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May 2023

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Inflation and the 'Age-Old Attack' on Labor

When President Joe Biden signed the Inflation Reduction Act in August 2022, much attention was given to the new legislation's pro-labor policies and union protections. This was for good reason. Whenever inflation fears are raised, anti-labor forces will rush to place blame on the wages unions secure for their members.

In their view, punishing the worker through job and wage cuts is how to bring down prices. The IBEW sees it differently. The IRA, as then-International President Lonnie R. Stephenson stated, "pairs clean energy investments with labor standards that promote family-sustaining union jobs." Investing in our future with good-paying, union-protected jobs is an essential part of economic stabilization, not oppressive wage cuts.

And yet, nearly a century ago as the U.S. struggled to combat a worldwide economic depression, the same arguments were made by anti-union forces. And just like today, the IBEW was there to strike them down.

On Oct. 24, 1929, the U.S. stock market crashed, triggering the Great Depression. After the U.S. government took steps to ensure that credit lines were available, it turned next to restoring consumers' purchasing power. Unions pushed for large-scale public work programs to get more money into people's pockets, while banks and corporate interests pushed for job and wage cuts in the name of "reducing inflation."

Albert Wiggin, president of the Rockefeller Chase National Bank, was quoted in the April 1932 issue of The Electrical Worker saying, "American business has proved its good will in dealing with labor and may reasonably ask labor to accept a moderate reduction of wages designed to reduce cost and increase both employment and the buying power of labor." Economics professor John Commons issued a blunt response in the same article: "The banking fraternity of New York City does not want to stop unemployment; they want it to continue until labor will take a cut. They will do all in their power to force this end, so that American industry can compete with cheap European labor."

This was the debate heard throughout the early 1930s as politicians in Washington and bankers in New York tried to find a way out of the Depression. Speaking on behalf of the union, IBEW International President Howell Broach published blistering editorials month after month in The Electrical Worker.

"The aim of these anti-union lawyers is the same as it was in 1921, in 1907, in 1902 — to destroy unionism," he wrote in April 1932. "No matter what course the engineered attacks upon our local unions take, none can succeed when members remember the union's needs, its benefits, and its social and industrial importance."

Sure enough, there were many investments in construction that gave Americans a sense of optimism in these dark times. Buildings pushed higher into the skies as IBEW Local 3 in New York City finished wiring the Chrysler and Empire State buildings, each the tallest building in the world when completed in the early 1930s. Construction of the world's longest span, the Golden Gate Bridge in California, was about to begin with Local 551 in Santa Rosa.

These engineering marvels became symbols of IBEW members' skill and determination. And they served as proof, as Broach stated in another editorial, "that the Electrical Workers' Union has refused to roll over and play dead."

One of the most successful of these efforts was the passage of the National Industrial Recovery Act, signed into law by President Franklin D. Roosevelt in 1933. Similar to the IRA, this sweeping legislation was created not only to invigorate the economy but to ensure that union members were protected.

As described in the August 1933 Electrical Worker, the NIRA "set up labor-code language establishing the maximum hours per week and per day each employee should work; the minimum rates of wages per hour; the right to collective bargaining between employer and employees." To help ensure that these new pro-union policies were followed, the National Labor Board was established in August 1933 to implement the collective bargaining provisions of the act.

Imbued with a new sense of optimism, legislators overseeing the NIRA pushed for a wide range of public work programs. These efforts laid the groundwork for the Rural Electrification Act. A construction boom was unleashed, followed by a massive wave of union organizing. In 1934, the IBEW saw a significant increase in membership. It was clear that the NIRA was finally addressing what unions had realized all along: Wage and job cuts had prolonged the Depression.

IBEW Secretary Gustave Bugniazet said in his December 1933 editorial: "For years, industrialists have looked with envy upon the building trades and deplored the supposed high wages paid. They have advocated drawing them down to the level of the unskilled. Certain employers will use the NIRA to do this very thing."

Bugniazet was right. In 1935, the Supreme Court struck down many provisions of the NIRA. And although the union protections emerged unscathed, the NLB eventually catered to anti-labor forces and permitted company unions, effectively gutting the act. It was as Broach warned in a 1932 editorial: "The price of progress is to incur the enmity of powerful anti-union leagues. … Anti-union lawyers will go on earning their dirty money by attacking wage earners, but they won't succeed."

And they didn't. Fed up with corporate anti-labor practices, Sen. Robert Wagner of New York authored one of the most important pieces of labor legislation, the National Labor Relations Act. The law made clear that the explicit policy of the U.S. government is to respect and encourage collective bargaining, to eliminate unfair labor practices, and to allow workers to organize for their rights. On July 5, 1935, the NLRA was signed into law. It superseded the NIRA and established a new federal labor policy that remains today.

All these years later, the Inflation Reduction Act makes it clear again that a strong economy demands strong union protections.

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IBEW executive officers wait outside the U.S. Capitol in August 1933 to attend an NIRA hearing on the codes for electrical manufacturing. IBEW President Daniel Tracy is second from left, and Secretary Gustave Bugniazet is third from left.