Introduction
In the late 1800s and the early 1900s, huge corporations dotted the United States. These corporations were successful largely because they employed “carrot and stick” strategies to quell unionism. The term “welfare capitalism” refers to the employer strategies which provided benefits to employees such as day-care services and health insurance. These welfare benefits were controlled by the managements of the corporations. “Welfare Capitalism” had varied strengths and weaknesses in its employment as a strategy for containing labor.
One of the strengths of Welfare Capitalism was the establishment of mutually acceptable trade agreements. Several pacts were signed between employer groups and workers’ unions such as the one between the International Association of Machinists and the National Founders’ Association (Dulles & Dubofsky, 169). These agreements brought about significant acceptance of collective industrial peace and the progress towards industrial peace. The American Federation of Labor (AFL) led by Samuel Gompers saw the increasing number of trade agreements as an indication of a change in employers’ attitudes towards encouraging labor. Gompers declared that the increased trade agreements and Welfare Capitalism”was the harvest after years of organization (of labor unions) that was beginning to bear fruit” (Dulles & Dubofsky, 169).
Welfare Capitalism also helped in enforcing some labor laws such as child-labor laws. These laws placed restrictions on the age at which children might be employed and also limited the hours of such children are supposed to work. Following massive Welfare Capitalism efforts, this law was adopted by 38 states by 1912 (Dulles & Dubosfky, 182). In addition 28 other states adopted laws that protected women from exploitation at work while limiting the number of hours that women were supposed to work. The workmen’s compensation laws had been adopted in 35 states by 1915 largely due to Welfare Capitalism (Dulles & Dubosfky, 182). These laws provided for compulsory benefit payments in case of accidents at the workplace.
Welfare Capitalism also helped in the appreciation of skilled workers. Several employers in the textile and steel industries devised and structured their employment systems to accommodate and appreciate efforts by skilled workers such as smiths, masons, cobblers, machine operators among others. The employers adopted policies pursued by craft unions such as seniority rules. The skilled employees were offered salaries in place of wages and were listed in pension schemes and offered stock bonuses (Dulles & Dubosfky, 183).
Initially, Welfare Capitalism was seen as a mutual way to handle the demands from laborers while accommodating the economic needs of the employers. However, it soon became apparent that company managements meant the welfare benefits as a means to entice the employers into being overworked to compensate for the benefits they received (Dulles & Dubosfky, 192). Craft unions were only successful in a declining category of American workers. Many of the workers were still unskilled and therefore they were not covered by the benefits, pension schemes and stock bonuses.
The other weakness of Welfare Capitalism was the fact that many of American workers performing traditional tasks preferred to train in programs organized and run by the workers themselves. This way they shunned the efforts by employers to be trained through company run programs leading to a division of interests between employers and workers’ unions. Without the input from traditional craft skills, American corporations were very weak in traditional craft industries such as textiles, smith works, shoe-making, hat-making among others. The industries that benefited from Welfare Capitalism were those heavily reliant on machines such as chemical manufacturing, steel, paper, textiles and metal industries because they relied less on human labor (Dulles & Dubosfky, 183).
The greatest weakness of Welfare Capitalism was that the strategies locked out majority of the American Workforce. Only the large corporations were able to execute the strategies due to financial constraints. Comprehensive welfare benefits such as career jobs, enrollment in financial schemes, supervisor training programs among others were limited to large American companies which employ only a fifth of the American workforce (Dulles & Dubosfky, 183). This meant that Welfare Capitalism faced more opposition than acceptance and support and as such it was destined for a definite unstable future if nothing was to change.
Conclusion
Welfare Capitalism refers to the employer strategies which provided benefits to employees such as day-care services and health insurance benefits. These strategies had some strength in that they led to the signing of several trade agreements which meant more conducive working strategies. The benefits also led to reduced cases of industrial unrest. They also led to the appreciation of skilled workers and the enforcement of labor laws such as child-labor laws and the compensation laws. However, Welfare Capitalism had a major setback in that the welfare benefits targeted a mere fifth of the total American workforce because they concentrated on only the skilled workers. Welfare capitalism was also suitable for some of the industries and not others and therefore it faced significant opposition especially from industries relying more on traditional crafts.
Works cited
Dulles, Foster R, & Dubofsky Melvyn. Labor in America: A History. Arlington Heights, Ill: Harlan Davidson, 1984. Print.
