University of California, Riverside

AMERICAN SOCIOLOGICAL REVIEW 1976, Vol. 41 (February):34-51

A distinguishing feature of the black position in advanced capitalism lies in relatively high unemployment and underemployment, a phenomenon that emerged in the 1930s and became finely entrenched in the mid-1950s. To explain this we examined the black/white split labor market between World War I and the New Deal, showing how blacks were used to undermine white workers and their unions. The conflict was resolved with New Deal labor legislation protecting the unions and outlawing under cutting. This permitted a coalition to emerge between black and white workers. But in the long run the rising cost of labor drove capital to seek cheaper labor overseas, to make use of internal pockets of unprotected labor or to automate. All three processes hurt black industrial workers disproportionately leaving a group of hardcore unemployed in the ghettos.

Currently one of the most noteworthy features of the position of black people in the United States is a high degree of unemployment running at roughly twice the white rate and aggravated by higher black than white hidden unemployment (Ross, 1967). This has not always been the case. According to Killingsworth (1968:2):

The roughly two-to-one ratio between white and Negro unemployment rates has been widely publicized, and some otherwise well-informed persons have formed the impression that this relationship has "always" existed - at least as far back as the f igures go. That is not so. The two-to one ratio first appeared in 1954, and it has persisted through good years and bad since then. But the ratio was only about 160 in the 1947- 49 period; the 1940 Census reported a ratio of 118,and the 1930 Census showed a ratio of 92.

Unemployment statistics as currently defined were not collected prior to 1940; however, earlier censuses computed the proportion of the population which was gainfully employed. The complement of this figure gives us not only the proport ion unemployed (defined as persons in the labor force who are out of work) but also those who have not entered the labor force. As a measure of unemployment, it has the advantage of not omitting hidden unemployment, and disadvantage of including those who would genuinely not be part of the labor force (such as students and the independently wealthy). Table 1 presents the census findings on black versus white proportion not gainfully employed for males ten years and older. It is evident that black rates were lower than white and that lower black "unemployment" was not a regionally restricted phenomenon. In a word, there appears to have been a reversal in the relative rate of unemployment for blacks and whites. From 1940, black unemployment exceeds white and climbs rapidly to the current two-to-one ratio. The reversal took place some time during the 1930s.

The rise in relative unemployment among blacks raises a question regarding the role of race in advanced capitalism. While black slavery and share-cropping were of unambiguous benefit to the owners of land and capital, the gains from high unemployment in one segment of the population are less evident. Two approaches to this question can be distinguished in the literature. One sees a continued advantage to the employer in keeping blacks as a marginal workforce, useful for dealing with economic fluctuations and helping to divide and weaken the working class (e.g., Baron, 1971:34;Gordon, 1972:53-81;Reich, 1972; Tabb, 1970:26-7). The other, exemplified by Willhelm (1971), asserts that the technology of advanced capitalism has lessened the need for unskilled labor, which was the primary role played by blacks in the past. Blacks have become useless to the economy and to the capitalist class and, combining this fact with persistent racism, may even face genocide. (It should be noted that some authors, e.g., Baran and Sweezy, 1966:263-8; Bailey, 1973, hold both of these apparently contradictory positions simultaneously.)

Each of these approaches has problems. It takes some convoluted reasoning to find the interests of the employer served by unemployment, and one could argue with equal cogency that his interests are hurt by reduction in "surplus value" to be expropriated (Harris, 1972), by the decline of a market and by the creation of a dangerously dissatisfied element in the population. In addition, it is difficult to see why black unemployment would be more beneficial to the capitalist class now than it was before 1940.

Interpreting black disadvantage as a product of technological advances, rather than a planed strategy of capitalists, makes more sense on the surface; but this approach errs in the opposite direction in treating technology as an impersonal force which imposes itself on society without human choice. Technology should be seen as a resource which parties can use in a variety of ways to further their interests or which they may choose not to use if their interests are harmed by its introduction. Thus, despite the availability of labor-saving technology, the South African economy tends to be under- mechanized in large measure because African labor is so cheap that mechanization does not pay (Van de n Berghe, 1967:185). In addition, there is no reason to assume that technological advances inevitably displace the unskilled. During the 1920s and 1930s there was considerable technological innovation in certain industries in the United States. For example, the meat-packing industry rationalized its production process through the introduction of some machinery and an assembly line (disassembly in this case). The craft of meat-cutting was divided into fairly simple activities enabling unskilled and semi-skilled labor to be used in place of skilled labor. This mechanization may be seen, in part as an attack on craft unions and the power they wielded by controlling access to training in complex skills (Tuttle, 1970a: 89- 90).

In order to understand the shift to high unemployment of blacks in advanced capitalism we need to look behind the process of automation in the post-World War II era. Who would profit by automation of industries? Why did technological advances during this period hurt unskilled (and disproportionately black) labor? The answers lie in the historical evolution of class conflict in this country. The period between World War I and the New Deal was characterized by a racially split labor market, encouraging the employment of black "cheap labor" but also generating considerable conflict. New Deal labor legislation temporarily helped to resolve the conflicts but created pressure to mechanize unskilled work, as well as other forces, which threw blacks out of work. This paper attempts to trace the dominant forces at work during this evolution.



A split labor market refers to a difference in the price of labor between two or more groups of workers, holding constant their efficiency and productivity (Bonacich, 1972). The price differential includes not only wages but any costs incurred by the employer connected with his labor supply, such as housing, recruitment, training and discipline. A racially (black/white) split labor market began with slavery (Bonacich, 1975) and persisted well into the twentieth century in industrial America. During the period under investigation the price difference showed most clearly in wage rates and degree of unionization.


Northern and southern states differ in the degree to which racial wage differentials were openly drawn but both regions show various more covert means of maintaining a difference. In the South blacks sometimes received lower wages than whites for the same work. Table 2 illustrates this difference in the Virginia building trades using data described as "the most complete data on variations between the wages of white and Negro workers") from the reports of the Commissioner of Labor of Virginia (Reid, 1969:17). Alternatively, blacks and whites had different job titles and were paid at different wage rates (Table 3), yet it is not clear that the "value" of the work in the production process was any less for black workers than for white workers.

The northern picture is more complicated. Blacks and whites doing the same work in the same plant rarely were paid different wages. But a wage differential appears in two more disguised forms. First, as in the South, one finds racial segregation by job title, with "black" jobs generally paying less. For example, a steel foundry in Chicago employing 135 people in 1927, 35 of whom were black, paid white workers an average wage of $37 a week and black workers an average of $29 (Spero and Harris, 1966:175) . Table 4 shows wage discrepancies in the meat-packing industry in Chicago. Not only were blacks generally earning less, but, as the table shows, they also tended to work longer hours.

Such discrepancies are typical and generally accounted for by the fact that blacks were concentrated in unskilled and semi-skilled jobs; but job classifications are sometimes arbitrary and a "skill" may require very little training. For example, Bailer (1943:421) points out that before World War II only 10 percent of jobs in the automobile industry required more than one year of training or experience.

The second indirect form of wage differential appears in segregation by firm, i.e., black workers are employed by firms which pay a lower wage rate than firms employing white workers even though they may be engaged in the same work. According to Hill (cited in Reid, 1969:16), "working as the only wage earners of a business such as building tradesmen, laundresses, garment workers. the rule is to force upon [black workers] smaller compensation than white would get."

Some may argue that, despite apparent similarities in job title, black workers were less efficient to employ and that wages reflect "productivity." Black and white labor would be equal in price to the employer, the higher wages of whites being balanced by their greater efficiency. By and large, the evidence goes against this supposition. For example, the Chicago Commission of Race Relations (1922:373- 8) sent questionaires to 137 firms and interviewed 93 employers concerning their experience with black workers. Their conclusion was that "despite occasional statements that the Negro is slow or shiftless, the volume of evidence before the Commission shows that Negroes are satisfactory employees and compare favorably with other racial groups" (Chicago Commission, 1922:378). It seems reasonable to conclude that the causes of the wage differential lie elsewhere.1

Unions. More important than wage differences, in the period under investigation was a difference in labor militance. White workers were more likely than blacks to form unions, to make demands for improved conditions (including wages) and to engage in costly strikes. This militance threatened to raise the price of labor substantially. If black labor was less militant, it would be cheaper to employ.

The picture of black union activity is complicated by the fact that a number of "white" unions openly excluded blacks while many others discriminated more covertly (Wesley, 1927:254-81). It may be that this discrimination entirely accounts for black underrepresentation in the unions. However, each group entered the situation with a different historical experience which, I would argue, shaped their initial orientation towards unions. And, as we shall see, union discrimination was partly a product as well as a cause of black anti-unionism.

Greater white worker recognition of class conflict with the capitalist class was partly a product of longer experience in the industrial labor market. When they were raw immigrants, Europeans had also played a "cheap labor" role. But the wartime decline in immigration, coupled with the Immigration Act of 1924, meant that the white work force was becoming increasingly seasoned. Not-so-new immigrants began to join or form labor organizations and make demands for higher wages and improved work conditions. For example, in the organizing campaign of 1918 in the steel industry, white immigrants were the first to respond (Brody, 1960:223-4). In addition, unlike the blacks, some white immigrants came from countries where the concept of a politically active working class was well developed. These elements were feared by capital and denounced as un- American and communist. The exclusion of European immigrants in 1924 was, perhaps, not only a reaction by "native" labor to the threat of undercutting, but also a response by capital to the dangers of a "corrupting" element in the work force.

Some blacks had been members of the industrial proletariat for years and were at least as class conscious as white workers. But with the coming of World War I a large, impoverished peasantry entered both northern and southern industrial labor markets for the first time. This class was vulnerable to exploitation as cheap labor.

At least three factors were at work making blacks more "exploitable." First, they tended to be desperately poor; jobs and wage levels which were distasteful to some seemed attractive to them. ''The undesirable working conditions in meat establishments {for example} did not stop Negroes from taking jobs in them-many preferred these working conditions to bare subsistence in the South" (Fogel, 1970:30). Wages for farm labor in the South were around 75 cents a day compared to 40 cents to $1 .00 an hour for unskilled labor in Chicago (Spear, 1967:156). What looked undesirable to many white workers looked like a "golden opportunity" to black migrants from the South (Spero and Harris, 1966:114). At least at the outset, their discontent would be lower.

A second factor was a tradition of paternalism in the South, begun under slavery but extending well beyond it. Mixed with a hearty dose of intimidation by southern land-owners there was, nonetheless, a personal relationship between employer and employee which sometimes bound the worker to his employer. Black workers were not accustomed to intervening organizations, like unions, which expressed an explicitly antagonistic relationship to the employer. They had not had much exposure to the ideals and goals of organized labor. "The attachment which the Negro had been taught to feel for his employer in the South was quickly sensed and exploited by northern industrialists" (Cayton and Mitchell, 1970:6l ).

Third, a long history of discrimination and hostility by white labor led black workers to be chary of joining their organizations. It was in part the product of a split labor market begun under slavery (Bonacich, 1975) which led white workers to erect defensive barriers against the threat of being undermined, and this history created considerable black suspicion against the unions.

Precise figures on union membership are difficult to obtain, but scraps of information have come down to us from past studies. Spero and Harris (1966:82) report that in 1923 20.8 percent of non-agricultural workers in the United States belonged to unions. Estimates of the corresponding figure for black workers ranged from 4.2 to 7.6 percent for 1926. In 1930, according to Wolters (1970a: 138-9), the NAACP calculated that a maximum of three percent of the 1,500,000 nonagricultural black workers were in unions and almost half of these were in the Brotherhood of Sleeping Car Porters. The country-wide rate of union membership in non-agricultural work in 1930 was around ten percent.

In New York, a 1919 survey found that less than .003 percent of black women working in 217 industrial establishments were union members. "Even in the shops where the white women were well organized, Negro women working there seldom held union membership" (Franklin, 1936:96). A 1928 survey, also conducted in New York and this time not restricted to women, found that 3.8 percent of union members were black while the 1930 census revealed the black proportion of gainful workers in the city was 14.1 percent. "This leaves no doubt that on the whole Negro workers were far less organized than others" (Franklin, 1936:114).

There are important exceptions to this picture. Some black workers were active union members and even leaders in the "white" labor movement. Black workers sometimes organized their own unions either under the umbrella of the American Federation of Labor or independently. The former arrangement was not very satisfactory (Spero and }Harris, (1966:95-101). Black locals were chartered directly by the AFL, an organizations which could not negotiate wage rates itself. They were dependent on agreements arrived at by the white unions and did little to improve black bargaining power. Independent black unionism was not much more successful (Spero and Harris, 1966:116- 27). Many of these unions failed after brief histories. The most successful, the Brotherhood of Sleeping Car Porters was unable to bring off a threatened strike and eventually requested affiliation with the AFL (Marshall, 1965:26).

Lack of unionization among blacks affected their bargaining position which in turn affected wage levels. In describing wage differentials between the races in Virginia, for example, Pinchbeck (1926:85) points out, "The fact that organization and collective bargaining among Negro skilled and unskilled laborers in the State are practically absent tends further to reduce the effectiveness of the bargaining power of Negro craftsmen who offer their services to white employers in competition with white artisans in the same trades." The Shipbuilding Labor Adjustment Board, created during World War 1, accepted the southern system of dividing work into black and white, unequally paid, occupations. "Since most Negroes in the industry were unorganized, they had no representation on the Board, and hence no opposition to such plans was voiced" (Robin, 1970:38).

In sum, a lesser degree of involvement in labor unions meant that black workers could be used by employers to cut costs. This was achieved both by avoiding demands for improved wages and work conditions, and by avoiding the costs of lab or conflict itself.


Split labor markets develop dynamics which can perpetuate or increase the original price differential. The chief parties to the interaction are capital, higher priced labor and cheap labor. A schematic representation of the interact ions for the post-World War I period is presented in Figure I.

Figure I begins with the class conflict between capital and white labor (1). Efforts by white workers to improve their position, especially through militant trade unionism, threatened to drive up the price of labor. Capital, in an effort to keep costs down, sought an alternative labor supply which would be cheaper (2). Blacks were facing economic displacement in the South while European sources were drying up. Besides, for reasons suggested above (which can be summarized as a weak position in the labor market), blacks seemed an ideal group with whom to fight the aspirations of white labor (3). That they were so used is demonstrated by three types of evidence: the use of black strikebreakers, the displacement of white workers with black and efforts to gain the loyalty of the black community.

Strike-Breaking. The use of blacks as strikebreakers was not uncommon during this period. According to Jacobson (1968). ''In strikebound plants employers found it easier to recruit strikebreakers among Negroes who never developed a trade union consciousness and could see no reason why they should forsake a much needed day's pay for a white man's union." Table 5 presents some instances where black strike-breakers are reported to have been used. It is by no means a complete list nor are the strikes identical in terms of their importance of black strike-breaking. My purpose is merely to list strikes in which it was mentioned.2 It should he noted that not all blacks helped to break strikes nor were blacks the only strike-breakers. We are speaking of tendencies, not absolutes. (See Spero and Harris, 1966:128-46 for a thorough discussion of this topic.)

Perhaps the most important use of black strike-breaking occurred in the great steel strike of 1919. Foster (1920:206) reports that blacks already working in the steel mills were less likely to participate in the strike (e.g., in the Hom estead Steel Works 1,737 of the 14,687 employees were black but only eight joined the unions and one struck; among white unskilled workers in the same plant at least 75 percent joined the unions and 90 percent struck). In addition, 30,000 to 40,000 blacks were brought into the mills from outside as strike-breakers, some from northern cities and most from the South. Black strikebreakers "were used in all the large districts and were a big factor in breaking the strike" (Foster. 1920:207).

Displacement. Strike-breaking sometimes proves to be a short-term relationship in that strikers may return to their position once the conflict is resolved. A more stable relationship with black labor also emerged in the form of substituting black for white in non- strike situations. An illustration comes from the laundry industry in New York:

Of the 30,000 laundry workers of New York City at that time [1925] about 20,000 were Negroes, the majority of whom were young women. The conditions under which they worked were shocking. The usual day's work was from 7:30 A.M. to 7:00 P.M., with but one-half to three quarters of an hour for lunch, and a full six day week; the wages were disgracefully low and utterly inadequate from eight to ten dollars weekly. It was reported that an enterprising laundry management in Larsen discharged most of the white workers and replaced them with Negro girls because it could act more work out of them. An added incentive to the workers was a weekly Saturday chicken dinner served in a little restaurant in the garret of the factory. (Franklin,1936: 106)

Other examples are found in a variety of industries. For instance, in the metal industry during the fall of 1916 the Aluminum Ore Company of East St. Louis "embarked upon a policy of increasing the Negro labor force in order to l imit the future demands of white workers" (Rudwick, 1964:16-7). In November, 1916 they increased the number of black employees from 10-12 to 280; in December, to 410; in February, 1917, to 470. In the bituminous coal industry, there was an increase in the use of black labor, in part because of "the ease with which Negro labor, because of limited industrial opportunity and low economic standards, can be used in labor difficulties" (Spero and Harris, 1966:208). An increase also occurred in meat-packing: "The packers tried to thwart the unions and limit their success by employing more colored wage-earners" (Herbst, 1971:33). In general, "employers came to refer to their Negro help as 'strike insurance'" (Cayton and Mitchell 1970 :x).

The great migration blacks northwards during and after World War I must be understood in this context. Not only were economic conditions bad in the rural South but positive inducements were being offered by industrial employers. Labor recruiters were sent South to encourage migration (Brody 1960:184-5; Spear 1967: 133). While recruitment was partly a product of labor shortage caused by the war and the decline in European immigration it is also evident that employers saw in this black "industrial reserve" a population which could be used to keep out unions and displace troublesome and increasingly expensive white labor.

Loyalty. Displacement was sometimes accompanied by efforts to gain the loyalty of the black work force thereby forestalling the development of unions among them and maintaining the "cheap labor" status. The Saturday chicken dinner mentioned above is a case in point. On a larger scale employers would make overtures to black workers and community leaders giving money and urging workers to come to the employer for aid. Leaders in the black community would, in turn urge black workers to be a docile and loyal work-force keeping faith with the employer.

In the Chicago meat-packing industry, for example, packers "made financial efforts to obtain good relationships with institutions in the black community such as the YMCA and the churches" (Fogel, 1970:32). Their efforts bore fruit. When faced with a strike in 1921, the packers had black ministers read messages to their congregation urging them not to join the strike. The Urban League supplied the packers with 450 strike-breakers. "The dependence of the League upon wealthy whites for financial support may have influenced its actions" (Fogel,1970:35).One of the most outstanding cases of paternalism occurred in tile automobile industry. The Ford Company, especially at its Rouge plant, "followed a definite policy of employing Negroes in all capacities" (Bailer,1943:422). As a result "Negroes have traditionally shown greater loyalty to Ford than to any other automobile manufacturer" (Bailer 1944:554) and this loyalty enabled Ford to resist unionization of his plants. Another important paternalist was Honier Ferguson of the Newport News Shipyard. Working closely with Booker T. Washington Ferguson increased his black work force from 2,375 in 1914 to 5,000 in 1920 (Pinchbeck 1926:99-l00)

Another facet of paternalism was the development of "industrial representation plans" or company unions. "Migrant Negroes from the South proved peculiarly susceptible to this form of organization" (Cayton and Mitchell, 1970:61), and they received support from some black community leadership. "Negro leaders, including those who represented such organizations as the National Urban League, regarded [company unions] as a demonstration of the favorable attitude of the employers toward Negro workers, as over against the discrimination and prejudice of the white union men" (Cayton and Mitchell, 1970: 62)

Needless to say, not all black leadership responded to paternalistic overtures by capital, but a significant element did. According to Foster (1920:210), "It is a lamentable fact, well known to all organizers who have worked in industries employing considerable numbers of negroes, that there is a large and influential black leadership, including ministers, politicians, editors, doctors, lawyers, social workers. etc., who as a matter of race tactics are violently opposed to their people going into the trade unions." Even black nationalist Marcus Garvey took an anti-union, pro-employer, stance. He saw the white capitalist as a friend of black workers because of the latter's relative cheapness and advocated a strategy of continued undercutting. "If the Negro takes only advice he will organize by himself and keep his scale of wage a little lower than the whites . . . By doing so he will keep the good will of the white employer" (Spero and Harris, 1966:136).

The substitution of black labor for white was in part accompanied by the process described earlier of division of skills into simpler assembly line tasks. Black migrants were largely unskilled while the union movement's strength lay in controlling access to training in complex skills. A way of cracking the unions power was to breakdown the skills and substitute unskilled labor. Black labor was not the only source of substitution but it was an important and growing element.

Returning to Figure 1 the efforts to develop the black labor force aroused the ire of white labor (4) which felt a threat to their efforts to improve their lot. The antagonism towards black workers was not simply race prejudice but a fear that blacks because of their weakness in the labor market could be used by capital as a tool to weaken or destroy their organizations or take away their jobs. As Spero and Harris (1966:128) state: "The use of Negroes for strike breaking has led the whi te trade unionist to regard the black workers as an enemy of the labor movement.

White workers reacted by trying to exclude black workers or to keep them restricted to certain jobs. (See Bonacich 1972 for a more thorough discussion of the reasoning behind these reactions.)

Black workers came on the industrial scene unfamiliar for the most part with the aspirations of organized labor. They were not an easy element to organize to start out with but whatever potential for organization was present was discouraged by white union antipathy and exclusion (5). Union policies frequently meant that black workers had no alternative but to turn to strike-breaking as the only means of entering white-dominated lines of work. Sometimes even strike-breaking did not secure long-term employment as white workers roared back anxious to see them dismissed.

Interaction 5 was mutually reinforcing. Blacks distrusted the unions because they discriminated, and the unions discriminated because blacks didn't support them. The circle of antagonism was difficult to break out of. Even if the unions opened their doors as was not uncommon, black workers were apt to view the action as self-serving to protect the unions from scabbing by blacks. It would take more than non-discrimination to end the distrust and many white unionists were not willing even to take the first step of lowering the barriers to membership.3

The policies of the employer fed the division between black and white workers (6). Employer paternalism led black workers to feel they had more to gain by allying with capital than with white labor. Besides behind it lay a veiled threat : blacks would be hired and given preference over white workers so long as they remained out of the unions.

Interaction 6 helped sustain interaction 5. Foster ( 1920:21 ) vividly makes this point:

They know little of the race problem in industry who declare that it can be settled merely by the unions opening their doors to the Negroes. It is much more complex than that and will require the best thought that conscientious whites and blacks can give to it. The Negro has the more difficult part to solve in resisting the insidious efforts of unscrupulous white employers and misguided intellectuals of his own race to make a professional strike-breaker of him.

The antagonism of the labor movement to black workers weakened still further the latter's position in the labor market (7). White labor severely restricted the alternatives of black labor by maintaining control over important lines of work. The perpetuation of the black labor force in a weak position kept them as a target group for capital's efforts to undermine the union movement. Finally, to close the system the efforts by capital to utilize black labor-to their detriment added to the militancy of white workers (8). Strikes were sometimes called over this very issue which could unite white workers in a common grievance (Tuttle, 1970a: 1 o7-8). 4

This interpretation of the division between black and white workers differs from one which sees it as created by the capitalist class to "divide and rule." If employers create a price differential, they must be paying one group of workers more than they have to, which would only be rational if paying more to one group enabled them to pay another substantially less. Capital would have to be "bribing" white labor to help keep black labor cheap. Such a convoluted strategy may indeed be in operation, but a number of facts argue against it. First, as we have seen, workers do not enter the labor market with a clean slate upon which the employer arbitrarily marks his price; there are forces which differentiate the labor force before he touches it. Second, a strategy of bribery is hard to combine with the facts of displacement and strike-breaking.  If capital wanted to keep white labor loyal why undermine them? Third, the evidence suggests that bribery and the exacting of loyalty were strategies directed more toward cheap labor than higher priced labor. As a means of maintaining labor costs as low as possible, this makes more sense.

What fits the evidence better is a picture of a capitalist class faced with (rather than creating) a labor market differentiated in terms of bargaining power (or price). Capital turns toward the cheaper labor pool as a more desirable work force, a choice consistent with the simple pursuit of higher profits. Higher priced labor resists being displaced, and the racist structures they erect to protect themselves are antagonistic to the interests of capital.

Effects of the Split labor market

The "system" described above had implications for black labor force participation. Blacks were more desirable employees than whites which helps to explain their higher employment rates in 1920 and 1930. However, considerable conflict was generated in the process and some of the nation's worst race riots occurred during this period. East St. Louis erupted in 1917 (Rudwick, 1964). Twenty-six riots broke out in 1919 (Lee and Humphrey, 1968:ix), the most destructive in Chicago (Chicago Commission, 1922; Tuttle, 1970b). Detroit and Harlem blew up in 1925 and 1935, respectively. The importance of labor conflict in these riots is subject to some dispute. Undoubtedly, they were complex affairs with more than a single cause. However, the East St. Louis riot was directly precipitated by the introduction of blacks to break a strike at the Aluminum Ore Company (Marshall, 1965: 22), and Tuttle (1970a: 1970b: 108-56) argues convincingly that the Chicago riot of 1919 was intimately tied to labor conflict, especially in the stockyards.

Another negative effect was the precipitous decline of the trade union movement. Union membership reached a peak of 5,047,800 in 1920. It dropped sharply to 3,622,000 by 1923 and continued falling to 3,442,600 in 1929 and 2,973,O00 in 1933 (Bernstein, 1950:2; 1960:84). "By 1930 union membership constituted a bare 10.2 percent of the more than 30 million nonagricultural employees counted in the census, a marked drop front 19.4 percent in 1920" (Bernstein, 1960:84).

I am not suggesting that the decline was entirely a product of the black/white split labor market. This was an era of virtually unrestrained union-busting and the use by employers of every device imaginable to keep independent labor organizations out of their plants (Bernstein, 1950:7-14). However, the split labor market played a part in the decline. Membership in the Amalgamated Meat Cutters and Butcher Workmen in East St. Louis, for example fell from 1,500 in 1916 to 30 in 1917. "Of primary importance to this collapse was the ability of employers to use as a club the threat of employing more Negroes, who by now were arriving in large numbers from the South. Labor officials realized that under these circumstances another strike was out of the question" (Fogel, 1970:33). Similarly, in the steel industry the defeat of the great steel strike of 1919, with the large-scale use of black strike-breakers, marked the virtual end of organization in that industry until the mid-thirties. In 1919 the Amalgamated Association of Iron, Steel and Tin Workers was able to call out an estimated 365,000 workers. By 1933 the union had only 3,000 dues-paying members and these were probably tolerated by U.S. Steel to avoid an anti-trust suit (Cayton and Mitch ell, 1970:43- 81).

Industrial unions suffered most. Craft unions which were able to maintain control over access to training, in the building trades, printing trades and railways, held their membership or increased it (Bernstein, 1960:86). The unions which survived the open-shop drives of the corporations were those which discriminated most severely against blacks (Jacobson, 1968:4; Marshall, 1965:22- 3), suggesting that discrimination by the unions was not a totally irrational short-term reaction.


White labor had dealt with this problem in a variety of ways in the past. Two prominent strategies were exclusion (keeping blacks out of the territory) and caste (dividing "white work" from "black work," so that cheaper blacks were not substitutable). By the 1930s, the former strategy had failed totally, and a caste arrangement was holding only in its strongest bastions. These resolutions could too easily be attacked by capital. A new solution was called for.

The New Deal provided such a solution in the form of protection by the Federal Government. Section 7a of the National Industrial Recovery Act (1933) reads as follows:

(1) That employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designat ion of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or mutual aid or protection; (2) that no employee and no one seeking employment shall be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting a labor organization of his choosing; and (3) that employers shall comply with the maximum hours of labor, minimum rates of pay, and other conditions of employment approved or prescribed by the President.

Thus, it protected unions from employer efforts to undermine them, ensured the right of independent unions to organize and bargain collectively and outlawed sweatshops and cheap labor. Although the NIRA was shot down by the Supreme Court in 1935, these principles were kept alive in other legislation such as the National Labor Relations (Wagner) Act of 1935 and the Fair Labor Standards Act of 1938.

The racially split labor market was not the only precipitant of these laws, but it was one of their major beneficiaries. In effect, they legislated it out of existence, making it illegal for employers to use blacks as strike-brea kers or "strike insurance," denying the legitimacy of the company union and taking away the advantage to be had in paying blacks lower wages for longer hours. Protective legislation ideally made the price of labor equal regardless of race.

This ideal was not totally realized in practice. The process of establishing protective barriers took time and was never complete. Powerful capitalists were often able to by-pass the laws or find loopholes in them. One important stand-out was Henry Ford, and a split labor market pattern continued into the early 1940s in the automobile industry (Bailer, 1944). Cayton and Mitchell (1970: 88-224) document in detail the battle in the steel industry with capital using every imaginable ploy to subvert the intention of the laws. Despite loopholes and evasions, protection for the unions gradually came to be enforced in most of the major industries in the nation.

Short-Term Effects {1935-1945)

In the short run, protective legislation dramatically altered the split labor market. The New Deal brought black and white labor closer together than ever before, enabling them to form a "radical coalition" (Bonacich, 1975).

The labor movement received a tremendous spurt from protective legislation. The American Federation of Labor took advantage of the new laws and began organizing campaigns. During two months in 1933, for example, they moved from a member ship of 2,126,798 to 3,926,796 (Cayton and Mitchell, 1970:123), but most of the new vigor was associated with the emergence of a new organization, the Congress of Industrial Organizations. Denouncing craft unionism and advocating broad-based industrial unions, the CIO successfully penetrated the automobile, steel, rubber, electrical goods and meat-packing industries by 1940. The AFL responded by moving more toward industrial unionism. Between them total union membership rose from 2,805,000 in 1933 to 8,410,000 in 1941. The latter figure represents 23 percent of non-agricultural workers (Dubofsky, 1970:12-4).

Black workers were not excluded from this new development. A shift in orientation was evident in both camps. White labor became more active in recruiting black support, and the black community became more supportive of organized labor.

The shift in white labor was especially noticeable in the CIO. This organization adopted many programs to attract blacks including "financial contributions to organizations like the NAACP and Negro churches and newspapers, the adoption of equalitarian racial resolutions, the use of Negroes to organize in Negro communities, the creation of the Committee to Abolish Racial Discrimination, and interlocking officials between unions and such organizations as the NAACP and the National Urban L eague" (Marshall, 1965:38-9). The CIO was not alone in moving toward joining hands with the black community. Perhaps spurred on by the obvious successes of its rival, the AFL tried to develop a more equalitarian racial policy, too (Marshall, 1965:41-5).

At first the black community feared protective legislation, believing it would strengthen the AFL without stopping it from discriminating against blacks. Efforts were made to introduce an amendment to the Wagner Act outlawing racial discrimination, but to no avail (Wolfers, 1970a). These early suspicions gradually disappeared especially with the emergence of the CIO. Olson (1970) describes how the CIO won the support of the NAACP, the Urban League and the black press, during the period 1936 to 1945. "At the war's end," black leadership "looked upon the CIO and the idea of labor solidarity as the black man's greatest hope for social and economic progress in the post-war world" (Olson, 1970:164). While exact figures are not available, one estimate gives black union membership in 1930 as around 56,000. By 1940, it had risen to 600,000 and during World War 11 reached 1,250,000 (Marshall, 1965:49).

The short-term emergence of a radical coalition provides support for our previous analysis. The fact that blacks could be used as cheap labor contributed to white union antagonism towards them. When the cheap labor status was made illegal and "management ended its conspicuous relations with the black community and no longer demanded or commanded loyalty" (Olson, 1970: 163), unions could accept black workers much more warmly, with ramifications for how black workers responded. In addition, when the option of siding with the employer was removed, black workers had every reason to join forces enthusiastically with organized labor. Franklin's description (1936:266) of the effect of the New Deal and its immediate aftermath in New York applies to the nation as a whole: "The role of the Negro worker as a strike-breaker has about come to an end." In terms of Figure 1, the split labor market interactions had been short-circuited at arrow 2.

Long-Term Effects. Fighting the High Cost of Labor

Protective legislation swung the balance of power in the class struggle between capital and labor towards the labor side, but it could not be expected that the capitalist class would accept such a state of affairs lying down. Protective legislation drove up the price of labor, threatening the very existence of firms throughout the economic spectrum.

Wolters (1970b:119) describes the impact of the New Deal on a small cotton textile mill in Greensboro, Georgia:

Before the NRA, the daily wage of workers in this mill was about seventy-five cents for a ten-hour day; afterward, wages ranged from $2 to $2.40 for an eight-hour day. The machinery in this mill was obsolete, and the firm had been able to compete with more modernized mills only because labor costs were so low. With the coming of the NRA the mill at Greensboro had three choices: to maintain employment, pay code wages, and operate at a loss; to ignore the NRA stipulation; or to install more productive machinery and pay code wages to fewer workers.

Oppenheimer (1974: 11) makes a similar point for the garment industry. Sweatshops in the Northeast, which became organized and had safety features introduced, then faced competition from sweatshops in the Far East.

The effects of the rising cost of labor also were felt at the level of large corporations. For example, in the steel industry in 1966 hourly labor costs in the United States had risen to $4.63 compared to $1.87 in West Germany, $1.76 in Italy, $1.53 in France and $1.10 in Japan (Rowan, 1968:22). For this reason, among others, steel exports declined from 5,348,000 tons in 1957 to 1,724,000 in 1966, while imports rose from 1,155,000 to 10,753,000 tons in the same years (Rowan, 1968:21).

At least three options were open to the capitalist class. (Of course, not every capitalist had all three alternatives available.) First, they could relocate part of the industrial process overseas to make use of cheaper foreign labor. Second, they could relocate internally to those sectors of the economy where organized labor and/or protection had not yet penetrated. And third, they could mechanize, displacing jobs which had previously been performed by "cheap labor." These processes all had a negative impact on black employment.

Relocation overseas. Treating the late 1960s, Jalee (1973:80) points out that roughly 20 percent of American investment in manufacturing industry went abroad. At that time a high proportion went to Europe which "has the use of cheaper labor than in the United States" (Jalee 1973:82). Today the "runaway shop" is found wherever cheap labor is available. "Smith-Corona makes typewriters in Italy. U.S. Plywood makes veneers in Peru, South Korea, and Nigeria. National Cash Register has plants in Taiwan and Japan. Sears Roebuck manufactures shoes in Spain ... Heinz makes tomato paste in Portugal and cans pineapples in Mexico" (Zimmerman et al.,1973:6), and so forth.

The runaway shop has hurt black unskilled and semi-skilled labor disproportionately, partly because white labor is more concentrated in the production of goods with high technological content, which are more likely to be produced here. For example, in moving a radio plant to Taiwan at the cost of 7,000 American jobs, Zenith reported that 38 percent of those laid off would be blacks (Zimmerman et al., 1973:8). Black workers in the United States are in competition with overseas labor at the same level of skill but overseas labor is considerably cheaper to employ.

Internal relocation. There remains gaps and loopholes in the present protective structure, and capital has moved internally to avail itself of these. An illustration is provided by the meat-packing industry, the major industrial employer of blacks before the New Deal. Since the late 1940s and early 1950s, the big meat-packing cities of Chicago, Kansas City, East St. Louis and Omaha, have lost meatpacking plants-particularly to the South where hourly wages are $1.86 compared to $3 .08 in the Midwest. By 1947 the large midwestern packers were all unionized and could not themselves take advantage of cheaper labor elsewhere. But small, low-cost operators could open without unions to serve local and regional markets. Between 1946 and 1 965, the four largest packers were forced to close a net 250 plants, and the industry became decentralized. Black workers were adversely affected by this shift. In 1950 the big mid-western cities employed 16,960 blacks in meatpacking. By 1960 the number had declined to 10,350. While black workers did not lose a disproportionate number of jobs, their overrepresentation in the industry meant a greater impact on group unemployment (Fogel, 1970:58-65). In this particular case internal relocation took advantage of another segment of black workers: non-union, southern women (Fogel, 1970:65-6). Other minorities, such as Mexican illegal aliens and poor immigrants from other countries, have played a part in this type of displacement (e.g., Lan, 1971, on the use of Chinese "sweatshop" labor in the San Francisco garment industry). Regardless of where new sources of cheap labor came from, the losers have been black industrial workers who had made important gains under the New Deal.

Given that cheap labor jobs are still scattered through the economy, why do the black urban unemployed not flock to them? The answer, I believe, lies in two inter-related factors. First, black industrial workers, unlike new immigrants, had come, during the late 1930s and early 1940s, to develop a working class consciousness. They rejected the sweatshop as had white workers before them. Employers have long justified the use of cheap minority labor on the grounds that "whites will not do the work." The same can be said of blacks today. Both groups are unwilling to work under rough conditions for low wages. If the job were "decent," they would willingly do it. The availability of a "cheap labor" alternative enables the employer to avoid im proving the job and raising wages (Abratus and Abrams, 1975:24-6).5

The second factor is "welfare." This institution may, in part, be seen as a mechanism which keeps people from having no alternative but the sweatshop. It is part of the apparatus which protects organized labor from being undercut . Protective legislation would be totally ineffective if large segments of the population were close to starvation. Employers would by-pass the laws and the starving people would gladly avail themselves of the jobs, however dreadful and low-paying. Of course, this phenomenon does occur in the United States, e.g., among many Mexican illegal immigrants (Samora, 1971). But a significant difference between black and immigrant poor lies in legal status. Blacks are unambiguously eligible for various forms of welfare and unemployment compensation which many new immigrants, particularly illegals, are not. Blacks have an "alternative" to the sweatshop.

Internal relocation helps to perpetuate a "dual labor market," i.e., a division of the economy into central and peripheral industries, the former offering higher wage, union jobs, and the latter relying on cheap, nonunion labor. If they try to escape the welfare trap, black workers tend to get locked into the peripheral economy with a ceiling on opportunities for advancement. (There is an extensive and growing literature on this topic partially reviewed by Gordon, 1972:43-52.)

The persistence of peripheral or marginal firms operating on cheap labor means that a split labor market is not dead in this country. Protective legislation has changed its shape somewhat, increasing the segregation, by industry and plant, of higher priced from cheap labor. And the ethnic composition of cheap labor has shifted away from blacks to some extent (Oppenheimer, 1974:16) to other nonwhite immigrants. But the New Deal did not, in the long-run, successfully eradicate the problem .

Automation. The move to automate does not arise simply as a response to technological innovation. Rather it is, at least in part, a response to rising labor costs. In the steel industry for instance, rising wages have led to an increase in capital relative to labor. "The United Steelworkers are resigned to continued long-term shrinkage of its core membership in basic steel" (Averitt, 1968:147). Similarly in meat-packing, high wages for unskilled and semi-skilled labor, in part due to strong unions, have "accelerated automation and the substitution of equipment for labor" (Fogel, 1970:15)

A number of authors trace a link between automation and black unemployment (e.g., Ferman et al., 1968:276-7; Peck, 1968; Willhelm, 1971: 188-224). Northrup (1965: 87) sums up the situation well:

An important factor in the Negro unemployment problem was industry's substitution of machinery for unskilled labor over higher minimum wages, the rapid rise under union pressure of unskilled labor rates, and the competition from West European and Japanese industry (with the much lower labor rates paid in these countries) all spurred this labor-replacement program. Negroes laid off as a result of these developments and young Negroes who found that industry was no longer hiring the unskilled became significant proportions of the hardcore, long-term unemployed.

To the three processes must be added certain "rigidities" in the system which make blacks suffer disproportionately from displacement. For example, poor ghetto schools make it more difficult for blacks to move out of the unskilled ranks . Union seniority rules, which may be "universalistic" and protect against the employer's natural desire to lay off his oldest, most expensive workers, may in practice have racist consequences because of the trend towards later entrance to industrial work among blacks. Similarly, discrimination in apprenticeship programs hurts black acquisition of skills while unions perceive efforts to change their rules as "union busting''(Strauss and Ingerman, 1968). And residential restrictions make it difficult for black workers to follow decentralizing industries as they flee highly taxed central cities.


Let us return to the two approaches to the question of high black unemployment in advanced capitalism presented at the beginning of the paper. The first suggested that significant elements in the while community, especially the corporate capitalist class benefited from black unemployment. While there may be indirect sources of gain, the conclusion to be drawn from this paper would be that large capitalists are unable to take advantage of ghetto labor and abandon it to marginal enterprises. The second argument, that technological advance has left blacks useless to the economy, gained some support, but I hope to have shown that it was not the product of impersonal economic forces. Rather, it was the effect of a complex history of class struggle.

This history is summarized in Figure 2. The "displacement" phase was one in which blacks were desirable employees relative to whites but threatened the gains of the latter. Protective legislation equalized the two groups in terms of labor price but also drove up the price of labor, leading capital to seek cheaper alternatives. As a result, black labor has been by-passed for machines and other cheap labor groups, here and abroad, creating a class of hard-core unemployed in the ghettos. This reality took a while to emerge after the New Deal and only became full-blown in the in the mid-1950s when black unemployment reached its current two-to-one ratio. The timing helps to explain the rising despair of the 1960s.6

Our conclusion is not cause for optimism over solving the problems of split labor markets. Immediately after the New Deal, it appeared they could be eradicated by government intervention, but the passing years have shown this to be a false hope. As long as there is "cheap labor" anywhere the world, there may not be a solution within capitalism.




*I wish to thank Joe Feagin, John Freeman, Leo Kuper, Barbara Laslett, John Laslett, Ivan Light, Harvey Molotch, Alex Saxton, Ira Sohn and Bill Wilson for their helpful comments.

  1. According to orthodox economics, wages are assumed to reflect the marginal productivity of the worker (Gordon, 1972:28-30). Clearly, I am challenging this assumption, as does Brody for the steel industry.
  2. Authors vary in their interpretation of these reports. Some point out that white strike breakers out-numbered blacks and that the perception of blacks as strike-breakers merely reveals race prejudice. My inclination is to believe th e reports since there were good reasons why blacks would have engaged in strike-breaking.
  3. There have been important exceptions to this picture. In an earlier era, for example, the United Mine Workers were able to form a coalition in an industrial union between black and white workers even in racist Alabama (Worthman, 197 0). It should be noted, however, that the union was broken by precisely the forces we have been speaking of: the introduction of black strike-breakers from outside the union, the dismissal of most of the white miners and the initiation of "welfare program s to secure the loyalty of their black employees" (Worthman, 1970:82).
  4. It is this part of the interaction which Alexander Saxton (1971) focuses on in regard to the anti-Chinese movement on the Pacific coast.
  5. 5. Some support for this comes from the 1974 Manpower Report of the President (U.S. Department of Labor, 1974:924) which finds that recent black migrants from the South have higher labor force participation rates than do northern born b lacks. Recent migrants are less likely to be "class conscious."

  6. Note that the "race riots" of the 1960s have a very different meaning from the pre-World War II riots, reflecting different economic roles of the black community. They should not be viewed as a single phenomenon.



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