III. WELFARE CAPITALISM IN THE
UNITED STATES: POLICIES, PRACTICES,
AND POSSIBILITIES

DISCUSSION

Sanford M. Jacoby
University of California, Los Angeles

     Today's papers focus on different regional variants of employer paternalism, ranging from a Maine paper mill to an urban mail-order company to southern cotton textile mills. The papers consider different aspects of paternalism, from industrial relations to the provision of health insurance.

     I begin with Michael Hillard's paper, which takes a wonderfully long view of a single company, S. D. Warren, tracing its founder's roots in early nineteenth-century Boston to its labor relations in the 1980s. The founder, "Dennis" Warren, was a not unfamiliar type--a devout, patrician Protestant who, although he lived in Boston, kept a close eye on developments at his mill--his industrial plantation--in southern Maine. Warren resembles the early Lowell textile mill owners, who started in business around thirty years before Warren launched his paper mill. Like Warren, the Lowell mill masters had a social conscience but, at the same time, used paternalism to suit their business needs. One wonders about the business culture that existed in Boston in the 1850s--how men like Warren thought about their responsibilities, what they said about each other, and how they weighed the Lowell system and its alternatives, such as the rougher, less sentimental approach to mill management found in Rhode Island.

     There has often been an ethnic dimension to paternalism, in which a metaphorical family had a basis in shared identity between owners and workers. For example, the early Lowell mill owners were Yankees who recruited young Yankee women from rural parts of New England. In the case of Lowell, however, paternalism broke down when Irish and French-Canadians began to supplant the native Yankee workforce in the mills. The same process occurred in other places, too. Yet paternalism persisted at Warren, even as French-Canadians moved in. So, one wonders, why? What was special about Warren? What were relations like between Yankees and French-Canadians? Did French-Canadians assert their Americanism as in Gary Gerstle's portrait of Woonsocket factory workers in the 1940s? And, just for reference, how prevalent were native Yankees at Warren as compared to other large New England mills over the course of the twentieth century?

     In the mid-twentieth century, the industrial relations system at Warren was a good example of what Alvin Gouldner called the "indulgence pattern," in which factory management bent over backwards to treat workers decently and discipline them gently, thereby obtaining their loyalty and hard work. Did Warren do this because they were worried about unions or because they thought it motivated workers, even though some took advantage and slacked off? Hillard might explore these tradeoffs, whether indulgence can here be interpreted as the kind of gift relationship that George Akerlof has written about.

     Yet, for some reason, the company didn't do a good job of managing its indulgence system. While the personnel department refused to permit foremen to dismiss workers, it doesn't appear to have monitored foremen very closely. This is very different from the situation at a company I studied, Eastman Kodak, which, as part of its own indulgence pattern, had its personnel department keep a gimlet eye on foremen to make sure that they were treating workers equitably and ethically. It's not clear why Warren failed to do this. Perhaps it was just another example of the company not being run very efficiently, or perhaps there was an ethnic factor that created tension between foremen and their subordinates.

     Finally, I would urge Hillard to consider where Warren fits into the larger pattern of labor relations in New England. We now have dozens of microstudies of New England mills stretching from the early nineteenth century to the late-twentieth-century version of paternalism found at Malden Mills, home of Polar Fleece and Aaron Feuerstein. Hillard might even go one step further and give us a big picture, interpretive essay or book about the New England labor-management experience.

     Hugh Hindman takes to another mill economy, that of the southern textile industry. The striking difference with the situation in Maine is the prevalence of child labor and a family labor system. Initially, at least, the southern textile mills employed relatively few adult men and a relatively large number of women and children. This difference is striking--it recalls the family labor system in the early English textile industry--but we need a more precise explanation from both Hindman and Hillard of why labor supply has particular regional characteristics. Hindman is to be commended for recognizing that textile workers had a culture of their own that was autonomous from the mill owners, a point well made in the book by Doug Flamming on the mills at Dalton, Georgia. Hindman delves into the mind of the mill owners--their motives for paternalism--but could tell us more about their origins and the effect of local versus absentee ownership.

     With Howard Stanger's paper, we turn to a newer company in a more urban location, the mail-order house of Larkin Company, which started as a soap factory in Buffalo, New York. By the 1920s, Larkin was a very large company, with more than 5,000 employees in Buffalo and several other locations around the country. The identification with the founding family, the Larkins, does not appear to have been as strong as with the Warren mills. The company was too big; the workforce was, apparently, made up of new immigrants. On the other hand, in place of a personalistic kind of employee relations, Larkin offered a full panoply of modern welfare work: a mixture of pecuniary benefits and uplift activities, especially recreation and sports.

     There is much about Larkin that reminds me of other companies I've studied. Like its arch-competitor, Sears Roebuck, Larkin cooperated with the YWCA in designing recreational activities for its workers. Also like Sears, many of Larkin's employees were female, and, presumably, welfare work was partly an attempt to persuade young women and their parents that the company was a wholesome, safe place to work. The gendered motive behind welfare work had been around since the Lowell mills and has recently been explored by Nikki Mandell.

     Another audience for its welfare work was, presumably, Larkin's customers. Sears was never shy about letting its customers know that it was a progressive, ethical employer, and one suspects that Larkin did the same thing. Surely Elbert Hubbard knew a thing or too about clever marketing. (Among his many accomplishments, Hubbard was the author of the self-help book, A Message to Garcia, which later inspired Ron DeWolf to found the Scientology movement. In homage, DeWolf changed his name to L. Ron Hubbard.)

     Finally, like S. C. Johnson of Racine, Wisconsin--a company known for its progressive, nonunion welfare work--Larkin had a modern building designed by Frank Lloyd Wright. There is a fascinating angle here to be explored on the relationship between images of modernity as represented by welfare work, on the one hand, and industrial architecture, on the other. Margaret Crawford, the architectural historian, has written about this issue as it applies to company towns.

     Fascinating as the Larkin story is, one is left wondering: what is different about Larkin? What makes it distinctive? On the business front, what distinguishes Larkin from its competitors, Sears and Ward's? Was it its failure to make the transition from mail order to retailing? Was this a sign of more systemic problems at Larkin?

     Among its programs, Larkin was known for its health and dental benefits, although the transition from company provision to subsidized employee insurance was slower in the health area than with pensions or life insurance. Indeed, generally speaking, American business did not offer much in the way of health insurance in the 1930s. There were a few corporate plans, some union plans, some HMOs, and some Blue Cross plans, such as the original community health system found in Rochester, New York. In the late 1930s and early 1940s, there also were efforts at the federal level to introduce national health insurance, both a "left" version written by Mary Van Kleeck and a more centrist approach known as the Wagner-Dingell-Murray bill. Dan Mitchell picks the story up at this point, taking us to California and Governor Earl Warren, who three times proposed successively more modest versions of state-funded health insurance. This little-known chapter in the saga of health insurance is fascinating. Mitchell may well be right: had Warren succeeded, health insurance may well have become a state-level program like workers' compensation.

     Of course, we will never know for sure how things would have turned out had Warren succeeded. But Warren had only a narrow window of opportunity when he developed his first--most ambitious--plan in 1944. By the end of the war, the window had closed. As Mitchell notes, after the war, unions were busy negotiating private plans with employers, HMOs had become established in the form of the Kaiser plans throughout California, and the medical establishment had shown Warren that it could fight off the most comprehensive approach to public health insurance. Warren's third bill--the one that failed by a single vote in 1947--covered only major hospital expenses. Had it passed, instead of serving as an opening wedge for other states and more ambitious public provision, it may have become the inferior alternative chosen by low-wage, nonunion workers in California. The result would have been not all that different from the present situation in California, where the working poor receive catastrophic care from county-subsidized hospitals. Then again, we will never know for sure.