Management Prerogatives, Plant Closings, and the NLRA


Decisions in many areas of labor law turn not on the common wisdom, i.e., that legal results are based upon an analysis of the text, legislative history, and the asserted policies of the National Labor Relations Act, but on a set of underlying values and assumptions. These implicitly assumed values help explain what is an incoherent body of labor relations law. Many of these implicit values can be found in common law decisions; this suggests that as far as judges are concerned, the revolution of the 1930’s, which led to the passage of the Taft-Hartley Act, accomplished much less than is usually believed.

The following discussion is only a portion of a longer analysis of the scope of the obligation to bargain, the substantive area where the Court has generally been clearer about the implicit values with which their analysis begins and sometimes ends. All authors, no doubt, believe that the whole is greater than the sum of the parts, so the reader should be aware that this section supports a series of propositions based upon an analysis of a number of substantive areas which appear in other portions of my book.

What is the goal of legislation regulating labor-management relations? The answer to this question varies with the view of the respondent:

Even where collective bargaining exists, the promise of industrial democracy has only been partially fulfilled, for neither the law nor the practice has accepted employees as full partners in the enterprise.’

This Court has spent many hours searching for a way to cut to the heart of the economic reality-that obsolescence and market forces demand the close of the Mahoning Valley plants, and yet the lives of 3500 workers and their families and the supporting Youngstown community cannot be dismissed as inconsequential. United States Steel should not be permitted to leave the Youngstown area devastated after drawing from the lifeblood of the community for so many years.

Unfortunately, the mechanism to reach this ideal settlement, to recognize this new property right, is not now in existence in the code of laws of our nation.

[I]n establishing what issues must be submitted to the process of bargaining, Congress has no expectation that the elected union representative would become an equal partner in the running of the business enterprise in which the union’s members are employed.

The most commonly expressed goal of the National Labor Relations Act (NLRA or Wagner Act) was the goal of achieving industrial peace,  Thus the Senate report on the Wagner Act cited the large number of strikes, the number of employees involved and the estimated cost of these disputes. The report stressed that the Act would attempt to eliminate neither all causes of disputes nor the exercise of economic force since “disputes about wages, hours of work, and other working conditions should continue to be resolved by the play of competitive forces …. ,” There was an attempt to eliminate disputes caused by the failure of employers to recognize unions and to utilize the process of collective bargaining. The Act was designed to prevent a large proportion of bitter disputes by giving legal status to the procedure of collective bargaining and by setting up machinery to facilitate it.” Moreover, the very process of negotiation, presumably leading to information sharing and creating mutual respect, was thought to lessen the incidence of strife.

The institution of collective bargaining, leading to mutually respected trade agreements, had long been the goal of certain employers, who were seeking industrial order, and of many unions. During the Progressive Era, a major source of economic unpredictability and instability involved the organization of production. For example, attempts to control competition, especially in wage rates, led to interstate compacts in bituminous coal production in 1885. These compacts collapsed four years later due in part to the absence of a strong mine workers union capable of keeping recalcitrant operators in line.

In response to this instability, collective bargaining was favorably regarded by entrepreneurs such as Marc Hanna, who led the National Civil Federation in an attempt to foster labor-management cooperation. Hanna believed that the recognition of labor unions would introduce much needed stability into labor-management relations, defusing the perceived threat flowing from the current confrontation. Hanna wanted labor “Americanized in the best sense, and thoroughly educated to an understanding of its responsibilities, and in this way to make it the ally of the capitalist, rather than a foe with which to grapple.” The use of collective bargaining to secure a “depoliticalization” of industrial relations was also widely recognized by many reformers, including John Commons.”

The second major objective of the Act was to encourage through collective bargaining the creation of equality of bargaining power between employers and employees. The aim was to increase the bargaining strength of employees and thus increase their wages. The low level of employee wages contributed to the inability of consumers to relieve the market of an ever-increasing flow of goods. Increasing wages, therefore, would serve to counteract depressions. The Senate report on the Act thus stressed the need to eliminate the long-standing disparity between “production and consumption.” The report also expressly referred to minimum wage and maximum hour legislation as an attempt to stabilize competitive conditions and create adequate consumer purchasing power throughout the nation. The scope of bargaining, however, was never made clear. Moreover, it was perhaps obvious to the drafters of the legislation that bargaining itself-even though statutorily required-could not necessarily usher in a period of “equal bargaining power.”

Despite the extensive goals and potentially broad scope of the Act, early judicial opinions which favored unions generally stressed the limitations of the Act. As long ago as NLRB v. Jones & Laughlin Steel Corp., the Supreme Court held that although the Act required bargaining, it did not require or “compel” agreement; nor would the Act interfere with “the normal exercise of the right of the employer to select its employees or to discharge them” so long as the employer’s actions did not violate the statute. The Court clearly needed to assuage hostile industrialists in 1937; however, the continued use of such language suggests that something more is at stake than temporary appeasement. Do not fear-it seems to say private ordering is still the order of the day except for the narrow incursions required by the NLRA. The Act does not herald the development of a new “legal consciousness,” rather, the dominant views of the past will limit the scope of change. Moreover, the Supreme Court’s tendency to mask “the unavoidably ideological content of judicial action” is merely a reflection of a commonly observable tendency of judges, clearly recognized long ago by Judge Oliver Wendell Holmes in labor cases such as Plant v. Woods”‘ and Vegelahn v. Gunter.

Some historians argue that the New Deal “effected a veritable revolution in American Government.” They see the Wagner Act as “one of the most drastic legislative innovations of the decade.” Leuchtenburg noted that while most employers fought the bill no one “fully understood why Congress passed so radical a law with so little opposition and by such overwhelming margins.

The Wagner Act was presented and passed at a very propitious time. The debate went rapidly, opposition in Congress was feeble and even the Senate vote (63-12) surprised Senator Wagner. Indeed, 1935 may have been the “apogee of the New Deal as a progressive domestic reform movement. The influence of labor was at its height …”

Many of the judicial interpretations of the Wagner Act, however, seem inconsistent with this commonly expressed perception of the New Deal. Perhaps the Act now seems more radical than it really was in 1935. One of its expressed goals, after all, was to contain radical labor elements and to institutionalize labor disputes within the confines of the capitalistic order.  Thus, the views of the old National Civic Federation and John Commons were reflected in the debates (although their weight should not be overestimated). It is also true that neither the AFL nor the CIO, founded only after the Act’s passage, challenged capitalistic norms. Others have argued that the New Deal, rather than breaking sharply with American traditions, created institutions which protected American capitalism from the potential damage created by major business cycles. Although the codification of labor dispute resolution provided “procedural restraints,” Paul Conkin and other commentators have argued that these were “necessary for security and ordered growth.” The courts equated private property with the private right to manage the means of production, and this equation seems to have carried over in the interpretation of the Wagner Act. Like other legislation in the 1930’s, the Wagner Act was partially supported because of its presumed Keynesian effect: unions would avoid depressionary wage spirals.

Assessments of the original purposes of legislation often appear at odds with the Act’s consequences. The following materials will reveal the extent to which certain goals of the Wagner Act, such as those of industrial democracy and equality of bargaining power, are routinely ignored by the courts. Instead, most pronounced in the bargaining area is the never-stated goal of protecting inherent managerial prerogatives from collective bargaining.

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