Quaker businessmen started some of the earliest welfare experiments, as did employers imbued with mainline Protestantism's "Social Gospel. It created company bonds that undermined trade unionism and quieted public critics of concentrated wealth.
Welfare work was as diverse as the situations that spawned it. In isolated company towns--particularly in the textile and mining industries--welfare work verged on a feudal system whereby the employer controlled most aspects of a worker's life.
As in preindustrial master-servant relations, deference was combined with paternal obligation and prerogative. Closer to urban areas, welfare work was infused with communitarian ideals adopted from utopians like Charles Fourier, Robert Owen, and John Humphrey Noyes, and, later, from thinkers such as the pragmatist John Dewey. Reverend Josiah Strong founded the League for Social Service in to promote industrial welfare programs, which, he said, enhanced the "oneness of society" and its "interdependent organs.
The company towns built throughout the United States between and were characteristic settings for welfare work. Places such as Pullman Illinois and Wilmerding Pennsylvania were living experiments in paternalistic social engineering.
Employers designed every aspect of the industrial community--from leisure activities to architecture to landscaping--to match the putative harmony inside the workplace. With profit sharing, even the worker's pay package was not immune to this encompassing organicism.
But communal harmony did not come cheap, if it came at all. Model towns were expensive to build and maintain and, as demonstrated at Pullman, they offered no guarantee of labor peace. Besides, profit sharing and other welfare activities could just as easily be pursued in a conventional factory setting. As welfare programs became more complex and costly, employers sought to systematize their administration.
Among the first companies to hire a specialized manager to oversee welfare programs was National Cash Register. NCR's welfare secretary sought to "restore the old-time 'personal touch'" by counseling employees at work, organizing social activities, and visiting the sick at home. These home visits revealed mixed motives: while they extended a friendly hand from an otherwise impersonal corporation, they often served as occasions for a patronizing lecture on proper housekeeping or a chance to see if the employee was really sick.
Filene's, the Boston department store, took a different approach to managing its welfare programs. It placed the administration of its loan fund, medical clinic, and recreation clubs in the hands of elected employee representatives. Constituted in as the Filene Cooperative Association, this group of elected representatives was the first major company union in the United States.
By giving workers a stake in corporate decisions, management hoped to widen the circle of common concerns while shrinking the distance between itself and the employees.
Welfare work was frequently condescending and manipulative. The hope was that firms could recast the intemperate, slothful worker or the ignorant immigrant in a middle-class mold: uplifting him, Americanizing him, and making his family life more wholesome.
The most paternalistic programs were directed at immigrants from eastern and southern Europe and also at women. Skilled workers--who were almost always men, either native born or from northwest Europe--were likely to be offered more straightforward economic incentives for loyalty, including wage bonuses, deferred compensation, and profit-sharing plans.
The relationship between welfare work and unionism was not a simple one. In England, iron and cotton manufacturers combined paternalistic welfare programs with trade-union bargaining. That mixture was rare in the United States, although some American employers were willing to try company unions.
Avoiding "outside" unions was not always the motive for experimenting with company unions; several of the firms came from industries in which trade unionism was weak or nonexistent.
Welfare work primarily concerned employees' lives off the job; inside the workplace, employment policies often remained crude. Given an abundance of immigrant labor, at least until World War I, employers were reluctant to tamper with the drive system as applied to the mass of semiskilled workers. Between and , however, some employers began to devise stable, structured employment systems, initially for their skilled workers.
The systems combined policies pursued by craft unions, such as seniority rules, with enticements offered to salaried employees, chiefly deferred compensation in the form of pension benefits and stock bonuses. The railroads were pioneers in this area, followed by industrial giants such as U. Steel, Baldwin Locomotive, and International Harvester.
Because the benefits could not be enjoyed if a worker was dismissed, they raised the cost of engaging in union activity--an intended effect. By tying skilled workers to the firm, employers hoped to weaken craft traditions, speed the pace of work, and hasten the introduction of new technologies.
In effect, employers sought to take the guild out of guild manorialism. Piece-rate and other incentive wage devices were part of this strategy, especially in the metalworking industries, where Frederick W. Taylor's ideas were popular. However, the importance of incentive pay can be overstated. Employers started to realize that incentive pay sometimes produced undesirable results.
Because it rewarded proficiency in a given job, incentive pay made employees reluctant to accept technical innovations or job transfers, either of which might cause earnings to decline. Other, more career-based workplace policies--promotion ladders, seniority rules, and dimissal restraints--began to supplement incentive wage systems.
These policies were administered by new employment departments whose job was to keep watch over foremen and other line managers. Gradually the drive system started to give way to more enduring work relationships, intertwined with employer-provided welfare services outside the workplace. The pioneers in these developments were mid- to large-sized firms serving the national market, companies like Dennison Manufacturing, Goodyear, and National Cash Register. Such firms had the resources to establish career employment policies, a major resource being their managerial hierarchies.
To keep pace with company growth and increasing organizational complexity, turn-of-the-century corporations were impelled to adopt systematic planning, accounting, and management methods. Initially these methods were applied to sales and production; managerial rationalization only later spilled over into the employment sphere.
Thus, while welfare capitalism emerged as a solution to the problems of modern industry, it was modern industry itself that made welfare capitalism viable. Welfare capitalism also drew heavily on developments outside of industry. The decades after saw American society caught up in a "search for order" led by a new class of professional problem solvers--educators and economists as well as social workers and psychologists.
Although their specific prescriptions differed, they embraced the idea of deliberate social engineering conducted by benevolent professionals. Scientific administration--order guided by knowledge--was seen as the best hope for stabilizing an industrializing society.
The work reformers conceived of industry as the site of reconcilable differences between workers and management, a place where competing interests could be bridged by people skilled in the art of mediation and compromise. At the center of this approach was the impartial professional, trained to prescribe administrative solutions to workplace problems. Where unions were present, these professionals would serve as arbitrators, the approach developed by Louis Brandeis for the New York clothing industry.
In the absence of unions, newly created personnel departments would, it was hoped, bring to unorganized employees some of the same benefits as unionism. Despite a penchant for top-down social engineering, these reformers hoped to create institutions that would encourage democracy as well as efficiency. Here the reformers drew on a set of common ideals inspired by Progressive pragmatism: that individuals are capable of making choices, that differences can be solved through open communication, and that democracy would emerge from decentralized problem solving.
Characteristically American in its optimism was the belief that modern industry could avoid the deadening rigidity of bureaucracy by applying what John Dewey called the "science of participation. For those reformers concerned with industrial democracy, these ideas pointed in the direction of trade unions, which were seen as the only genuine vehicle for realizing citizenship norms within industry. The "new" unions in the needle trades were viewed as the exemplar of a laborist alternative to welfare capitalism.
The new unions were promoting modern management methods and joint problem solving, while also building worker-run schools, banks, and other institutions to serve their immigrant membership. Reformers were enthralled at the prospect of foreign-born workers being educated to participate in industrial as well as civic democracy. Other reformers rejected laborism in favor of a private corporatism that elevated enterprise ties over those of craft or class. For the corporatists, modern industry was viewed as a vast experiment in cooperation.
Managers, technicians, and workers had what Dewey called a "genuinely shared interest in the consequences of interdependent activities. They also were skeptical of legislative responses to social problems, preferring instead to rely on private solutions--especially programs associated with welfare capitalism--although some saw a government role in coordinating the economy through trade associations and industrial planning.
The Taylor Society originally the Society for the Promotion of Scientific Management was a hotbed of liberal corporatism. By it had been taken over by progressive engineers sensitive to the criticism that scientific management "had not fully caught the organic nature of human relations in industry.
Company unions, works councils, and employee participation in time studies were justified as stimulants to productivity. The Taylorists also were captivated by the idea that unemployment--perhaps the most pressing problem of the day--could be mitigated through the application of scientific management techniques by private employers.
The Taylorists believed that market analysis and production planning could stabilize fluctuations in employment, thereby removing a major cause of joblessness. Stabilization would also make employees more willing to participate in works councils and more tolerant of schemes to raise efficiency. After World War I, some laborists were drawn to scientific management and to the idea that "microregulation," as historian Steven Fraser calls it, would efficiently reduce unemployment.
But the group--including Sidney Hillman, Mary van Kleeck, and John Commons--continued to believe that collective bargaining was the best way to achieve microregulation. As proof they pointed to union efforts to rationalize production and reduce seasonality in the clothing industry by hiring industrial engineers, cooperating with management in redesigning wage systems, and negotiating joint unemployment insurance plans.
In contrast, the employers who moved in the Taylor Society's orbit--liberals like Henry S. Dennison, Henry P. Kendall, and Richard Feiss--criticized the drive system and saw trade unions as a reasonable corrective, but held traditional unionism to be inferior when measured against their own brand of enlightened management. Their synthesis of personnel administration, employment stabilization, welfare work programs, and company unionism served as a model for other employers to follow.
The welfare capitalist model, however, was not entirely free of kinks. Although personnel management was intended to resolve conflicts between workers and foremen, welfare programs implicitly denied that such conflicts existed. Meanwhile, employer paternalism contradicted the citizenship ideals informing employee representation. These tensions--between authority and democracy, efficiency and community--would strain industrial relations in progressive companies for years to come.
Although numerous employers adopted welfare work programs, few combined them with systematic personnel administration, and fewer still had company unions. But the war changed all that. After , the combined pressures of labor shortages and labor unrest produced a rapid expansion in all manner of workplace reforms. By , more than half the firms with five thousand or more workers had established personnel departments.
The war also saw a proliferation of welfare work programs. Much of it was of the uplift variety: such things as Americanization classes and glee clubs. With time, employers gradually relinquished these activities to groups like the Young Men's Christian Association YMCA and began to direct more attention to insurance plans, pensions, and profit sharing. Katz argued in his book Improving Poor People , that when corporate-delivered welfare capitalism provided workers with only limited gains, organized labour did not take its problems to the top-floor offices of company presidents.
The United States has never had a social welfare state. People used to think this because the United States never established the sort of universalist welfare state that some European democracies did. The US welfare state its supporters liked to think anyway provided a hand up, not a hand out. One of the most important hands up was public education. Prior to about the United States had the best public school system in the world. By about mid-century, American government expenditures on public schooling were as large as expenditures on all other welfare state programs combined.
The high school participation rates for American youth were twice what they were for European youth. The funny thing about demands for expanded educational opportunity is that these demands often grow in the same soil as social democracy. When we search for the origins of the one, we often end up digging around the roots of the other. Historians of education have pointed to the error that historians of welfare have made when they have characterized the American commitment to public education as a sign of liberal or middle-class values, not working-class demands.
Texas anti-segregation campaign, UT Center for American History. Admittedly, this has happened less often in the US than elsewhere.
But is has occurred in the United States in specific historical circumstances, something that Ira Katznelson and Margaret Weir observe in their book, Schooling for All. Although they have sometimes faced off against working-class whites trying to restrict access to education and opportunity to whites by denying education to blacks.
African Americans demanded equal access to schooling and quality education for black youth both before and after the famous Brown v.
Board of Education de-segregation cases of the mid twentieth century. Oddly enough then, the white working class as well as African Americans and others undoubtedly as well enjoy a sort of latent familiarity with social democracy. It comes to them through their familiarity with schooling as a potential source of opportunity and, in a more remote sense, with welfare capitalism as one source of public schooling.
Her appointment signified the arrival of welfare capitalism as a profession and its linkage to the Chicago settlement house movement. In the McCormick company added an employee representation plan, a common feature among large welfare capitalist firms of the time.
In combination, McCormick programs were intended to blur the distinction between worker and manager, to bind employees to the firm, and most emphatically, to deter unionization. The peak of enthusiasm for welfare capitalism was in the s, and in that era the Western Electric Company was widely respected as a model employer.
Its executives concluded that settlement houses did not fully meet the needs of female employees at its Hawthorne Works. So it offered baseball , tennis , bowling , and golf , all of which were very popular with both office and factory women, as were holiday festivals and community dances. Dozens of firms aimed similar programs at young working women. Though the Great Depression restricted the growth of welfare capitalism and transformed its character, it did not destroy it.
Stock purchase and profit sharing declined, as did certain recreational and educational programs. In , company unions became an illegal practice. Sears had long practiced traditional welfare capitalism.
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