1
00:00:10,460 --> 00:00:13,890
We've used the term social
contract several times already,

2
00:00:13,890 --> 00:00:16,660
so let's take a
look at what did we

3
00:00:16,660 --> 00:00:19,960
mean by this post-World
World War II social contract?

4
00:00:19,960 --> 00:00:23,170
And why did it work
so well for so many?

5
00:00:23,170 --> 00:00:26,630
If you were born
between 1946 and 1964,

6
00:00:26,630 --> 00:00:29,820
you're a member of what we
call the Baby Boom generation.

7
00:00:29,820 --> 00:00:33,820
And chances are you did
quite well, because you were

8
00:00:33,820 --> 00:00:36,270
able to follow
your parents advice

9
00:00:36,270 --> 00:00:38,610
of working hard,
staying in school,

10
00:00:38,610 --> 00:00:42,050
and being able to improve on the
standard of living you achieve

11
00:00:42,050 --> 00:00:44,420
for yourself and for
your family compared

12
00:00:44,420 --> 00:00:46,260
to what your parents had.

13
00:00:46,260 --> 00:00:49,550
So was this all just
a matter of luck?

14
00:00:49,550 --> 00:00:52,970
Is there some iron law of
economics that achieved it?

15
00:00:52,970 --> 00:00:54,240
Well, neither are true.

16
00:00:54,240 --> 00:00:57,930
It took a lot of hard work
and a lot of invention

17
00:00:57,930 --> 00:01:02,710
on the part of labor and
management leaders of the time.

18
00:01:02,710 --> 00:01:07,010
America came out of World War
II with an enormous amount

19
00:01:07,010 --> 00:01:09,250
of pent-up demand
for consumer goods,

20
00:01:09,250 --> 00:01:11,310
because we were
focused on building

21
00:01:11,310 --> 00:01:12,780
the economy for the war.

22
00:01:12,780 --> 00:01:15,860
So we had to convert
from factories

23
00:01:15,860 --> 00:01:19,370
that made tanks and
military airplanes

24
00:01:19,370 --> 00:01:23,310
to factories that made cars
and other kinds of goods

25
00:01:23,310 --> 00:01:28,280
and services that were in high
demand in the post-World War

26
00:01:28,280 --> 00:01:29,280
II economy.

27
00:01:29,280 --> 00:01:34,100
And that created what we call
the post-war social contract.

28
00:01:34,100 --> 00:01:37,000
Now, you've seen
this diagram before.

29
00:01:37,000 --> 00:01:41,410
It shows that over the
post-World War II time period,

30
00:01:41,410 --> 00:01:45,590
wages and productivity
moved in tandem.

31
00:01:45,590 --> 00:01:48,040
And so as the
economy got better,

32
00:01:48,040 --> 00:01:51,970
so too did wages and
living conditions

33
00:01:51,970 --> 00:01:54,740
for the vast majority of
families of that time.

34
00:01:54,740 --> 00:01:56,470
So how did that work?

35
00:01:56,470 --> 00:02:01,790
Well, as I said, we've had
an enormous amount of growth

36
00:02:01,790 --> 00:02:05,610
in construction,
in heavy industry,

37
00:02:05,610 --> 00:02:09,090
in rebuilding the economy
after World War II.

38
00:02:09,090 --> 00:02:12,510
We had the rise of
mass production.

39
00:02:12,510 --> 00:02:15,270
We had automobiles
coming out of our ears.

40
00:02:15,270 --> 00:02:18,250
Here's a picture of
how Ford and General

41
00:02:18,250 --> 00:02:21,510
Motors and other companies
were able to produce millions

42
00:02:21,510 --> 00:02:26,850
of vehicles for the mass market,
largely similar kinds of goods

43
00:02:26,850 --> 00:02:30,170
and services that
people were looking for.

44
00:02:30,170 --> 00:02:31,890
So it was out of
this time period

45
00:02:31,890 --> 00:02:35,250
that unions began to grow.

46
00:02:35,250 --> 00:02:38,000
In the post-World World
War II time period,

47
00:02:38,000 --> 00:02:41,750
unions grew to about 30% to 35%.

48
00:02:41,750 --> 00:02:43,930
But union growth
didn't come easily.

49
00:02:43,930 --> 00:02:47,210
It took a lot of battles
between labor and management

50
00:02:47,210 --> 00:02:50,060
in the steel industry,
in the auto industry.

51
00:02:50,060 --> 00:02:53,960
General Motors had to
experience a sit-down strike

52
00:02:53,960 --> 00:02:59,060
in their plant in 1937
before unionization

53
00:02:59,060 --> 00:03:01,140
was accepted by General Motors.

54
00:03:01,140 --> 00:03:04,740
This is an example
of what's called

55
00:03:04,740 --> 00:03:06,800
the Battle of the
Overpass, where

56
00:03:06,800 --> 00:03:08,730
the auto workers' leaders--

57
00:03:08,730 --> 00:03:10,920
led by Walter Reuther,
who we're going

58
00:03:10,920 --> 00:03:13,940
to hear about a little bit
more specifically in a moment--

59
00:03:13,940 --> 00:03:18,260
had to fight with paid security
guards hired by Ford Motor

60
00:03:18,260 --> 00:03:20,100
to try to keep the union out.

61
00:03:20,100 --> 00:03:22,240
So this was a
battle that went on

62
00:03:22,240 --> 00:03:25,640
not only in autos but in steel
and in many other industries.

63
00:03:25,640 --> 00:03:30,560
But once it was successful,
and once unions were organized,

64
00:03:30,560 --> 00:03:36,140
you got something called
the postwar social contract.

65
00:03:36,140 --> 00:03:39,010
This is an example of
Walter Reuther, here,

66
00:03:39,010 --> 00:03:42,500
negotiating and signing an
agreement with General Motors

67
00:03:42,500 --> 00:03:45,020
which was called the
Treaty of Detroit,

68
00:03:45,020 --> 00:03:48,750
where the parties agreed that
they would increase wages

69
00:03:48,750 --> 00:03:52,090
by the rate of growth
in the cost of living

70
00:03:52,090 --> 00:03:55,910
and the overall average rate
of growth in productivity

71
00:03:55,910 --> 00:03:56,930
in the economy.

72
00:03:56,930 --> 00:04:01,500
And it was that agreement that
allowed wages then to grow,

73
00:04:01,500 --> 00:04:04,970
and why we got this
tandem movement of wages

74
00:04:04,970 --> 00:04:08,050
and productivity for so many
years in the postwar time

75
00:04:08,050 --> 00:04:08,960
period.

76
00:04:08,960 --> 00:04:10,870
But that was just
the auto industry.

77
00:04:10,870 --> 00:04:13,740
How do we get this to
spread across the country?

78
00:04:13,740 --> 00:04:15,640
Well, to understand
that, we have

79
00:04:15,640 --> 00:04:17,660
to introduce another
term, something

80
00:04:17,660 --> 00:04:20,130
that in labor
relations terminology

81
00:04:20,130 --> 00:04:22,400
is called pattern bargaining.

82
00:04:22,400 --> 00:04:26,160
What would happen is, you
negotiated a wage agreement

83
00:04:26,160 --> 00:04:29,670
at, let's say, General
Motors; and then the union

84
00:04:29,670 --> 00:04:32,610
would carry that same
agreement to Ford and say,

85
00:04:32,610 --> 00:04:34,640
if you don't want
a strike, then you

86
00:04:34,640 --> 00:04:36,310
should agree to the same wage.

87
00:04:36,310 --> 00:04:39,080
And Ford would agree,
and the pattern

88
00:04:39,080 --> 00:04:41,570
would spread to
Chrysler and others

89
00:04:41,570 --> 00:04:43,730
in the automobile industry.

90
00:04:43,730 --> 00:04:48,130
While not perfect, it then
also spread to other industries

91
00:04:48,130 --> 00:04:50,810
across the country
at its own rate.

92
00:04:50,810 --> 00:04:54,350
So you got oil and gas
and household appliances

93
00:04:54,350 --> 00:04:57,060
and the steel industry
and aerospace,

94
00:04:57,060 --> 00:05:00,710
rubber, electronics, all of
these growing industries,

95
00:05:00,710 --> 00:05:03,950
basically following a
similar wage pattern--

96
00:05:03,950 --> 00:05:08,540
not exactly copying but fitted
to the economic circumstances

97
00:05:08,540 --> 00:05:10,780
of their particular setting.

98
00:05:10,780 --> 00:05:15,240
And so this is what created
that tandem movement

99
00:05:15,240 --> 00:05:17,980
of wages and productivity.

100
00:05:17,980 --> 00:05:21,000
And as the economy
got better, so too

101
00:05:21,000 --> 00:05:25,840
did the average workforce
member and his or her families.

102
00:05:25,840 --> 00:05:29,560
That's the kind of thing
that we then lost since 1980.

103
00:05:29,560 --> 00:05:31,660
That's the kind of
thing we have to find

104
00:05:31,660 --> 00:05:34,250
a new solution to create again.

105
00:05:34,250 --> 00:05:37,680
But the key for us
today is not to try

106
00:05:37,680 --> 00:05:41,410
to go back to the 1940s,
'50s, '60s, or '70s,

107
00:05:41,410 --> 00:05:44,360
but to ask, how can
we create wage norms?

108
00:05:44,360 --> 00:05:46,870
How can we create the
bargaining power for workers

109
00:05:46,870 --> 00:05:48,960
so that we can once
again start to get

110
00:05:48,960 --> 00:05:52,410
wages moving with the overall
growth of the economy?

111
00:05:52,410 --> 00:05:54,410
That's our challenge
moving forward.

112
00:05:54,410 --> 00:05:58,330
We'll talk about how to do
that in future sessions.