What happened to the good old days? How can we get them back?

There was a time, from the late 1940s until about the early ‘eighties, recalls the Washington Post’s lugubrious economic columnist, Robert Samuelson (in a column hyperlinked below), when employees of major American industries enjoyed “annual wage increases, job security and generous fringe benefits.”

Samuelson attributes most of the economic peace and prosperity of that era to good corporate citizenship: shared norms, “business practices shaped by social values and government policies,” the desire of corporate executives to erase memories of the Depression by “refurbish[ing] the image of Big Business.” He mentions the lack of competition from imports.

Those days are long gone, of course. In addition to competition from abroad, Samuelson cites new technologies and deregulation as the factors that took us from where we were then to where we are now.

Oddly, he doesn’t include, among either the causes that ushered in the era of economic good feelings or the causes that ushered it out, the events that he identifies in his first paragraph as having triggered the onset of those good times: the impact of strong labor unions. Companies didn’t give workers higher pay, good benefits, and job security out of benevolence. They ceded these favorable terms and conditions in hard-fought negotiations, concluded, as Samuelson says, by a period of labor-management peace called the Treaty of Detroit.

As Samuelson partially recounts, labor unions took a voluntary no-strike pledge during World War II. But the natural tension between management’s and employees’ interests, suppressed during the war, resurfaced with a vengeance after V-J Day. In 1946, he says, almost 4.6 million workers were involved in 5,000 strikes. Work stoppages reduced production, preventing industry from meeting pent-up post-war demand. Companies were willing to split burgeoning profits with labor in return for uninterrupted production. The result was not only a generation of relative labor-management peace, but the elevation of assembly line workers into the middle class, suburbanites who could afford second cars, summer vacations and college tuition for their kids.

Those were the days, all right.

Samuelson is right to attribute the retreat from good times in part to foreign competition. It was easy for companies to pay high wages when they could pass the costs on to consumers whose car-buying choices were limited to American companies. Competition from Japan in cars and from Brazil and Korea in steel put an end to that.

But an even more pronounced trend was the weakening of labor unions. The downsizing of heavy industry, where unions were strongest, depleted labor where it had been strongest. The labor movement could have recovered from that, though, as it did in the ‘thirties when it responded to the growing strength of heavy industry by organizing industrial unions like the auto and steel workers and confederating them into the Congress of Industrial Organizations, the CIO.

Organized labor could have followed that strategy in the ‘seventies and ‘eighties, and to some extent it did. The National Education Association completed its transformation from trade association to trade union, and together with the American Federation of Teachers became a force to be reckoned with in individual communities and in the national debate over educational reform. Public sector unions like the American Federation of State, County and Municipal Employees, American Federation of Government Employees and National Treasury Employees Union increased their membership and their economic and political power despite the fact that they, like the teachers’ unions in most places, were not permitted to strike.

But labor’s attempts to win back, in new segments (like service and high technology) of the private sector the power it was losing in the old were blocked by deliberate anti-union policies pursued by the Republicans who, by the 2008 elections, will have controlled the presidency for twenty of the last 28 years. The headlines went to Ronald Reagan’s smashing of the air traffic controllers’ union in 1981 after an illegal strike. But much more important were the twenty years of Republican appointees to the National Labor Relations Board (NLRB) that quietly but inexorably narrowed unions’ organizing rights while expanding management’s. Twenty years of Republican appeals court judges made sure that conservative NLRB rulings stuck. Twelve years of Republican control of the House and sixteen of the Senate prevented any legislative attempts to restore the economic and political balance between labor and management.

There’s been nothing illegitimate about this power shift. Parties that win elections get to enshrine their political and economic philosophies into government policy and action.

But the economy has been the poorer for it. The workers took the biggest hit, of course, by losing the “annual wage increases, job security and generous fringe benefits” that labor unions won for their post-war counterparts, not to mention the dignified retirements and college educations the post-war workers could afford but today’s cannot.

But the rest of the economy has suffered too. Samuelson praises the union-less economy that started in the 1980s and continues today as being more productive, more stable and less prone to inflation. But he concedes that income inequality has worsened. “Income gains at the top seem so outsize,” he observes, and gains elsewhere are so choppy. The very uncertainty means that, even amid great prosperity, Americans feel anxious.”

Who doubts that there is a direct relation between the strength of unions from the late ‘forties through the ‘sixties and ‘seventies and the good times and security that were widespread then? Or that the diminished strength of unions since the ‘eighties is closely linked to the miasma of tight budgets and anxiety that today hangs over even well-educated and highly skilled workers and their families?

And who wonders whether what worked then might be worth trying again today?

Robert J. Samuelson “The Equality Quagmire”