 7.4 to 3.7; Jacoby, Sanford, Employing Bureaucracy: Managers, Unions, and the Transformation of Work in American Industry, 1900–1945 (New York, 1985), 268Google Scholar. Turnover rates for the two periods are not strictly comparable, however. The measurements for the latter period are median rates, whereas those for the former period are based on average rates. A comparison of quit rates in the early 1920s with the later 1920s is therefore less fraught with possible error. Monthly quits averaged 5.4 per 100 employees for the period 1919–1923 and 2.7 for the period 1924–29; Lazonick, Competitive Advantage on the Shop Floor, 251.

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43 Nonparametric tests may have an advantage over parametric tests, such as regression techniques, when certain features of the analysis—for example, small sample size—make it likely that standard parametric assumptions are violated. We have utilized a nonparametric test in this case, however, because the simple summation of injury rate and productivity growth performance to arrive at a measure of joint shopfloor benefits would not allow us to distinguish cooperative outcomes from those that are noncooperative (i.e., ones which contain dramatic benefits for one party but losses for the other). Under our ranking system, industries with modest improvements in productivity and safety receive higher rankings than those with, for example, dramatic productivity growth and slight reductions in safety.

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46 Alternative measures of labor productivity were considered, but they resulted in a much reduced sample size and generally left our reported findings unchanged. Using Fabricant's measure of output by industry (as opposed to value of output which is used here) to generate the productivity data yielded a drastically reduced sample size. Replacing the number of wage earners in the denominator of our productivity measure with an index of worker hours from Beney reduced the sample size by one quarter and yet yielded similar results to those presented here. Fabricant, Solomon, The Output of Manufacturing Industries 1899–1937 (New York, 1940)Google Scholar; Beney, Ada M., Wages, Hours, and Employment in the United States 1914–1936 (New York, 1936).Google Scholar

47 It might be claimed that this comparison is not legitimate because the two samples are composed of different industries. However, the results are not substantively altered by restricting the analysis of productivity growth to the six industries that are common to both samples. The coefficient on the company union index for this analysis is positive and significant in the early 1920s and positive but insignificant and smaller in size in the late 1920s.

48 Once again, the introduction of the mechanization variable into the productivity growth equation left the results largely unchanged.

49 The average rate of change in horsepower per worker over the two periods was 19 percent for our sample of industries. If the rate of change in mechanization had been 19 percent during the period 1921–25, a 1 percent increase in company union concentration in an industry would have been associated with a 10 percent decrease in the injury rate. For a similar rate of change in mechanization in the 1925–29 period, however, a 1 percent increase in the company union coverage would have been associated with a 3 percent reduction in the injury rate. Again, it might be claimed that this comparison of injury rate trends in the early versus late 1920s is not legitimate because the two samples are composed of different industries, thereby possibly giving rise to different results even absent any structural change in the ability of company unions to affect shopfloor safety. However, the results are not substantively changed when the analysis is restricted to the six industries that are common to the two samples. The coefficient on the company union index in the simple regression of injury rate changes is negative and significant in the early 1920s and negative but insignificant and smaller in absolute value in the late 1920s.

50 Changes in total factor productivity measure real enhancements in the productive efficiency of labor and capital combined. Such measures are not influenced by substitution between inputs in production as are the partial measures of productivity growth—the change in output divided by labor input—used in our earlier analyses. Thus, the change in total factor productivity is a superior measure of productivity growth. Unfortunately, measures of total factor productivity are not available for subperiods of the 1920s, only for the decade as a whole.