CHAPTER THREE

THE STRUGGLE
FOR ECONOMIC SECURITY

On November 3, 1943, Milwaukee’s laborers and garbage collectors began the city’s longest wartime strike, a thirty-one-day walkout over wages. The city workers feared that their monthly salary was falling behind inflation. The city used work rules, suspensions, and legal challenges to fight the union. Municipal officials received regular assistance from the Milwaukee Journal, which railed against the union’s attack on government. Local 2 of the American Federation of State, County and Municipal Employees’ Union fought back with rising piles of noxious garbage.

The city had the law on its side, and on November 8 sent strikers notices reading: “[Y]ou have been absent from your employment for a period of three successive days without leave and without notice, and you are therefore no longer in the service of the city of Milwaukee.” This approach to dismissal placed the strikers in an awkward position. Because the laborers had left their jobs voluntarily, the city maintained that they had quit. Federal War Manpower Commission rules prevented war plants from hiring such “job skippers” for two months after they left their jobs. Not only were they out of work; they were also prohibited from seeking employment elsewhere.

The strikers, on the other hand, had garbage on their side. As the strike dragged on, piles of noisome refuse littered the city. A picket line around the city incinerator prevented independent haulers from disposing of their loads. The situation worsened day by day, and the health department instructed residents to burn perishable garbage. Many residents began this practice during the early days of the strike, although, as one citizen told a Milwaukee Journal reporter, “It makes an awful odor.” The Thanksgiving holiday only compounded the problem. Garbage barrels were full to overflowing throughout the city, and unsanitary conditions were becoming an increasing problem as dogs, cats, rats, and other animals rummaged in the refuse.

Unlike private citizens who had little recourse, many Milwaukee business concerns relied on private haulers for refuse removal. They felt the impact of the strike more slowly. Even so, private haulers soon found it difficult to remove garbage. Many of these haulers were local farmers who picked up refuse, separated the vegetable matter for their pigs, and delivered the remaining material to the city incinerator. With pickets around the incinerator, these haulers had no place to dump their loads. George Shephard was the operator of the Beloit Hog Farm in West Allis. In violation of health code, he began storing refuse on his farm. He told a Journal reporter: “I’ve got a big pile of the stuff on my farm now. . . . I’ve got no place to put it. I’m not going to go down to the incinerator while this strike is on. No, sir! Not me.” Frank Sansone was not a farmer and did not have the options open to Shephard. He serviced twenty-six stores and eight restaurants. When interviewed by a Journal reporter on November 17, he was still carrying a load of garbage picked up on November 9. Sansone told the reporter “I’ve gone down to the incinerator plant a number of times, and the strikers have warned me not to go through. . . . After all, if I do, who knows what’ll happen to my truck that night—or the tires.” To demonstrate the problem, Sansone took the reporter to the incinerator. When stopped by pickets, Sansone asked what he was to do with his load. A striker replied, “Dump it in the lake, pal.” “Sure, dump it in the lake,” he muttered to the reporter, “and get arrested by health officers.”¹

Ultimately, the union accepted a city offer of a $15 monthly raise to base salaries of $115 and a promise of 200 hours of overtime in 1944. Unfortunately, the solution was only temporary as workers continued to struggle for postwar economic security.

At its core, wartime industrial conflict represented a struggle for economic justice not just in the present but in the future. By referring to the past, an editorial in the Milwaukee Labor Press emphasized the seriousness with which labor viewed the postwar era.

Because some men are working 48 hours a week (40 hours is standard); and because some families now have two or three persons working where only one worked before, rising prices just don’t count, says Milwaukee’s afternoon daily. Why, it moans, some $1,200 a year families are now actually $5,000 a year families!

What kind of life did these people live when the whole family had to live on $1,200 a year? Certainly not the life that decent Americans are entitled to. And, if certain anti-labor groups had their way, those families would be back there—in spite of longer hours and increasing profits and rising living costs.

Brother, could you spare a dime?²

The battle to maintain a decent standard of living began as soon as the smoke cleared from Pearl Harbor. America’s workers quickly concluded that the government had frozen their wages; that price inflation, taxes, and the declining quality of consumer goods had reduced their standard of living; that corporate profits and salaries of executives had soared as a result of war production; and that workers were paying the bills for the war effort while industrialists reaped the profits. As a legion of governmental agencies imposed rationing and controls on wages and prices “for the duration,” workers and their unions focused on preserving wage rates and buying power for the postwar era.

The nature of industrial conflict in Milwaukee during World War II reflected the workers’ belief that wage rates needed to keep pace with inflation or they would find themselves with less real buying power in the postwar era. Although they were paid well during the war, most workers were concerned not so much with their weekly pay but with the clear pattern that basic pay rates³ were barely keeping pace with the cost of living. Workers who experienced no improvement in their employment situation—who neither progressed into a better paying classification due to labor shortages and factory expansion, nor moved from a lower paying occupation such as retail to a better paying factory job—found that basic pay rates fell behind the rising cost of living. Workers who progressed to better paying jobs may have kept pace with inflation, but they did not experience an improvement in standard of living commensurate with moving into a job of greater economic value to society or in which greater knowledge and skill were required. Even for those fortunate enough to experience rising economic status due to overtime and improvements in classification or occupation, the postwar era held the real prospect of a declining standard of living. They assumed, with reason, that the postwar era would restore the forty-hour work week and that many individuals would be bumped back to old, lower paying jobs when soldiers returned from the war. With the end of overtime pay and wartime production, they would therefore return to basic pay rates—pay rates that had fallen behind inflation—and to lower-paying jobs.⁴

The Milwaukee Journal reinforced workers’ fears by routinely attacking wage increases as inflationary and calling for greater worker sacrifice to win the war. Labor organizations countered that the war could be won without sacrificing living standards and crippling postwar recovery. As industrial companies built reserves to finance postwar reconversion, labor organizations insisted that workers required similar financial reserves to cushion the unemployment that would come with reconversion and to provide the buying power necessary to keep the economy afloat once consumer production resumed. Without such reserves, union leaders feared that America would be plunged into another depression.

The Milwaukee A.F. of L. Labor Press told its readers:

Will Rogers once said that America had never lost a war, and never won a peace. It would be the irony of the ages if, while battling to “free the world,” this nation should succeed merely in re-enslaving its workers in the old, odious chains of a few decades ago.⁵

The economic foundation of industrial conflict was plain to see. Normal grievance procedures and government agencies may have been adequate for settling many traditional disputes over contract interpretations, work rules, and plant discipline, but they proved inadequate for settling economic disputes. Any explanation of industrial conflict requires an understanding of the complicated forces acting upon workers in disputes involving wages or job security. On the one hand, America was at war, and her armed forces needed weapons. On the other hand, workers watched as their wage rates fell behind inflation and corporations seemed to reap excess profits. Workers looked toward the postwar era, remembered the depression they had just experienced, and envisioned an uncertain future. Although patriotism kept many workers on the job, economic issues could tip the balance and send them onto the picket line.

Industrial conflict during World War II stemmed largely from the failure to resolve issues related to economic and job security. These issues transcended the unity brought by war and sparked conflict among workers as diverse as AFL operating engineers, CIO auto workers, and municipal laborers. Even at companies such as A.O. Smith, where labor and management were on the best of terms, industrial conflict existed. Whether settled quietly through negotiation or conciliation or noisily after a public clash such as a strike, disputes in Milwaukee clearly illustrated the importance that workers attached to economic issues. Throughout the war, workers and their unions kept their gaze firmly fixed on the postwar era.

The federal government also was concerned about economic issues, but with a different focus than industrial workers. The federal government was more concerned about the impact of inflation and economic conflict on wartime society than with economic justice or the postwar economy. As a consequence, efforts by the OPA to control prices and the War Labor Board (WLB) to limit worker wage increases quickly came into conflict with labor’s goals and interests.

As the battle of France raged during May of 1940, President Roosevelt reactivated the National Defense Advisory Commission (NDAC), originally authorized in 1916. The President appointed seven commissioners to the group, each with a different expertise in industrial and economic mobilization. Leon Henderson, an economist, member of the Securities and Exchange Commission, and later the head of the OPA, was named to head the Price Stabilization Division of the NDAC. The Stabilization Division laid the initial foundation for controlling prices through consumer education, farm subsidies, rent controls, and rationing. The division’s legal staff drafted the executive orders that created the OPA as well as the Emergency Price Control Bill, which authorized the OPA to control prices. President Roosevelt signed the Emergency Price Control Act in late January 1942, confirming creation of the Office of Price Administration and authorizing the OPA to stabilize prices and rents, to prevent hoarding, profiteering and speculation, and to fix maximum prices when those prices rose or threatened to rise.⁶ To carry out its control mission, the OPA reached into the daily affairs of every American. To control prices in a free market economy, the OPA not only had to establish an organizational structure comprised of volunteers in every community, but also had to deal with the complexities of pricing, supply, and distribution across a continent.

Unfortunately, the federal government implemented price controls only after the United States entered the war, and those controls never worked perfectly. As manufacturers shifted capacity from consumer goods to military supplies during 1941, and as workers gained disposable income with the end of the Great Depression, inflation rapidly increased. The Bureau of Labor Statistics’ (BLS) Consumers’ Price Index rose 15 percent between January 1941 and May 1942, when the government actively began to control prices on consumer goods. Price control efforts during the following year only partially subdued the sharp increase. Although initial regulation was largely successful in controlling the cost of apartments, apparel, household furnishings, and fuel, the price of food rose dramatically. This increase was due not to the failure of controls, but to the fact that many foods were not covered by those controls. The wholesale prices of controlled foods rose by only about .5 percent during 1942. By contrast, uncontrolled foods such as flour, cornmeal, lamb, poultry, eggs, butter, cheese, and many fruits and vegetables rose over 15 percent. Largely because of the rise in prices for uncontrolled foods, the Consumers’ Price Index rose 7.8 percent by May 1943. This continued rise sparked a growing concern in government over the potential for runaway inflation wreaking havoc on the American economy.

Organized labor also was concerned with the failure of the OPA to adequately control prices. The Milwaukee Labor Press provided workers with a graphic illustration of the problems associated with price controls when it published the results of a survey of Milwaukee food and clothing prices conducted by the AFL’s regional office under David Sigman. The report compared the cost of goods purchased by an average worker on March 27, 1943, with the cost of those same commodities on January 1, 1941. As the paper told its readers, the cost of food and clothing in Milwaukee had risen an average of 84.4 percent—far more than the 19 percent increase in wage rates received by Milwaukee workers. Because of the decline in quality of many goods, especially clothing, the paper considered this a conservative estimate. The price of milk, which had risen 18 percent, rose less than almost any other food item. Also on the low end of the scale, bread had gone up 22.2 percent; flour, 36.8 percent; canned green beans, 23.3 percent; and round steak, 35.4 percent. Every one of these foodstuffs had risen more than the wage increases being allowed by the WLB.

The majority of consumer items on the AFL’s Milwaukee shopping list had risen substantially more than 40 percent. For example, consumers paid 60 percent more for Grade A eggs in 1943 than at the beginning of 1941. (Actually, Grade A eggs were a bargain compared to Grade B eggs, which had risen 100 percent during the same period.) Potatoes were up by 92 percent, canned peas by 100 percent, fresh peas by 135 percent, hamburger by 172 percent, peanut butter by 200 percent, and ring bologna by a whopping 252.9 percent. Clothing had risen more slowly, but such basic items as work pants rose 21.5 percent and work shirts by 41.4 percent.

This skyrocketing cost of food and clothing, accompanied by marginal wage increases could mean only one thing: a declining standard of living in the future. Workers kept pace during the war only by working longer hours and promotion to new, better paying jobs as industries expanded and as workers joined the armed forces. The BLS admitted that its Consumers’ Price Index measured only selected items. David Sigman’s AFL survey attempted to measure the change in cost of living based on a review of average buying patterns. The results dramatically demonstrated to workers that their buying power was declining. The rising cost of Sigman’s shopping basket not only outstripped the 19 percent rise in average wage rates (adjusted to eliminate the influence of overtime pay), but even surpassed the workers’ 48 percent rise in weekly earnings. Although BLS statistics based on a more selective shopping list showed an increase of only 35 percent for food and 22 percent for apparel, even these figures surpassed average wage rate increases in Milwaukee.⁷

Nor could Milwaukee’s workers draw much comfort from the rollback of prices implied by President Roosevelt’s Executive Order 9328 issued on April 8, 1943. Labor leaders, upset by the disparity they perceived between the cost of living and the wage increases being approved by the WLB, had been demanding a price rollback or an end to wage controls. With much fanfare, the OPA prepared new ceiling price lists for meats, dry goods, and vegetables. To reduce retail costs to the level of September 15, 1942, as demanded by organized labor, the price control agency planned to force a 10 percent cut in the cost of meats and a 30 to 40 percent cut in the cost of some vegetables by July 1, 1943. In practice, the rollback accomplished very little.

Indeed, the first published ceiling list provided little encouragement to those who compared its maximum prices with the food basket in the Milwaukee AFL survey. The ceiling covered dry goods such as flour, coffee, cereal, and bread, and dairy products such as milk, cheese, and eggs. For virtually all comparable items, the OPA posted ceilings higher than the prices registered by the AFL survey. Generally, the ceilings would have allowed price increases for cheese, flour, bread, raisins, prunes, macaroni, spaghetti, rolled oats, and Wheaties. Although the milk ceiling corresponded with the price found by the AFL, relatively few prices represented a clear rollback of earlier figures. The new ceiling mandated a price cut for butter, corn flakes, egg noodles, and chili sauce; but most other items showed mixed changes, depending on the precise brand purchased. Other ceilings published later for canned fruit and vegetables and for meats seemed to represent an attempt to actually bring about a rollback in consumer prices, but they failed to provide a clear image of rollbacks for the consumer. Ceilings for some items—such as canned wax beans, green peas, and pears—fell below the survey prices found by the AFL; but for many meats, only the ceilings on lower-grade cuts represented a reduction in March prices. For fresh vegetables, upon which consumers relied to augment rationed canned goods, ceiling prices remained unchanged. Likewise, fresh fish fell outside the rollback plan.

From a labor perspective, the proposed price “slash” was pitiful. As the Milwaukee Labor Press told its readers, “True to prediction, the ‘price rolling’ started over the weekend. But the first lists of new ceilings showed them rolling ‘forward’ instead of ‘back.’” Even if everything went according to plan, the 10 percent reduction hoped for by the OPA hardly matched the rise in food prices noted by David Sigman. A full-page ad purchased by the UAW-CIO carried a similar message. The union ridiculed the OPA’s control efforts and asserted that the OPA was incapable of controlling anything. The current rollbacks, much ballyhooed by the government, were virtually meaningless. As the auto workers’ advertisement told readers of the Milwaukee Journal, “Headlines these days tell of new OPA ‘efforts’ to reduce the cost of living. Unfortunately you can’t serve headlines at the dinner table.”⁸

Having seen food prices climb, Milwaukee workers watched as independent grocers protested the recently established canned vegetable and fruit ceilings. Instead of selling these commodities, retailers withdrew them from their shelves, and some wholesalers refused to restock existing supplies. Each group claimed that the mark-up allowed by the OPA was so low as to prevent them from making any profit. The Labor Press bitterly attacked the grocers’ stand, charging that the OPA ceiling already was ridiculously high. The editor suggested that Hitler probably was “tickled pink” at news of the retailers’ “strike,” and concluded ironically, “It might be a good idea for the worker to talk about making weekly profits, instead of weekly wages. Surely, it would be safer from attack.”⁹

As the summer progressed, organized labor maintained its attack on the cost of food, but with relatively little result. The Milwaukee Journal expressed frustration over the lack of real progress in the war against prices. An editorial cartoon published in June showed two unhappy citizens watching as a gentleman labeled “O.P.A.” held an ax marked “Price Rollback” and scratched his head. He had just chopped through the trunk of the “cost of living” tree, but the tree defied gravity and remained standing. The caption read “Yeh, but—?”¹⁰ Without doubt, organized labor’s response would have been that the “rollback” ax was too small and too feeble to have the desired effect.

The OPA and its price control efforts formed the front line of the government’s campaign against inflation. Although originally created to help resolve labor disputes, the WLB became a second line of defense as it attempted to control wages. Wage increases had traditionally been a matter to be determined directly between unions and employers. America’s entry into World War II brought the federal government actively into the equation. Locally, workers found themselves dealing with both the company and the government. Nationally, organized labor fought to preserve the original flexibility of the wage control system so that workers at the local level could continue to make economic gains, or at least keep pace with inflation.

Time after time, workers found themselves in conflict with the National Defense Mediation Board (DMB) and its successor, the National War Labor Board. In response to a wave of strikes in defense industries during the first months of 1941, the President created the DMB to work within the collective bargaining system to prevent work stoppages. The DMB had a tripartite structure. It and the individual panels appointed to resolve specific disputes were composed of individuals who theoretically represented the disparate interests of industry, labor, and the public. Although the board was successful during its first months, it collapsed in November 1941 when the CIO withdrew its support after the DMB refused to grant a union-shop clause to the United Mine Workers Union.¹¹

President Roosevelt created the National War Labor Board on January 12, 1942, to replace the moribund Defense Mediation Board. The WLB received the old board’s caseload and took new cases certified to it by the Secretary of Labor if a dispute could not be resolved by the Department of Labor’s Conciliation Service. The new board was charged with resolving disputes that might disrupt war production. Although the WLB was given few guidelines about how to perform this function and still had the troublesome tripartite structure of its predecessor, America was now at war and board decisions carried more weight than had those of the DMB.¹²

Many disputes revolved around wage issues, and initially the WLB possessed the flexibility to protect workers’ wage rates against inflation. The agency judged wage disputes on the basis of such factors as local wage rates, living standards, impact of raises on the war economy, and the financial standing of the company involved.¹³

But before long the WLB became part of the much larger government effort to control inflation, and it gradually lost most of its power to award wage increases. On April 27, 1942, President Roosevelt presented Congress with a seven-point anti-inflation plan calling for wage stabilization, heavy taxes on profits, a salary ceiling of $25,000 after taxes, price ceilings, rationing, farm prices set at parity, and curtailment of credit buying.

Less than two months later, the WLB issued an important decision that established the formula the board would use to achieve wage stabilization. The “Little Steel formula,” as it came to be known, developed out of the settlement ordered by the WLB in a case between the United Steelworkers and the “Little Steel” companies: Bethlehem, Republic, Youngstown, and Inland. The United Steelworkers argued that pay at the Little Steel plants had fallen behind inflation. Union negotiators sought an increase of 12.5 percent in hourly rates; that is, an increase of approximately 12.5 cents in hourly rates of approximately $1 an hour. The WLB fact-finding panel investigating the case concluded that an hourly raise of 5.5 cents was appropriate for two reasons. The board awarded 3.2 percent because the cost of living had risen 15 percent between January 1, 1941, and May 1, 1942, compared with average pay increases for the steelworkers during the same period of only 11.8 percent. The board awarded an additional 2.3 percent because the dispute was submitted to the board before the President’s message of April 27, and because inflation had been higher in steel towns than in the nation as a whole.¹⁴

The award established the precedent of granting wage increases to bring workers’ wage rates into line with the cost of living as it stood on May 1, 1942; but the formula was flawed by the assumption that living costs had stopped rising appreciably within days of the President’s anti-inflation message. During 1942, the WLB used the Little Steel formula as a guide in wage decisions; but the board granted higher raises when it concluded that an injustice existed in the wage structure or when workers in a plant were being paid less than similar workers in other area factories.

Unfortunately, the WLB lost most of its flexibility to grant wage increases in April 1943. Responding to rising food prices and inflationary pressures caused by rising incomes, President Roosevelt instructed the OPA and the WLB to “hold-the-line” on prices for farm products and wages paid to workers. The President instructed the WLB to limit wage increases to those allowed under the Little Steel formula or to rectify substandard pay. No longer could the board consider inequities between workers doing the same job at different plants as a justification for granting a wage increase. In recent months, most awards had been based on the inequality principle, and relatively few adjustments were left to be made under the Little Steel formula. The labor and public board members of the WLB protested that the President’s order made it impossible for them to regulate wages successfully. While they awaited a new order to clarify their function, the board dismissed approximately 10,000 cases—three-fifths of its caseload—that had been submitted to remedy inequalities. As a result, workers at 200 Milwaukee companies found voluntary agreements with their employers thrown out by the board as a result of the WLB dismissal of cases. Although it was clear that raises might still be granted if workers were at a substandard pay level or had not been compensated according to the limits set by the Little Steel formula, the elimination of inequality as a criterion effectively created a freeze of wages.¹⁵

By April 1943, it was already clear to many workers that the WLB’s Little Steel formula, which had once been viewed as a sign that the agency would protect workers’ wage rates from the ravages of inflation, had become a trap that stifled attempts to keep wage rates in line with the rising cost of living.¹⁶ Although weekly pay of industrial workers in the Milwaukee metropolitan area had increased by 50 percent since January 1941, far above the 19 percent rise in the Milwaukee Consumers’ Price Index, the increase was largely the result of overtime work. Factory employees worked an average of 47.7 hours a week during March 1943, compared with 40.7 hours a week in January 1941. After adjusting for time-and-a-half pay, the average hourly rate among industrial workers rose from approximately 78 cents an hour in January 1941 to 93 cents in March 1943—an increase of 19 percent.

Even though wage rates seemingly kept pace with the Consumers’ Price Index, these figures underestimate the real differences between wages and the cost of living. Not only was the real cost of goods several percent higher than indicated by the BLS because of changes in quality and the discontinuation of low-priced items, but the 19 percent increase in wages also overestimated real wage rate increases that would survive into the postwar era. The figure was skewed upward by the fact that industry experienced a dramatic increase in the number of high-paying jobs making durable goods such as iron and steel products, electrical machinery, and automotive equipment.

In January 1941, approximately 84,000 industrial employees worked in the Milwaukee metropolitan area. Of these, 66 percent were in durable goods manufacturing and 34 percent in nondurable goods. By March 1943, metropolitan Milwaukee companies employed approximately 131,000 industrial workers, 76 percent of whom made durable goods, compared with only 24 percent in nondurable production. Although the total industrial workforce had grown by 56 percent, the nondurable work force remained almost static, having risen from 28,843 to 31,377. The expansion of heavy industry during the war helped produce average hourly rate figures that kept pace with inflation. By 1943, workers making durable goods earned an average of 18 cents an hour more than their cohorts in nondurable goods.

Bowing to labor pressure to bypass or replace the Little Steel formula, Franklin Roosevelt asked the WLB to appoint a committee to study the cost of living. The committee consisted of two labor and two industrial members of the WLB, with William Davis, head of the Board, as chairman. The President’s Cost of Living Committee began its work in December 1943. On January 25, 1944, R. J. Thomas (president of the CIO United Auto Workers) and George Meany (secretary-treasurer of the AFL), the two labor members, issued a report summarizing labor’s view of the matter and recommended that the committee adopt the report as its own.¹⁷The report was, in fact, one of the war’s most vigorous and cogent attacks on the government’s cost-of-living figures.

After reviewing all of the available statistical information and conducting special surveys in ten cities, Thomas and Meany concluded in a published report that the cost of living had risen 43.5 percent between January 1941, and December 1943. By contrast, the BLS’s Cost of Living Index showed a rise of only 23.4 percent. The two labor leaders argued that the disparity existed because the government had focused price control efforts on items that were included in the bureau’s index and ignored items that were not. Because such efforts had kept prices on these items under some control, the results were skewed, and the true rise in the cost of living was grossly underestimated.

Organized labor’s study of cities ranging in size from Boston and Flint to Oshkosh and Sioux Falls indicated that food items not studied by the BLS had increased approximately twice as much as those items sampled for the index. The index also failed to take into account the disappearance of cheaper consumption items, concurrent shifts toward higher-priced alternatives, quality deterioration, smaller portions served in restaurants, and higher rent in congested small cities. The labor report concluded that food prices had risen 74.2 percent compared to the 40.2 percent estimated by the BLS; that clothing was up 72.2 percent compared to 33.7 percent; rent was up 15 percent compared to 3 percent; and house furnishings had risen 62 percent compared to the BLS estimate of 27.8 percent. The Thomas-Meany report concluded, “since January 1941, living costs have risen 43.5 percent, and that there is a discrepancy of 28.5 percent between the rise in living costs and the wage adjustments allowed under the ‘Little Steel’ formula.”¹⁸

The CIO and the AFL immediately disseminated the labor report as the authoritative critique of BLS methodology. The CIO News printed a four-page “Special Cost of Living Supplement” summarizing the report’s findings; its cartoon illustrations said as much about the CIO’s views as did the text. In one cartoon a grocer told an astonished customer, “Yes, Ma’am, these grade B eggs are sold for grade A prices.” Another poor shopper looked sadly at shelves devoid of low-cost items in a clothing store, while the shelves containing high-cost items remained well stocked. The supplement’s final cartoon portrayed a boxing ring in which the cost-of-living bruiser prepared to demolish his Little Steel formula opponent, the proverbial ninety-eight-pound weakling. A third figure labeled “Bureau of Labor Statistics” helplessly watched the fiasco.

The Milwaukee Labor Press also published Thomas and Meany’s findings, noting that an AFL survey of Milwaukee, conducted as part of the research for the report, showed substantial increases in the price of food and clothing. Since 1941, for example, the price of canned pears had risen 44 percent; tomato soup was up 71.6 percent; Idaho potatoes, 120.3 percent; Swiss cheese, 215.1 percent; chopped beef, 101.6 percent; and summer sausage, 236.5 percent. Organized labor’s message was clear: while the BLS Cost of Living Index underestimated inflation and the Little Steel formula held wage rates down, the average worker’s standard of living was taking a beating.¹⁹

Throughout the spring of 1944, Milwaukee’s labor papers kept the cost-of-living issue before their readers with regular articles emphasizing the need for reform. They contended that labor’s goal was not to break the stabilization program, but rather to rectify the losses in standard of living imposed by the formula.

David Sigman, director of the regional office of the AFL, highlighted this point by citing a University of California survey that found a decent standard of living in Milwaukee currently required an average wage of $1.13 an hour, compared with the 83-cent figure used by the BLS. In April 1944, average earnings in Milwaukee were in fact $1.13 an hour. Thus, if one relied on BLS figures, Milwaukee’s workers were earning a comfortable living. But if one employed the University of California figures, those same workers were on the knife-edge of poverty.²⁰

In response to labor’s charges, the BLS maintained that its statistics accurately measured the rise in cost of living. Faced with this stalemate, WLB chairman William Davis sought the advice of neutral specialists and appointed a “technical committee” of three statisticians to carefully weigh all the charges and countercharges. The committee’s report virtually eliminated any possibility that the WLB would consent to labor’s demands. The committee concluded that the cost of living had increased between 26.8 and 28.5 percent since January of 1941, compared with the increase of 23.4 percent indicated by the BLS Cost of Living Index. Much of the discrepancy between the BLS index and the findings of the technical committee stemmed from difficult-to-measure items such as changes in quality that the Bureau never really tried to measure. The technical report bolstered the public and industry members of the WLB in their determination to preserve the Little Steel formula.²¹

As the members of the WLB pursued their own goals, each side emphasized different statistics. Public members of the board relied upon average straight-time hourly earnings, statistically adjusted to discount the movement of workers into the higher-paying war industries, as the best measure of “changes in the average pay for an hour’s work received by employees who have not shifted from the industry in which they were customarily employed.” This measure included the effect on pay of such factors as accelerated merit increases and promotions, higher shift premiums, and wartime incentive rates. Based on such calculations, the public members of the Board believed that adjusted average straight-time earnings had increased by 36.7 percent between January 1941 and October 1944—well above the rise in living costs as measured by the BLS. Using these figures, they defended maintenance of the Little Steel formula as the foundation for wage adjustments.

These WLB members specifically rejected two measures that reflected lower wage increases. Average straight-time hourly earnings—what the BLS called “urban wage rates”—statistically discounted such factors as shift differentials, between-grade promotions, and the migration of employees who remained within a specific industry but moved to higher-paid localities. Based on “urban wage rates,” wages rose 30 percent by October 1944. The public members also rejected scheduled wage rates as a measure because it took no account of increases that did not require board approval, shift premiums and “fringe” adjustments to wage schedules, or increases to women workers to compensate for equal work. Using wage rate schedules as a yardstick, wages for manufacturing employees rose only 19.7 percent between January 1941 and the fall of 1944, well below the 25.5 percent BLS estimate of the rise in the Consumers’ Price Index.²²

On the other hand, AFL members of the WLB argued that adjusted average straight-time hourly earnings reflected a form of take-home pay and did not adequately measure either the wages actually received by workers or the wage rates to which workers would return when the war ended. The AFL considered scheduled wage rates a more accurate tool upon which to base wage decisions, although the labor leaders believed that this measure probably overstated the pay increases workers actually received. The federation leaders preferred to use a figure that reflected only those increases paid to specific groups or individuals. When such adjustments were made, they estimated that wages rose by only 16 percent during the period studied by the WLB.²³

When chairman Davis reported to the President in November 1944, he gave little credence to the charges being leveled by organized labor. As far as he was concerned, their argument had been demolished by the technical committee. Davis concluded that workers would have to accept the decline in merchandise quality and the disappearance of low-priced goods as one of the exigencies of war, to be endured temporarily for the sake of the nation.²⁴

Having lost the fight over the BLS index, the labor federations mounted new assaults on the Little Steel formula. In at least one case, a Milwaukee local openly flaunted the formula as part of a concerted effort to disrupt the government’s wage controls. Despite having received raises in excess of the formula’s 15 percent limit, AFL Federal Labor Union 22631 at the International Harvester Company demanded a 22-cents-per-hour raise to bring wages there into line with the AFL estimate that the cost of living had risen 38 percent since the beginning of the war. The federal conciliator concluded that the case could be resolved only by forwarding it directly to the WLB.²⁵

As organized labor pursued its attack on the Little Steel formula, the labor press in Milwaukee began placing an emphasis not only on the failure of wages to keep pace with inflation, but on the postwar consequences of this inequitable situation. Most reports in the Milwaukee Labor Press recounted the familiar tale of rising prices, falling quality, and inadequate wage rates; but such articles also contained a subtle shift in focus. By midwinter, the CIO News was carrying a similar theme. Where editors had earlier emphasized the difficulty with which workers met their financial responsibilities due to the rising cost of living, they now began placing greater weight on the importance of purchasing power in the postwar era.

The federations continued to remind their members that the Thomas-Meany study had found a 43.5 percent increase in the cost of living; but increasingly they used the technical committee’s findings (rounded upward to 30 percent) as the basis for labor’s pay argument. The AFL contrasted the rise in the cost of living with the 19 percent rise in wage rates and concluded that workers required an immediate pay increase of 11 percent. Philip Murray, president of the CIO, took this comparison one step further. He advocated a jump of 20 percent, at least 10 percent to account for inflation and another 10 percent to reward workers for improved productivity. The leaders of both federations warned that America was headed for a disaster if the government failed to allow equitable wage increases and if Congress failed to implement an equitable postwar program to assist workers as well as industry during the conversion process. As a cartoon in the AFL Milwaukee Labor Press suggested, a bridge was needed between wartime employment and peacetime employment.²⁶

From labor’s perspective, the failure of price controls and the success of wage controls made any such bridge perilous. By V-J Day, the BLS reported that its Consumers’ Price Index had risen 28.1 points since January 1941. Unfortunately, as admitted by the BLS, the index actually underestimated the changes in cost of living by approximately 5 points during the war because of hidden increases caused by such factors as the declining quality of goods and the replacement of lower-grade goods with more expensive models or lines. In other words, the cost of living rose by approximately 33 points between 1941 and the end of the war.²⁷ In contrast, between January 1941 and August 1945, urban wage rates, one of the measures preferred by organized labor, rose only 30.9 percent.²⁸

The discrepancy between the rising cost of living and wage rate increases, and concern for postwar living standards fueled many wartime industrial disputes, whether those disputes remained hidden behind the scenes or in public view on the picket line. The case files of the United States Conciliation Service provide one of the best windows through which to view the nature of industrial conflict, especially when that conflict never erupted into a public dispute.

The Conciliation Service was one of the most constructive agencies through which the government attempted to resolve industrial disputes. Dating to the 1930s, federal conciliators entered conflicts before they escalated into strikes. Early attention often resulted in rapid settlement. A survey of 109 Conciliation Service cases²⁹ at thirty-one of Milwaukee’s most significant factories demonstrates that wage rates, working conditions, job security, union security, and contract maintenance remained points of contention between management and labor in Milwaukee despite a commitment to win the war. Over half of these disputes stemmed from economic conflict when workers demanded higher hourly wages, better shift premiums, equal pay for women, improved piece rates, and job reclassifications.

Of the remaining Conciliation Service cases surveyed, twenty-nine (27 percent) arose from contract negotiation disputes, almost all of which included wage issues. Some contract disputes centered on one or two issues such as wages, fringe benefits, union security, or dues check-off.³⁰ At other times, negotiations dissolved into wrangling over almost every conceivable issue in the contract.³¹

Twenty cases (18 percent) involved traditional grievances brought to the attention of the Conciliation Service. These included conflicts over the firing of a worker, obnoxious behavior of a supervisor, violation of a contract, improper use of job classification, failure to process grievances, failure to agree to a proper work schedule under Executive Order 9240, and banning of a chief steward from entering a plant.³²

Conciliation cases at the Harley-Davidson Motor Company illustrated the dominant influence of wage-related issues on industrial conflict. The Conciliation Service helped to settle no fewer than eight disputes dealing with wage issues at Harley-Davidson. Shortly after America entered the war, the AFL Auto Workers local 209 demanded that wage rates be reviewed because of the rise in cost of living. The issue was tabled because contract negotiations were about to begin. Those negotiations quickly deadlocked, and the workers threatened to strike if they did not receive a wage increase. A compromise wage package settled the issue. Another compromise was needed in October of 1942, when a dispute arose over contract provisions for a cost-of-living increase. The Conciliation Service was back in the plant a year later to resolve a problem involving equal pay for women in the packing and shipping department. In April 1944, a conciliator was needed when contract negotiations deadlocked over wage issues. James Despins, another federal conciliator, visited the plant in February 1945 to resolve a dispute over payment of Christmas bonuses and the pay rate for employees transferred from one department to another. The bonus issue came up again three months later when contract negotiations stalled over whether the bonus was a management prerogative or a contract issue, whether the company should pay for the time stewards spent processing grievances, and whether provisions for paid holidays should remain in the contract. Finally, wage issues seemed to play a major part in a strike that began as soon as the war ended. Conciliation cases at Harley-Davidson reflected the desire to rectify specific inequalities in the plant, as well as the ongoing struggle between the company and its employees over the distribution of wartime economic prosperity.³³

In keeping with the pattern of Conciliation Service cases, wage-related issues of some kind also lay behind the majority of strikes in wartime Milwaukee. Half of the city’s sixty-five wartime strikes for which causes could be determined were brought on by some dispute over wages, and another one-sixth by disputes resulting from contract negotiations, which often included wage issues as a major component. In 1944, the year with the greatest number of strikes, for example, CIO steelworkers at the Crucible Steel Casting Company stopped work for three hours to protest the reclassification of several workers and the reduction of work hours; AFL steelworkers at the Globe Steel Tubes Company walked out briefly when they learned that their Christmas bonus would be half what they expected; CIO auto workers at the Milwaukee Foundry Equipment Company walked out twice, first when the company initiated new wage rate classifications and later when the Wisconsin Employment Relations Board ruled the earlier strike an unfair labor practice because of a no-strike clause in their contract; teamsters at the Petroleum Transport Company stopped work when the company refused to pay a wage increase granted by the WLB; and 1,750 AFL auto workers at Harley-Davidson took a one-day “holiday” to protest the way in which the company chose to apply a WLB rate range decision.³⁴

Because of its role in controlling wages, the War Labor Board often became the focus of conflict. Frustration awaited Teamsters Local 360, for example, when it tried to bring pay for dry-cleaning route salesmen into line with the pay of other service trade sales drivers and to compensate those drivers for improved productivity. In November 1942, the union and the Cleaners and Dyers Association began work on a new contract, but they had made little progress by the time the contract ran out in March 1943. During the next five months, with the aid of the Conciliation Service, the parties resolved all disputed issues except wages. With negotiations stalled, the disagreement was certified to the WLB, which turned it over to the Trucking Commission.

At the heart of the dispute lay the Little Steel formula and the question of how to apply it to drivers whose pay was derived primarily from sales commissions. The union proposed that driver-salesmen receive a 10 percent ($2) increase in weekly rate and that the commission for work over $100 be increased from 8 percent to 12 percent. The raise was designed to bring the pay for dry-cleaning salesmen into line with the wages of comparable drivers in Milwaukee’s laundry trade. While the Cleaners and Dyers Association argued that straight-time hourly earnings had increased more than the 15 percent allowed by the Little Steel formula, the union countered that straight-time hourly earnings could not be computed for workers with no definite hours. The Teamsters even questioned whether the Little Steel formula could be applied to such workers.

Douglas Soutar, a federal Trucking Commission examiner, ruled that the Little Steel formula could be applied, but he agreed with the union that straight-time hourly earnings could not be computed accurately in this case. Instead, he based his ruling on the average route earnings during January 1941. On that basis, he ruled that the Teamsters were entitled to a raise of $3.53 a week, and he increased the commission to 10 percent for work over $100 per week. However, when the Trucking Commission issued its directive order in November 1943, it reduced the recommended weekly raise to $3.

Having received WLB Trucking Commission sanction, the union learned that the directive could not be implemented until the OPA issued its stamp of approval as well. In exasperation, one union official stated that the union had conscientiously obeyed the no-strike pledge, despite a belief that a strike would have been effective, and had patiently cooperated with the Conciliation Service and the WLB. Now they had to wait longer. Perhaps a new contract deadline would arrive in 1944 before the government settled the dispute. “This case,” the union official argued,

is a living example of the ineffectiveness of the Commission form of Government to settle labor disputes. It also demonstrates why employees become restless, dissatisfied and at times even leave their jobs in protest of the great delay and injustice created thereby in these cases. It is often times said that “Justice delayed is justice denied.”³⁵

After learning of the new delay, Alois Mueller, secretary-treasurer of Local 360, implored the OPA to act promptly. The union had studied the financial resources of the companies involved and assured the OPA that the raise would require no price increases. The dry cleaners were experiencing a boom in business and profits, while their employees received little additional compensation for carrying a greater work load. As Mueller told the regional WLB, drivers often worked from 5:30 in the morning to 7:00 at night. They carried heavier loads, and 112 men were doing the work previously handled by 130 drivers. And finally, in recognition of the manpower crisis and the plight of the companies, the union was also allowing drivers to work more hours than permitted by the contract. In short, the companies were reaping unparalleled benefits from the higher productivity of the workers.

Finally, fifteen months after the workers began negotiating with the Cleaners and Dyers Association, the OPA approved the Trucking Commission directive. With the wage issue settled, Local 360 was ready to begin negotiating a new contract with the Association. Its old contract, to which the directive order applied, was set to expire in less than a month. While officials of Local 360 pushed their wage demands through the government hurdles, members of the union worked harder and stayed on the job with little or no outward manifestation of their irritation.³⁶

In some cases, worker frustration with the overloaded WLB became great enough to spark a strike. Fifteen of Milwaukee’s wartime work stoppages were directed not against companies but against the WLB. In a classic case of delay, forbearance, and frustration, which ultimately led to a strike as the war ended, members of Local 125 of the International Molders and Foundry Workers union and six Milwaukee foundries submitted a wage dispute to the WLB in December 1942. Nine months later, the Board issued an interim decision; but that decision could not go into effect until it was approved by the OPA or by the Director of Economic Stabilization. Out of frustration, the foundry workers requested a strike vote to force a final decision. This was primarily a strategic move; no strike actually took place. When the WLB finally granted a wage increase in March 1944, the Milwaukee Labor Press hailed the workers’ patience.³⁷

Perhaps because of their earlier experiences with government controls, Local 125 set out to break or bypass the limits on wages set by the WLB well before the ruling of March 1944. When the WLB rejected the union’s request for a raise of 15 cents an hour at Nordberg Company, for example, Local 125 demanded that the company reclassify all jobs in the foundry. Such a reclassification would have bypassed the Little Steel formula, and would have given the foundry workers raises ranging from 8 cents to 42 cents an hour. Ultimately, the union settled for a company compromise proposal of 5 cents an hour.

These foundry workers showed much less patience as the war drew to a close. Irritated by WLB area rates for gray iron foundries, which they felt were too low, the members of Local 125 voted overwhelmingly to strike. On August 6, 1945, they struck six foundries. After one day, the workers returned to their jobs with assurances that the WLB would restudy the local rates. (Of course, the end of the war soon made such assurances unimportant as the no-strike pledge expired and the WLB lost much of its power to control wages.)³⁸

Similar strikes protesting WLB action or inaction occurred at eight other plants organized by the AFL, and at one CIO factory. These stoppages were uniformly short, symbolic expressions of irritation with an overburdened WLB and with wage rates, which were falling behind inflation.

Frustration with slow government action could even spark work stoppages at plants otherwise free of strike activity. One such strike never received public attention in the press and never appeared in government statistics. The A. O. Smith Corporation, Milwaukee’s second-largest employer, and the various AFL unions with which it bargained, prided themselves on maintaining cordial relations. Since the organization of the Smith Steelworkers’ Union (Federal Labor Union 19806) in the early 1930s, all grievances had been settled without recourse to arbitration, and the company had willingly granted a union shop clause to the Smith Steelworkers. The rapid increase in the company’s workforce during the war did little to alter this stable relationship. In August 1944, the federal union and eight craft unions began wage negotiations with the company. In November, A. O. Smith and its unions submitted a wage package to the WLB. Five months later, the case remained unresolved, and the workers began expressing their dissatisfaction. “As a matter of fact,” an official of the Operating Engineers union wrote to a friend, “confidentially, there have been minor work stoppages at the plant, which fortunately, haven’t received any publicity.” The WLB finally awarded increases to the production workers, but only after another two months had passed.³⁹

As if to underscore the economic foundation of industrial strife, Milwaukee’s most prolonged wartime labor conflict originated as a dispute over cost-of-living bonuses for city workers—specifically, garbage workers. Throughout the war, city laborers and garbage workers chafed under what they believed were substandard wage rates that permitted them to live only slightly above a subsistence level. On five different occasions, groups of these workers struck to impress the city’s Common Council with the importance of their wage demands.

During 1942 and the first months of 1943, both city and county governments came under increasing pressure to improve the wages of their employees. Not only were they losing experienced workers to war plants, but the workers themselves had begun to clamor for raises to offset the increased cost of living.⁴⁰ In May 1943, the Common Council began work on plans to improve city employee compensation in 1944; but for garbage workers, this was not moving fast enough. On May 27, frustrated by the rejection of petitions for higher pay and an increase in the work week to forty-eight hours, city garbage workers walked off their jobs.

To compensate for the rising cost of living, the Garbage Workers Association, an independent union, demanded a raise of $32.50 a month effective June 1, and another raise of $17.50 a month, effective January 1, 1944. Once these improvements were implemented, collectors would receive between $165 and $180 a month for their labors. At the time of the strike, city garbage workers were paid a base rate of between $115 and $130 a month, with cost-of-living bonuses of between $25 for lower-paid workers and $22.50 for higher-paid employees. If one looked only at the base rate—as workers often did because the bonus was temporary and fluctuated with changes in the cost of living—the differential between industrial pay and city pay was widening. Industrial base rates had risen to an average of approximately 92 cents an hour, adjusted to eliminate overtime pay, and were based on negotiated permanent pay increases, not temporary cost-of-living adjustments. The base rate for garbage workers amounted to between 72 and 81 cents an hour, and the employees had little chance for overtime work. Although the cost-of-living bonus had raised a garbage worker’s pay to a range of 86 to 95 cents an hour, roughly comparable to pay in industrial concerns, the permanent increase sought by the collectors amounted to a raise of between 38 and 43 percent. This would have brought pay to a range of $1.03 to $1.12—well above the BLS Consumers’ Price Index, but in line with organized labor’s estimates of the real rise in the cost of living.

On the second day of the strike, Deputy Health Commissioner G. F. Burgardt warned residents that the strike posed a “serious health menace” to the city. He recommended that citizens burn their garbage or, if burning was not possible, that they bury it in their back yards. As collection cans overflowed throughout the city, the health department received relatively few complaints, and Milwaukeeans seemed to take the commissioner’s advice to heart to burn or bury their refuse. One protest, however, was particularly effective at demonstrating the results of a long strike. The proprietor of a fish market called to tell Morris Oesterreich, superintendent of garbage collection, that she had attempted to take two barrels of spoiled fish to the disposal plant but was unable to cross the picket line. “I have placed the two barrels at the curb in front of my shop,” she told the superintendent, “so if anyone complains over the week end you will know the reason why.”⁴¹

After six days the garbage collectors and their allies from Teamsters Local 200 returned to their jobs after the Common Council had voted to seek statutory changes to allow city employees to work more than forty hours a week, to allow the city to pay workers time-and-a-half for such overtime, and to allow the city to make pay adjustments during the year instead of only on January 1. As a gesture of good faith, the Council also pledged to pay the men for the time they were on strike, provided they returned and promptly cleaned up the garbage that had accumulated during their absence.⁴²

This happy solution to one problem only brought new ones for Milwaukee’s city fathers. As June passed into July and the Council tried to fulfill its promises, Fred Schallert, business agent for the city’s laborers, threatened the aldermen with another strike if they singled out one group for special treatment. The laborers, who were responsible for street cleaning and repair, had waited patiently for their wage demands to be met. Now, Schallert warned, “Some of our boys, including the street sanitation workers, are getting pretty hard to hold in line.” To this threat, Mayor John L. Bohn rejoined, with perhaps a trace of hyperbole: “A strike against the municipality is a strike against the whole government—against the greater good of the nation in time of war and a direct aid to our nation’s enemies.” The mayor admitted that just grievances existed, but he urged patience as the city moved to rectify the problems.⁴³

One drawback that complicated any attempt to meet city employees’ demands was the fact that the Common Council could not act in a vacuum. Milwaukee County contained five independent taxing authorities: the city, the county, the city school board, the vocational school board, and the sewerage commission. By 1942, these bodies had begun to work in concert on issues of employee compensation through a joint “technical committee.” To resolve some of the complaints and to prevent further defections to war plants, the technical committee settled on a bonus plan designed to offset increases in the cost of living. Based on an average civil service salary of $135 a month in the five taxing units, and using the June 15 BLS index as a measure of change, the technical committee proposed that a bonus of $30.64 become effective August 1, 1943, and that it be adjusted each January 1 thereafter. This was a bonus, not a wage increase, and it was designed to fall as well as rise depending on changes in the annual index each June. Based on the technical committee’s recommendation, the city adopted the bonus on July 26 and the county board followed suit a day later.⁴⁴

As the city finance committee considered the bonus proposal, city garbage workers took a one-day “holiday.” They were irked when they learned that the new bonus would replace a $22–$25 bonus they had been receiving and would not be in addition to that bonus. The city had been unsuccessful in its attempt to change the state statutes governing when wage rate increases could be granted, and the garbage workers remained irritated with what they perceived as substandard wages. While the cost-of-living bonus compensated for rising prices, it could not alter what the garbage workers considered a subsistence pay rate. All the bonus could do was prevent the workers from being swamped by inflation. Shortly after the garbage collectors’ “holiday,” the city approved the $30.64 bonus recommended by the technical committee. Having received an increase in their bonus of between $5.64 and $8.14 a month, instead of the $50 raise requested in the spring, the garbage collectors remained dissatisfied. Nonetheless, they decided not to strike again. Instead, they submitted a new proposal to the city requesting that base wages be increased from the existing range of $115 to $130 a month to a uniform rate of $140.⁴⁵

Milwaukee’s garbage collectors displayed their annoyance for all to see; but, as Fred Schallert had warned in July, the city’s street cleaning, construction, and repair workers were also unhappy with their wage rates. The city paid street cleaners a base rate of only $115 a month, electrical service workers $120 a month, and street construction and repair workers $140 a month. In October 1943, members of the American Federation of State, County and Municipal Employees’ union (AFSCME) Local 2 voted to strike if the city failed to raise the base rate to a uniform $140 a month, in addition to the $30.64 cost-of-living bonus to go into effect in August. Representatives of the international union, the Wisconsin Federation of Labor, and the Milwaukee Federated Trades Council opposed the local’s strike threat but strongly supported its demands for rate improvements. On Saturday, October 23, after receiving word that their demands would not be met, the members of Local 2 reaffirmed their desire to strike and gave the city a week to reconsider. Meeting in an adjoining room, the garbage workers voted to follow the same course as the AFL union.⁴⁶

As the union deadline approached, a special committee of the city finance committee proposed a $15 a month raise for workers earning $115 a month. Although this would have raised the pay for over 90 percent of the city’s laborers, the compromise proved to be too little and too late. On November 3, 1943, some 750 laborers and garbage collectors failed to show up for work. Thus began Milwaukee’s longest wartime strike.

In the succeeding weeks, the unions assigned workers to maintain emergency services, but the strike paralyzed routine garbage collection, ash removal, street cleaning, and street repair work. The city maintained its offer of $15 a month and the unions continued to demand a $25 increase to the monthly base of $115.

As the garbage piles grew, a special committee of aldermen met with union representatives in an attempt to settle the dispute while the strike dragged into its third week. On November 19, the Journal announced, “Council Capitulates!” Milwaukee’s principal daily newspaper opposed any solution other than a complete rejection of the union’s demands; editorially, the strike was represented as a direct threat to democracy. After all, if municipal workers could strike and win their demands, then government would be run by unions and not by representatives of the people. The Journal viewed such a development as intolerable.⁴⁷

The special committee’s meeting with strike representatives marked the beginning of a search for a rational way to end the strike. As the city negotiated, it also intensified measures to combat the strike. It continued to block attempts by laborers to secure statements of availability (which would have allowed them to find alternative employment during the strike), and the city openly hinted that it would take action to resume suspended services if the strike did not end soon. After the strikers rejected an offer to pay time-and-a-half for overtime up to 200 hours worked during 1944, Mayor Bohn promised police protection for anyone wishing to take garbage to the city incinerator and called a meeting of the nonpartisan aldermen (twenty out of twenty-seven aldermen fell into this category) to discuss replacement of the striking workers. The seven aldermen not invited to this caucus were Progressives and Socialists who had favored reaching some accommodation with the city laborers. On December 2, in response to the city’s promise of police protection, the garbage workers’ union placed the incinerator under siege with a picket line of thirty-five to fifty men. The strengthened line convinced all but five of the incinerator plant workers to leave their jobs, effectively shutting down the facility.⁴⁸

Just as most of the pronouncements on both sides seemed to point to an escalation of the conflict, the strike ended with a compromise worked out with the assistance of Arnold Zander, international president of the AFSCME, the union to which most of the strikers belonged. For all practical purposes, the city won the battle. The workers accepted the original offer, which raised salaries to $130 a month, as well as the city’s compromise proposal granting overtime pay for up to 200 hours of extra work during 1944. Although it was not publicly acknowledged when the strike ended, the workers agreed to return to their jobs with the understanding that the technical committee immediately would study the basic rates paid laborers and would likely report favorably on their demands. The union also understood that an additional $5 raise would become effective January 1, 1944. With these agreements and understandings in hand, the city’s sanitation and street workers returned to their jobs on December 5, 1943.⁴⁹

The sense of relief that came with the end of the strike soon dissipated. First, 1,100 employees of county institutions, members of Local 55 of the State, County and Municipal Workers of America (CIO), called for Milwaukee County to grant similar raises. City truck drivers, members of Teamsters Local 200, quietly came to the Common Council with a pledge not to strike and a request for a raise. Equally quietly, the Council turned down the request. As the new year dawned, Milwaukee’s laborers became restive again. The understanding they had with city officials proved illusory. The technical committee undertook a prolonged, detailed wage study of all workers in the county, not just the laborers, and the $5 raise turned out to be more implied than real. The mayor warned the laborers to stay at work, but 300 took a short holiday from their jobs to demonstrate their strength to the city council. Shortly thereafter, AFSCME Local 430, which represented many of the county’s employees, asked the county board for a raise of $15 a month for all employees earning less than $175 a month. The city strike was over, but the issue of substandard pay and the rising cost of living remained unsettled.⁵⁰

The grievances of the garbage workers simmered for the rest of the war despite the increases received after their strike in 1943. On July 3, 1945, the incinerator workers and garbage collectors, who had reorganized their independent union into Local 632 of the CIO State, County and Municipal Workers union, struck to emphasize their demand that the $15 “historical differential” separating them from other laborers be reinstated. (The differential was to compensate them for work that was particularly disagreeable.) The differential had been lost in the raises granted after the 1943 strike. The stoppage lasted only one day but was repeated by incinerator operators on July 31. As the war finally drew to a close, the Milwaukee Common Council began another study of the merits of the garbage workers’ demands.⁵¹

Milwaukee’s garbage collectors and laborers vigorously pursued their demands for improvement of basic wage rates and protection against rising living costs. Disputes between the city and its workers mirrored the pattern of escalating wage demands by industrial workers. City employees, like their working colleagues in Milwaukee’s factories, feared that inflated prices would become fixed when the war ended and they would be saddled with basic wage rates that had not kept pace with inflation.

While organized labor fought to protect postwar earning power, the Milwaukee Journal, which generally supported business positions during the war, vociferously attacked labor’s drive against wage controls. The paper attributed labor’s insistence on higher pay to greed and to an unwillingness to sacrifice for the war effort. For workers paying daily bills or thinking about future employment, a clear double standard existed between the way their demands for greater economic security were treated and the way similar corporate concerns were perceived. During the war, the federal government granted subsidies, low-interest loans, rapid tax write-offs for new facilities and equipment, and cost plus a fixed fee contracts to hasten production. To foster postwar conversion to a peace economy, corporations were encouraged to set financial reserves aside. Unlike a worker’s savings, these reserves were subtracted from taxable income. Likewise, although workers used their extra income to pay off debts and to fulfill delayed needs for scarce consumer goods at inflated wartime prices, businesses received easy credit for expansion and, as the war ended, were able to begin purchasing facilities built by the government at a fraction of their actual value. Corporate demands for postwar financial reserves and favorable reconversion policies received sympathetic treatment by government officials and the press. It seemed clear to many observers that such measures were necessary to guarantee postwar prosperity. Maintenance of worker buying power through protection of wage rates received much less consideration, and organized labor pointed out the inconsistency.

When the Milwaukee Journal published an article that reported declining profits during 1943 for seventeen heavy industry groups nationally, the Labor Press rejoined that the reduction was based on a comparison of profits to total sales—not of profits to invested capital as had been the practice in previous years. It was more accurate, the labor paper contended, to report that before-tax profits rose $188 million in 1943 while after-tax profits were up $14 million. Indeed, the editor went on, the Milwaukee Journal based its criticism of the “swollen” paychecks of workers on total income, ignoring the fact that higher paychecks resulted from working longer hours—the equivalent of companies earning more money because they sold more goods. Citation of after-tax profits as an indication of the price being paid by business for the war effort also ignored the fact that after-tax figures excluded money set aside for postwar re-conversion. That money was subtracted from the ledger before the calculation of taxable profits.⁵²

Although the war was clearly funded by deficit spending, individual income taxes, and corporate income taxes, in that order, the Milwaukee Journal argued that American industries had sacrificed profits to fund the war effort. The paper continually cited figures supplied by the Securities and Exchange Commission to bolster its view that net profits had lagged far behind corporate sales. In other words, American business and industry had created a production miracle, but was reaping few of the benefits of that miracle. In a typical article, the Journal concluded that the war was much less than a “bowl of cherries” for Milwaukee’s war producers. Faced with high taxes, soaring labor costs, and rising operating and maintenance expenses, Milwaukee’s industrialists viewed the future with trepidation. Not only did they expect reconversion to be expensive, but the government’s renegotiation act, under which federal officials could renegotiate contracts if they deemed profits to be too excessive, also made it difficult to estimate what resources might be available until after the government had taken its additional slice. Using as examples the A. O. Smith Corporation, Cutler-Hammer, Inc., and the Harnischfeger Corporation, the paper’s business editor, Ralph Werner, argued that large inventories, new loans, collapsing prices, and uncertain markets made for an uncertain future. He also noted ominously that corporate executives worried “that the postwar period may be capitalism’s last chance to prove itself. If jobs aren’t available for all the persons who want them they see appetite upsetting visions of communism or some other isms.”⁵³

The Milwaukee Journal often turned its analysis of the plight of business into a critique of labor’s demand for higher wages. In one editorial, the paper reported that North American Aviation had a net profit after taxes and expenses of $7.37 million during fiscal 1942–1943. “That’s a big sum,” the Journal admitted. “It possibly may look like ‘excessive profit,’ or an inordinately high ‘take,’ to workers earning $1,000 or $2,000, or $5,000 yearly.” Nonetheless, the paper told its readers that this profit amounted to a mere 2.91 percent of the company’s sales of $253.23 million for the same period. The Journal asked pointedly if a fine craftsman making a $253 piece of furniture would feel “overpaid if he received $7 net for his work.”⁵⁴

In a later editorial, the Journal made a more direct analogy as it attacked labor’s attempts to “smash wage ceilings and the ‘Little Steel’ formula.” A recent study of forty companies doing war work had indicated that between 1940 and 1942, production had risen 81 percent, wages were up 96 percent, and taxes had soared 193 percent; but profits had fallen 17 percent and dividends 20 percent. Despite these unfavorable statistics, the Journal reminded its readers that no stockholders had gone on strike to demand higher dividends. The conclusion was inescapable: the government had held profits down and it should do the same for wages.⁵⁵

In fact, the picture was not as bleak as Ralph Werner or his paper portrayed. Without question, the federal government taxed corporate profits heavily during the war. Indeed, most comparisons between the net profit after income taxes in 1941 and the same figures for 1944 or 1945 showed skyrocketing production and sales, but a decline in net profits. Therefore, by looking only at profit after taxes, corporations and newspapers such as the Milwaukee Journal could argue that industry had borne the financial brunt of the war, while workers’ wages soared.

But such comparisons often were fallacious, for they dealt only with wartime figures and ignored the future impact of exemptions to the excess profits tax. To be sure, the government taxed corporations more heavily during the war than during the defense crisis that preceded it. The Revenue Act of 1941 imposed a graduated taxation system which siphoned off no more than 60 percent of excess profits. In contrast, the Revenue Act of 1942 raised the tax to a flat rate of 90 percent. Comparisons made during the war ignored the Revenue Act’s postwar refund provision, which lowered the tax rate to 81 percent. An additional relief provision cut the net tax rate to 72 percent for a small number of companies that owed approximately 40 percent of the total tax liabilities.

Comparisons between corporations and individuals also ignored the fact that individual taxpayers paid a greater share of the war’s costs than did corporations. In 1944, for example, individuals paid nearly $20 billion in federal income taxes while corporate tax liabilities amounted to $14 billion. Likewise, comparisons seldom addressed the fact that sharply rising payroll figures were influenced by improved worker productivity, longer working hours, and growing numbers of industrial workers. For the worker, these factors were comparable to the production and sales figures cited when arguing that corporations were overburdened by war taxes. Taxes took a much larger portion of corporate income than of individual income, but the total annual net profits after taxes still averaged $8.625 billion during each of the war years. It was specious to argue, as Ralph Werner of the Milwaukee Journal did, that the war had worked a hardship on business.⁵⁶

As the national statistics suggested, war taxes cut into the profits of many Milwaukee companies. In reports to the Securities and Exchange Commission, the Harnischfeger Corporation showed a 32 percent jump in net profits after income taxes between 1941 and 1942. By the end of 1944, the company’s net had fallen 44 percent below the 1941 figure. The Chain Belt Company reported a more moderate change; its net profit after income taxes fell 1 percent in 1942 and 10 percent in 1944 when compared with figures for 1941. This decline was relatively mild compared with International Harvester Company, whose after-tax profit plummeted 13 percent during the first year of war and continued to fall until it was 17 percent lower in 1944 than in 1941. In 1944, Bucyrus-Erie Company recorded a decline of 21 percent, and Briggs and Stratton Corporation’s after-tax profits fell 19 percent when compared with 1941.

Yet such comparisons oversimplified the impact of the war on Milwaukee companies, just as they did on the national level. In preparation for the postwar era, all but one of these Milwaukee companies amassed sizable cash reserves to soften the blow of reconversion. International Harvester showed a net profit of $25 to $30 million after taxes during each of the war years, and put $2.5 million into its postwar reserve during each year America was at war. In 1941, it reserved over $5 million for postwar use. The Chain Belt Company reported only $829,000 in after-tax profits during 1944, but was able to set aside $337,000 for postwar contingencies. Similarly, Harnischfeger set aside sums equaling 30 to 112 percent of its after-tax profits during the war years. Bucyrus-Erie followed a slightly more modest course. Only Briggs and Stratton failed to set any money aside for reconversion.

None of these companies lost money during the war, and none was threatened with financial extinction. The net worth of each company rose steadily, and by the beginning of 1945 the net worth of each ranged from 11 percent higher than in 1941 (Bucyrus-Erie) to 43 percent higher (Harnischfeger). Yet, as the war drew to a close, the Milwaukee Journal’s reporting on these companies emphasized the relative decline in profits they were suffering compared to previous years. Commentary on postwar reserves, corporate optimism for postwar production, and net worth tended to appear at the end of such articles.⁵⁷

The Journal followed the same pattern when reporting about companies such as A. O. Smith and Cutler-Hammer. Ralph Werner had used A. O. Smith and Cutler-Hammer as examples of the plight faced by Milwaukee companies; but A. O. Smith showed a net profit after taxes for 1944 that was almost 60 percent higher than the company’s profit in 1941, and Cutler-Hammer increased its net profit level by almost 17 percent. Cutler-Hammer’s net worth grew by a modest 22 percent between 1941 and 1945; A. O. Smith’s grew by more than 69 percent in roughly the same period. Although neither company established a sizable postwar financial reserve, they could hardly be said to have suffered at the hands of government taxation and rising labor costs as the Journal’s business editor contended.⁵⁸

Some of the Journal’s articles seemed to contradict the image of the long-suffering corporations. After an exhaustive study of corporations listed on the national stock exchanges, the Journal reported, the Securities and Exchange Commission concluded that corporate working capital rose 63 percent by 1945 and provided a firm foundation upon which to finance postwar reconversion. The SEC attributed this healthy rise to the retention of profits after taxes and dividends, and to the fact that government construction of plant facilities lessened the expenditure of private capital for expansion and modernization. Much of the resulting surplus was held in cash, and the SEC expected that private capital was more than adequate to finance conversion to civilian production after the war.⁵⁹

When placed alongside the struggles of workers to secure a standard of living that would not be eroded when the war was over, corporations seemed to have reserved for themselves a comfortable position from which to expand in the postwar era. The American Federationist typified organized labor’s critique of corporate wealth built upon wartime production when it told its readers: “Profits are supposed to be the reward for the risk capital takes. Capital is risking much less in this war period than ever before in history. It has an assured market for everything it can produce. Much of the production is on a guaranteed cost-plus-a-profit basis.” The paper charged corporations with building large postwar financial reserves to avoid paying the excess profits tax and to avoid the public outcry that would arise if they distributed huge profits in the form of dividends.⁶⁰

This was the side of business labor saw and resented. Far from the sense of unity that characterized so many aspects of life on the home front, the debate over who profited from the war revealed the underlying tension regarding economic issues that could not be quieted by patriotic fervor or devotion to the war effort. Corporate net profits after taxes did not keep pace with the rate of sales, as the Journal often pointed out—but neither did wage rates keep pace with inflation and productivity. Like corporate profits, the workers’ take-home pay skyrocketed; but ever-greater amounts went to taxes, living expenses, and war bonds. Many workers looked at their employers’ profits and saw profiteering. They read in the labor press about the unequal sacrifice being expected of them, and the proof was all too plain as wage rates fell behind inflation.⁶¹

Throughout the wartime years, the basic disagreement among government, management, and labor over what statistical measuring tools best conveyed the realities of wages and profits, costs and income, gains and losses led the contending parties to different conclusions about the relationship between real income and the cost of living. Organized labor recognized that the substantial earnings of workers during the war derived from working long hours at high-paying war jobs—a temporary condition. The end of the war would mark an end to the long work week, and many workers would soon return to prewar occupations. When this happened, it held the prospect of workers returning to basic wage rates that had not kept pace with inflation and that could no longer be supplemented with overtime pay.⁶²

Government officials were concerned primarily with gauging and controlling inflationary pressures during the war itself. Business and industrial managers were concerned primarily with low-cost production and building a base for postwar profits. Labor leaders were concerned with basic economic justice for American workers and with the need to provide a consumer foundation for the postwar economy.

Given the incompatible goals of labor, management, and the government in controlling wages and fighting inflation, and given organized labor’s focus on the postwar era, industrial conflict was almost inevitable despite wartime unity. The perennial tension between worker and employer over economic issues worsened as the war progressed and eventually manifested itself in strikes, work stoppages, and many more subtle industrial conflicts.