Presidents and Labor: Dwight Eisenhower and the Steel Strike of 1959
In the summer of 1959, as the Cold War between the United States and the Soviet Union was in progress, the United Steelworkers of America (USWA) went on strike, shutting down the steel industry. The strike was ended when President Dwight Eisenhower used the provisions of the Taft-Hartley Act, and it was followed by a lawsuit brought by the union to have Taft-Hartley declared unconstitutional.
Philip Murray was the founding president of the USWA. When he died in November 1952, David J. McDonald was named acting president by the USWA executive board and the following year he was became the union's president. McDonald pressed for better benefits for union members from employers. He believed that the election of Republican Dwight Eisenhower as president and of Republican majorities in Congress would result in an unfriendly climate for unions generally, but in fact Eisenhower was not unsympathetic to the working man and did attract a significant amount of blue collar support.
In his bargaining with employers, McDonald focused on getting benefits such as unemployment compensation, health insurance, pensions, tuition reimbursement and other benefits for his members. He had watched the United Auto Workers (UAW) win better wage and benefit packages than the Steelworkers and were able to obtain and he believed that strike action was necessary for the USWA to catch up with other unionized employees. In 1956 McDonald led the Steelworkers in a strike that resulted in substantial wage increases, unemployment benefits, layoff rights, and improved pensions.
By 1959, the major American steel companies were reporting high profits. This prompted McDonald and Steelworkers general counsel (and future cabinet member and Supreme Court Justice) Arthur J. Goldberg to seek a major wage increase for the membership. Industry negotiators refused to grant a wage increase unless McDonald agreed to a substantial alteration or an elimination of a clause in the union's national master contract which limited management's ability to change the number of workers assigned to a task or to introduce new work rules or machinery that would result in reduced hours or fewer employees. Management asserted that this change was necessary for steel companies to remain competitive in the industry. But McDonald believed that this was in reality a disguised attempt to break the union. The parties attempted negotiations, but these reached an impasse over the disputed clause and the contract expired on July 1, 1959.
President Dwight Eisenhower requested that both sides agree to extend the agreement and resume bargaining. McDonald and Goldberg offered to extend the contract by one year. They also proposed creating a joint committee to study changes to Section 2(b) and to the contract's benefit structure. But the steelmakers rejected the offer.
On July 15, 500,000 steelworkers went on strike. The strike closed almost every steel mill in the country. After the strike had gone on for six weeks, the Department of Defense became concerned that there would not be enough steel to meet national defense needs in the event of a crisis.
McDonald received pressure from the AFL-CIO to end the strike. Its president, George Meany, was sympathetic to the government's security concerns. He was only willing to support the strike if it did not adversely affect national security. The strike spilled over into the auto industry. Without steel to make cars, automakers were threatening lay off tens of thousands of United Auto Workers (UAW) members.
On September 28, 1959, Eisenhower met privately with McDonald and Goldberg. In the meeting he threatened to invoke the back-to-work provisions of the Taft-Hartley Act. McDonald was unwilling to budge on Section 2(b) without other concessions from the steelmakers. But the steel companies believed that they could wait until Eisenhower forced union members back to work, so they refused to make any such concessions. Concerned about the risks posed to national defense, on October 7, Eisenhower utilized the provisions of the Taft-Hartley Act, first by appointing a Board of Inquiry. However, Eisenhower limited the Board's mandate to clarifying the issues rather than recommending a settlement.
At this point, management decided to offered a three-year contract with small improvements in pay and fringe benefits and binding arbitration over Section 2(b), but this was unacceptable to McDonald. He retendered his proposal of early July, but with reduced wage and benefit demands. He proposed that the contract be limited to two years rather than three. McDonald also proposed a nine-member committee consisting of three members from labor, management, and the public to study and resolve work-rule issues. Management rejected this proposal.
Eisenhower's Board of Inquiry issued its final report on October 19 and declared that there was no chance of a negotiated settlement. On October 20, the Department of Justice petitioned the federal district court for western Pennsylvania for a Taft-Hartley injunction ordering the steelworkers back to work. On behalf of the USWA, Arthur Goldberg argued that the Taft-Hartley Act was unconstitutional. The district court ruled in favor of the government on October 21, but agreed to a stay of the injunction until an appeal of its decision could be heard. The union appealed to the Third Circuit Court of Appeals in Philadelphia and lost again at a hearing held on October 27. The United States Supreme Court granted certiorari and set argument for November 3, 1959.
On October 26, a settlement was reached between the union and Kaiser Steel on October 26. Although the Steelworkers won only a fractionally higher wage increase than the steelmakers had proposed, the settlement included the nine-member committee, proposed by Goldberg and McDonald.
The Supreme Court heard submissions and four days later, on November 7, 1959, the 116th day of the strike, the Court upheld the appellate court's findings. In Steelworkers v. United States, reported at 361 U.S. 39 (1959), the court upheld the constitutionality of the Taft-Hartley Act by a vote of 8-1. The justices affirmed the district court's injunction, and ordered the workers back to work for an 80-day cooling-off period. McDonald reluctantly ordered his members back to work.
Though ordered back to work, productivity slowed due to the poor relationships between workers and managers. The Taft-Hartley Act required management to make a last offer and for union members to vote on this proposal. Management proposed minimal improvements in wages and benefits and the elimination of the disputed clause. The leadership of the union reject the proposal, and so did the membership in its vote.
Vice-President Richard Nixon was planning to run for president in 1960. He offered his services to the parties in the hopes of negotiating a settlement, and possibly winning union support. The Board of Inquiry, meanwhile, reconvened on November 10 and issued a second report on January 6, 1960. The major issues, the Board said, remained the size of the wage increase and the disputed clause in the agreement. In December, Nixon met privately with the steelmakers and warned them that the Democratic Congress would soon begin hearings on the steel strike. He said that if the steel companies acted unreasonably, neither Democrats nor Republicans would support them, especially if the strike caused an election-year recession. Nixon urged management to accept the terms of the Kaiser Steel settlement. In late December of 1959, Nixon successfully convinced the industry executives to agree to a new contract, similar to the Kaiser Steel settlement.
On January 15, a new 20-month contract was signed. The disputed clause was preserved and steel workers received a 7-cent an hour pay increase, 4.25 cents an hour lower than the Kaiser Steel settlement and far lower than the union had had demanded. However, the union won an automatic cost-of-living wage adjustment and greatly improved pension and health benefits. McDonald saw the settlement as a victory
The strike hurt the American steel industry. More than 85 percent of U.S. steel production had been shut down for almost four months and it caused American industries to import steel from foreign sources. Steel imports had been negligible before 1959, but the strike caused U.S. industries to discover that they could buy steel from Japan and Korea at a lower price than American steel even after accounting for importation costs. This led to the gradual decline of the American steel industry. This made the parties more reasonable when this contract ended. A three-year national steel contract was signed on March 31, 1962. The union agreed not to enforce the disputed clause and the union agreed to permitted increased automation, with a percentage of the profits from automation going to wage increases. But union members felt that McDonald was not protecting their interests and he was defeated in 1965 in his bid for re-election as USWA President.
Philip Murray was the founding president of the USWA. When he died in November 1952, David J. McDonald was named acting president by the USWA executive board and the following year he was became the union's president. McDonald pressed for better benefits for union members from employers. He believed that the election of Republican Dwight Eisenhower as president and of Republican majorities in Congress would result in an unfriendly climate for unions generally, but in fact Eisenhower was not unsympathetic to the working man and did attract a significant amount of blue collar support.
In his bargaining with employers, McDonald focused on getting benefits such as unemployment compensation, health insurance, pensions, tuition reimbursement and other benefits for his members. He had watched the United Auto Workers (UAW) win better wage and benefit packages than the Steelworkers and were able to obtain and he believed that strike action was necessary for the USWA to catch up with other unionized employees. In 1956 McDonald led the Steelworkers in a strike that resulted in substantial wage increases, unemployment benefits, layoff rights, and improved pensions.
By 1959, the major American steel companies were reporting high profits. This prompted McDonald and Steelworkers general counsel (and future cabinet member and Supreme Court Justice) Arthur J. Goldberg to seek a major wage increase for the membership. Industry negotiators refused to grant a wage increase unless McDonald agreed to a substantial alteration or an elimination of a clause in the union's national master contract which limited management's ability to change the number of workers assigned to a task or to introduce new work rules or machinery that would result in reduced hours or fewer employees. Management asserted that this change was necessary for steel companies to remain competitive in the industry. But McDonald believed that this was in reality a disguised attempt to break the union. The parties attempted negotiations, but these reached an impasse over the disputed clause and the contract expired on July 1, 1959.
President Dwight Eisenhower requested that both sides agree to extend the agreement and resume bargaining. McDonald and Goldberg offered to extend the contract by one year. They also proposed creating a joint committee to study changes to Section 2(b) and to the contract's benefit structure. But the steelmakers rejected the offer.
On July 15, 500,000 steelworkers went on strike. The strike closed almost every steel mill in the country. After the strike had gone on for six weeks, the Department of Defense became concerned that there would not be enough steel to meet national defense needs in the event of a crisis.
McDonald received pressure from the AFL-CIO to end the strike. Its president, George Meany, was sympathetic to the government's security concerns. He was only willing to support the strike if it did not adversely affect national security. The strike spilled over into the auto industry. Without steel to make cars, automakers were threatening lay off tens of thousands of United Auto Workers (UAW) members.
On September 28, 1959, Eisenhower met privately with McDonald and Goldberg. In the meeting he threatened to invoke the back-to-work provisions of the Taft-Hartley Act. McDonald was unwilling to budge on Section 2(b) without other concessions from the steelmakers. But the steel companies believed that they could wait until Eisenhower forced union members back to work, so they refused to make any such concessions. Concerned about the risks posed to national defense, on October 7, Eisenhower utilized the provisions of the Taft-Hartley Act, first by appointing a Board of Inquiry. However, Eisenhower limited the Board's mandate to clarifying the issues rather than recommending a settlement.
At this point, management decided to offered a three-year contract with small improvements in pay and fringe benefits and binding arbitration over Section 2(b), but this was unacceptable to McDonald. He retendered his proposal of early July, but with reduced wage and benefit demands. He proposed that the contract be limited to two years rather than three. McDonald also proposed a nine-member committee consisting of three members from labor, management, and the public to study and resolve work-rule issues. Management rejected this proposal.
Eisenhower's Board of Inquiry issued its final report on October 19 and declared that there was no chance of a negotiated settlement. On October 20, the Department of Justice petitioned the federal district court for western Pennsylvania for a Taft-Hartley injunction ordering the steelworkers back to work. On behalf of the USWA, Arthur Goldberg argued that the Taft-Hartley Act was unconstitutional. The district court ruled in favor of the government on October 21, but agreed to a stay of the injunction until an appeal of its decision could be heard. The union appealed to the Third Circuit Court of Appeals in Philadelphia and lost again at a hearing held on October 27. The United States Supreme Court granted certiorari and set argument for November 3, 1959.
On October 26, a settlement was reached between the union and Kaiser Steel on October 26. Although the Steelworkers won only a fractionally higher wage increase than the steelmakers had proposed, the settlement included the nine-member committee, proposed by Goldberg and McDonald.
The Supreme Court heard submissions and four days later, on November 7, 1959, the 116th day of the strike, the Court upheld the appellate court's findings. In Steelworkers v. United States, reported at 361 U.S. 39 (1959), the court upheld the constitutionality of the Taft-Hartley Act by a vote of 8-1. The justices affirmed the district court's injunction, and ordered the workers back to work for an 80-day cooling-off period. McDonald reluctantly ordered his members back to work.
Though ordered back to work, productivity slowed due to the poor relationships between workers and managers. The Taft-Hartley Act required management to make a last offer and for union members to vote on this proposal. Management proposed minimal improvements in wages and benefits and the elimination of the disputed clause. The leadership of the union reject the proposal, and so did the membership in its vote.
Vice-President Richard Nixon was planning to run for president in 1960. He offered his services to the parties in the hopes of negotiating a settlement, and possibly winning union support. The Board of Inquiry, meanwhile, reconvened on November 10 and issued a second report on January 6, 1960. The major issues, the Board said, remained the size of the wage increase and the disputed clause in the agreement. In December, Nixon met privately with the steelmakers and warned them that the Democratic Congress would soon begin hearings on the steel strike. He said that if the steel companies acted unreasonably, neither Democrats nor Republicans would support them, especially if the strike caused an election-year recession. Nixon urged management to accept the terms of the Kaiser Steel settlement. In late December of 1959, Nixon successfully convinced the industry executives to agree to a new contract, similar to the Kaiser Steel settlement.
On January 15, a new 20-month contract was signed. The disputed clause was preserved and steel workers received a 7-cent an hour pay increase, 4.25 cents an hour lower than the Kaiser Steel settlement and far lower than the union had had demanded. However, the union won an automatic cost-of-living wage adjustment and greatly improved pension and health benefits. McDonald saw the settlement as a victory
The strike hurt the American steel industry. More than 85 percent of U.S. steel production had been shut down for almost four months and it caused American industries to import steel from foreign sources. Steel imports had been negligible before 1959, but the strike caused U.S. industries to discover that they could buy steel from Japan and Korea at a lower price than American steel even after accounting for importation costs. This led to the gradual decline of the American steel industry. This made the parties more reasonable when this contract ended. A three-year national steel contract was signed on March 31, 1962. The union agreed not to enforce the disputed clause and the union agreed to permitted increased automation, with a percentage of the profits from automation going to wage increases. But union members felt that McDonald was not protecting their interests and he was defeated in 1965 in his bid for re-election as USWA President.