Proposal preview

Stronger together? Collective action during phases of industrialization

With industrialization and the growth of wage work, a number of risks emerged in the form of workplace accidents, illness and unemployment. The transition from an agrarian to an industrial economy meant that a growing group of wage earners lacked the support of old safety nets and needed protection from temporary loss of income. The male breadwinner model, which was established in connection with industrialization, meant that many families were put in a difficult economic situation if something would happen to the family provider even though industrial work meant higher average wages than alternatives in agriculture. Awareness of new risks in industry prompted both workers and employers to act; the former, by demanding new safety nets, forming voluntary associations and trade unions, and the latter by making various forms of welfare commitments, including investments relating to occupational health and safety. The emerging risks, which meant loss of income for those who were hurt or exposed to job loss, highlighted the need for insurance and of collective action to deal with these risks. Sicknesses funds (aka mutual aid societies or cash clubs) and trade unions are examples of collective action when dealing with risk, and these organizations became increasingly important in the context of industrialization and with the emergence of the modern labor market. Initiatives for improved occupational safety, but also for obligatory sickness funds, were ways for employers to protect competitiveness, economic value and workplace-specific skills at a time when the employers-worker relationship became more important. Though the historical roots of the challenges spurring collective action are similar across countries, the developments over time were very different. In some countries, the state took responsibility for issues relating to occupational safety, sickness and unemployment, resulting in comprehensive welfare states, though this was not the case everywhere, in particular not in Anglo-Saxon contexts where more solutions were left to market mechanisms rather than state intervention. Similarly, the extent of union power varied across time and space, with several interesting lessons to be learnt from the early phases of collective action, not least from comparing experiences from the industrial core (the UK, the US, continental Europe) with that of the periphery (e.g. the Nordics).

This session brings together scholars who present ongoing research on collective action relating to challenges and emerging risk connected to industrialization, before and during the modern welfare state. The use of novel techniques and new data is emphasized, especially when it comes to completing the more well-known macro picture with micro-level evidence. Topics for this session include the determinants of collective action and the origins and developments of trade unions and sickness funds; testing theory by evaluating ways of dealing with selection bias and information asymmetry among unions and sickness funds; estimating individual, firm, and regional consequences of collective action, more specifically individual returns in terms of health and income to membership in unions and/or sickness funds. Topics for this session also include the role of institutions, the outcomes of bargaining (including collusion and arbitration) and the effects of various initiatives affecting workers’ well-being.

This panel will follow a standard format, with eight papers and one chair/discussants. The papers will be pre-circulated. Each panelist will have between 15-20 minutes for presentation followed by discussion and Q&A after a set of four papers. We have papers on various forms of collective action during industrialization and before the establishment of more comprehensive welfare states. Papers cover a range of contexts; the US, the UK, Germany and Sweden. Each paper will explore one or more issues/inquiries outlined above with an overall objective to develop a multifaceted and comparative perspective on collective action during industrialization.

Organizer(s)

  • Maria Stanfors Lund University maria.stanfors@ekh.lu.se Sweden

Session members

  • Ethan Schmick, Washington & Jefferson College
  • William Boal, Drake University
  • Tobias Karlsson, Lund University
  • Maria Stanfors, Lund University
  • Liselotte Eriksson, Umeå University
  • Lars-Fredrik Andersson, Umeå University
  • Bernhard Harris, Glasgow Caledonian
  • Alfred Reckendrees, Copenhagen Business School
  • Laura Salisbury, York University
  • Price Fishback, University of Arizona

Discussant(s)

  • Chris Minns London School of Economics c.minns@lse.ac.uk

Papers

Panel abstract

With industrialization and the growth of wage work, risks like workplace accidents, illness and unemployment emerged. The transition from an agrarian to an industrial economy meant that growing numbers of wage earners lacked old safety nets and needed protection from temporary income loss. Awareness of new risks prompted both workers and employers to act; the former, by demanding safety nets, forming voluntary associations and trade unions, and the latter by making welfare commitments, including investments relating to occupational health and safety. Collective action was not restricted to working life but also emerged in other areas to enhance opportunities and well-being of the population. Though the historical roots spurring collective action were similar across countries, the developments over time were very different. This session addresses various forms of collective action during industrialization and present new evidence from both the industrial core (the UK, the US, Germany) and the periphery (the Nordics).

1st half

Collective Action and the Origins of the American Labor Movement

Ethan Schmick, Washington & Jefferson College

This paper proposes and tests a theory of labor union formation and strike activity. The model and the empirical results examine the relationship between collective action and the size of worker and employer groups. Using a new county-by-industry level dataset containing the location of unions, the location of strikes, average establishment size, and the number of establishments around the turn of the twentieth century, I find that unions were more likely to form and strikes were more likely to occur in counties with intermediate-sized worker groups and large employer groups.

This paper proposes and tests a theory of labor union formation and strike activity. The model and the empirical results examine the relationship between collective action and the size of worker and employer groups. Using a new county-by-industry level dataset containing the location of unions, the location of strikes, average establishment size, and the number of establishments around the turn of the twentieth century, I find that unions were more likely to form and strikes were more likely to occur in counties with intermediate-sized worker groups and large employer groups.

Work Intensity and Worker Safety in Early Twentieth-Century Coal Mining

William M. Boal, Drake University

Why did coal mining remain so dangerous in the early twentieth century? Observers blamed miners for neglecting safety in their haste to load coal, for which they were paid on piece. Using a panel of 421 coal mines, the elasticity of fatalities with respect to speed or intensity of work is estimated to be about one-half, implying a marginal cost of a statistical life to miners of about $400 thousand in 1921 dollars. This likely exceeded their value of a statistical life, so preventing accidents was expensive for miners. However, the union reduced fatalities with little effect on work intensity.

Why did coal mining remain so dangerous in the early twentieth century? Observers blamed miners for neglecting safety in their haste to load coal, for which they were paid on piece. Using a panel of 421 coal mines, the elasticity of fatalities with respect to speed or intensity of work is estimated to be about one-half, implying a marginal cost of a statistical life to miners of about $400 thousand in 1921 dollars. This likely exceeded their value of a statistical life, so preventing accidents was expensive for miners. However, the union reduced fatalities with little effect on work intensity.

To be or not to be? Membership in unions, sickness funds and temperance organizations in Swedish manufacturing, circa 1900

Tobias Karlson & Maria Stanfors, Lund University

The birth of the modern industrial society was fostered by various social movements, gaining momentum from the mid-nineteenth century onwards. In the Swedish historiography, three movements are claimed to have played a central role: the revival movement, the temperance movement and the labour movement; appearing chronologically in the same order. By 1920, about one third of the Swedish population was associated to at least one of these movements (directly or indirectly). The rationale for joining these organizations differed. Yet, while it has been observed that membership to some extent was overlapping – one person could for example belong to both a temperance organization and a trade union at the same time, membership in these organizations have most often been studied in isolation. Moreover, there were other important popular movements than the above-mentioned. Mutual aid societies gathered thousands of workers, primarily by providing sickness insurances. In this paper, we study the...

The birth of the modern industrial society was fostered by various social movements, gaining momentum from the mid-nineteenth century onwards. In the Swedish historiography, three movements are claimed to have played a central role: the revival movement, the temperance movement and the labour movement; appearing chronologically in the same order. By 1920, about one third of the Swedish population was associated to at least one of these movements (directly or indirectly). The rationale for joining these organizations differed. Yet, while it has been observed that membership to some extent was overlapping – one person could for example belong to both a temperance organization and a trade union at the same time, membership in these organizations have most often been studied in isolation. Moreover, there were other important popular movements than the above-mentioned. Mutual aid societies gathered thousands of workers, primarily by providing sickness insurances. In this paper, we study the determinants of membership in trade unions, sickness insurance societies and temperance organizations among worker in Swedish manufacturing, drawing on a cost-benefit framework factoring in risk. We use matched employer-employee data on three populations from the turn of the century 1900: tobacco workers, workers in the printing industry and workers in mechanical engineering. Unlike previous research, which has been delimited to specific locations, our study covers the whole country and exploits variation at the regional, local, firm and individual level.

Adverse or Propitious Selection on Alcohol Related Health Risks in Swedish Mutual Health Insurance Societies

Lars-Fredrik Andersson & Liselotte Eriksson, Umeå University

This paper analyses health data, household budgets and poor relief to provide an account on the selection, outcomes and distribution of alcohol related morbidity and accident risks in the urban working class in Sweden during the early twentieth century. Our analysis shows that health insurance societies effectively circumvented assuring alcohol related health risks. Temperance societies and teetotalers as such were not different from non-temperance/-teetotalers in terms of insurance coverage, morbidity or accidents. The costs due to alcohol were faced by the individual (alcoholics), the dependents and the poor relief. Due to substantial alcohol tax revenues however, the costs of poor relief and other alcohol related costs was covered up economically for the public sector, while the dependents faced a major external cost due to alcohol.

This paper analyses health data, household budgets and poor relief to provide an account on the selection, outcomes and distribution of alcohol related morbidity and accident risks in the urban working class in Sweden during the early twentieth century. Our analysis shows that health insurance societies effectively circumvented assuring alcohol related health risks. Temperance societies and teetotalers as such were not different from non-temperance/-teetotalers in terms of insurance coverage, morbidity or accidents. The costs due to alcohol were faced by the individual (alcoholics), the dependents and the poor relief. Due to substantial alcohol tax revenues however, the costs of poor relief and other alcohol related costs was covered up economically for the public sector, while the dependents faced a major external cost due to alcohol.

2nd half

Social policy by other means? Mutual aid and the origins of the modern welfare state in Britain during the 19th and 20th centuries

Bernard Harris, School of Social Work and Social Policy, University of Strathclyde

During the last twenty years, several writers have drawn attention to the role played by friendly societies and other mutual-aid organisations in the development of Britain’s welfare state. Proponents of mutual aid have argued that these organisations were part of the rich associational culture of working-class life; that they represented a viable alternative to state welfare; and that they were eventually undermined by it. However, this paper highlights the challenges which these organisations were already facing towards the end of the nineteenth century as a result of changes in working-class culture and the rise of more commercial insurance agencies. It suggests that the rise of state welfare was not so much a cause of these difficulties as a response to them. It also examines the role which friendly societies played in the expansion of welfare services after 1914 and their attitude to calls for further expansion before 1945.

During the last twenty years, several writers have drawn attention to the role played by friendly societies and other mutual-aid organisations in the development of Britain’s welfare state. Proponents of mutual aid have argued that these organisations were part of the rich associational culture of working-class life; that they represented a viable alternative to state welfare; and that they were eventually undermined by it. However, this paper highlights the challenges which these organisations were already facing towards the end of the nineteenth century as a result of changes in working-class culture and the rise of more commercial insurance agencies. It suggests that the rise of state welfare was not so much a cause of these difficulties as a response to them. It also examines the role which friendly societies played in the expansion of welfare services after 1914 and their attitude to calls for further expansion before 1945.

Why did early industrial capitalists suggest minimum wages and social insurance?

Alfred Reckendrees, Copenhagen Business School

In the beginning of the 21st century there is a debate across the world about how much welfare the state should provide and how much private savings and insurance is possible. Emphasizing budget limitations and costs, it is to a large extent a debate about finance and efficiency rather than about the function of welfare in society. In the early period of industrial capitalism, however, when almost all social problems were left to private initiative, the fragile legitimacy of the social order posed a political challenge. In response to a crisis of legitimacy in 1830, capitalists in the Rhineland, at that time the economically most advanced region in Prussia, collectively addressed social problems created by industry and, for example, suggested collective labor agreements regulating wages and work time. Their proposal did not gain support from the Prussian government that argued collective agreements would violate freedom of contracting. Three decades later,...

In the beginning of the 21st century there is a debate across the world about how much welfare the state should provide and how much private savings and insurance is possible. Emphasizing budget limitations and costs, it is to a large extent a debate about finance and efficiency rather than about the function of welfare in society. In the early period of industrial capitalism, however, when almost all social problems were left to private initiative, the fragile legitimacy of the social order posed a political challenge. In response to a crisis of legitimacy in 1830, capitalists in the Rhineland, at that time the economically most advanced region in Prussia, collectively addressed social problems created by industry and, for example, suggested collective labor agreements regulating wages and work time. Their proposal did not gain support from the Prussian government that argued collective agreements would violate freedom of contracting. Three decades later, the same group of capitalists suggested minimum wages and joint arbitration panels of employers and elected labor representatives. More than 20 years before Bismarck, they also proposed a mandatory pension system with equal contributions of employers and employees. The industrialists aimed at stabilizing the social environment by reconciling labor with the existing capitalist order. Today everybody knows that they did not succeed. But the observation of capitalists demanding public welfare and the Prussian state defending liberal capitalism is slightly ad odds with the dominant perception of the Bismarckian welfare state being a strategy of social and political pacification of the working class in the process of nation-state building. The industrialists’ proposals and arguments, however, and the time at which they articulated them, support a Polanyian view in which the need for social policy appears as a by-product of capitalism. Analyzing social policy as an aim of capitalists, the paper brings a new perspective to the debate about the origins of the welfare state.

Union Army Widows and the Historical Take-up of Social Benefits

Laura Salisbury, York University

There is a literature on incomplete take-up of modern social programs. This literature identifies a number of reasons for incomplete take-up, which can be divided in three broad categories – information, cost of application (relative to reward), and stigma – and typically finds a role for all three. This paper will analyze take-up of the first large-scale benefits program in the U.S., the Union Army Pension, focusing on the behavior of Union Army widows. Using microdata on the widows of Union Army veterans, I identify correlates of the above theoretical determinants of take-up, and characterize their impact on widows’ decisions about whether and when to apply for pensions. This offers some unique insight into the history of Americans’ relationship with social assistance. In particular, this work sheds light on process by which knowledge and uptake of a benefits program spreads in the absence of widespread familiarity with such programs. A...

There is a literature on incomplete take-up of modern social programs. This literature identifies a number of reasons for incomplete take-up, which can be divided in three broad categories – information, cost of application (relative to reward), and stigma – and typically finds a role for all three. This paper will analyze take-up of the first large-scale benefits program in the U.S., the Union Army Pension, focusing on the behavior of Union Army widows. Using microdata on the widows of Union Army veterans, I identify correlates of the above theoretical determinants of take-up, and characterize their impact on widows’ decisions about whether and when to apply for pensions. This offers some unique insight into the history of Americans’ relationship with social assistance. In particular, this work sheds light on process by which knowledge and uptake of a benefits program spreads in the absence of widespread familiarity with such programs. A specific advantage of the database and institutional setting I use in this paper is that it enables cleaner identification of the determinants of the take-up decision. The Civil War Pension was first introduced in 1862, and many widows applied shortly thereafter. In 1866, an amendment to the law was passed, granting women a supplement to the original pension, which was tied to the number of minor children she had. However, women had to apply for the supplement; it was not granted automatically. As such, I am able to observe multiple take-up decisions by the same woman, allowing me to control for unobservable characteristics of the individual that may influence these decisions.

Did Access to New Deal Relief Differ for Blacks and Whites?

Price Fishback, Jessamyn Schaller, University of Arizona & Michelle Liu, Experian

During the 20th century the national government seems to have been less discriminatory than southern states and local governments in many ways. Therefore, we might expect that New Deal federal government programs were likely to provide more equal access for blacks and whites than the earlier state and local relief groups. The Federal Works Agency (1940, p. 23), for example, argued that its programs—including the Public Works Administration, the Works Projects Administration, the Public Roads Administration, and the Public Buildings Administration—actively sought to ensure no racial discrimination in employment and in the distribution of benefits. Although the federal government may have attempted to create equal access to these programs based on race or socioeconomic status, its oversight was limited because nearly all of the programs were administered in conjunction with state and local authorities in some way. We analyze the differences in black and white access to New Deal programs...

During the 20th century the national government seems to have been less discriminatory than southern states and local governments in many ways. Therefore, we might expect that New Deal federal government programs were likely to provide more equal access for blacks and whites than the earlier state and local relief groups. The Federal Works Agency (1940, p. 23), for example, argued that its programs—including the Public Works Administration, the Works Projects Administration, the Public Roads Administration, and the Public Buildings Administration—actively sought to ensure no racial discrimination in employment and in the distribution of benefits. Although the federal government may have attempted to create equal access to these programs based on race or socioeconomic status, its oversight was limited because nearly all of the programs were administered in conjunction with state and local authorities in some way. We analyze the differences in black and white access to New Deal programs using evidence from the Federal Emergency Relief Administration in October 1933, the Works Progress Administration in 1937, as well as individual data for the WPA in 1940.