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Pittsburgh’s Transformation from Hard Hats to Scrubs

The city is no longer America’s steeltown. But how did it become a leader in health care? Author Gabriel Winant explains how economic realities allowed this service industry to emerge from the region’s old labor movement.

Pittsburgh's Jones and Laughlin Steel Works in 1967, with downtown Pittsburgh in the background (The Brookline Connection)
About a hundred years ago the Pittsburgh region hit its peak. Nestled in the southwestern corner of Pennsylvania, it hosted an industrial system of world historic proportions.

The population had been exploding for years, growing by double digit percentages every decade, as workers and their families arrived to fuel the area’s mammoth steel manufacturing concerns. Growth would slow almost to a halt during the 1930s, where the first seeds of deindustrialization were sown, but at the same time, one of the most powerful unions of the New Deal emerged to redistribute some of the fruits of this economic dynamism to those on the shop floor.

Gabriel Winant’s 2021 book The Next Shift explores how the Pittsburgh area stumbled from this industrial-era economy, with its privatized welfare state won by the United Steelworkers Union, to today’s care-focused economy where education and health care rule the roost. His book analyzes how today’s health-care industry emerged from the old labor movement, the limits of their victories, and what that meant for this corner of Pennsylvania and the larger American economy.

Governing spoke with Winant about how the modern health industry was shaped by massive mid-century collective bargaining agreements, how local and state government reacted to the social crisis of deindustrialization, and how health-care dynamics are shaping this year’s heated elections in Pennsylvania. This interview has been edited for length and clarity.

Governing: Your book looks back on the mid-century steel industry in Pittsburgh and shows that this supposed moment of class and political comity was actually quite fraught. Good union jobs were still very dangerous and socially difficult on both the men and their families. There were also huge strikes that convulsed the industry regularly throughout the late 1940s and 1950s. But in current social and political imaginings, we look back on this era with rose-colored glasses.

Gabriel Winant: First of all, it's important to say the material working-class gains of that period are real. The income gains and benefits, the ways that translate into things like homeownership, all that matters.

Back then there was a lot of criticism from the left of all of the costs and limits of the postwar social settlement. Then once Reagan swept in and undid a ton of it, they were like, oh no, that was good actually. Can we have that back? More expansive visions of working-class emancipation and social equality seemed further away. That produces the retroactive nostalgia that covered over the memory of the contradictions and limits and tensions of the postwar situation.
The Next Shift.jpg
(Harvard University Press)
What we had from the late '40s to the early '70s was a particular institutional structure by which some large industries had particular market conditions they were operating in, workforces they were dealing with and ways they were forced to organize. It was never a universal model. It never included everybody. Then when it came under attack and fell away, we turned it into "back when there was more social equality." That's true at one level, but it wasn't generic social equality. It was a particular, localized organization in the upper Midwest and the Northeast around certain kinds of men. It opens up a whole can of worms that makes it harder to use that moment as a rhetorical weapon against social inequality in the present.

Governing: Let’s start off at the beginning of your book, with the emergence of the health insurance industry as an outgrowth of the limits of the New Deal and powerful union movements. Why were the U.S. labor movement and New Deal liberals unable to achieve universal health care and what were the political economic side effects of that loss? 

Winant: The idea of federally administered health insurance was always present in the progressive social reform tradition [from the 1910s onward]. But it [wasn’t included in the New Deal’s Social Security Act] and, meanwhile, the advance of collective bargaining was moving faster. After the Wagner Act in 1935, industrial unions organized very rapidly and became integral to the Democratic coalition. During the [Second World] War, they played this key role in holding down strike activity and keeping workers accepting relatively limited wage increases, because of inflation fears, in return for security. Unions got really integrated into how the American workplace was governed and became a key part of not just worker power, but also control of workers.

Then, after the war, this question re-emerges and Harry Truman says Britain is establishing the NHS (National Health Service); we should do the same kind of thing. The industrial unions are the main basis for that push in the Democratic Party. But by this point the Cold War is starting. The opponents of socialized medicine start campaigning against it. They point to the ways that the labor movement is associated with communism, socialized medicine is associated with communism, and it becomes political poison.

But because of how unions are really integrated into the governance of the workplace, it's possible for them to give up the political fight without giving up their economic position. Their political leverage is severely diminished by the onset of the Cold War but their economic leverage is totally undiminished. They can grind their industries to a halt in auto, steel and coal, which they do, and then they win private health insurance plans. But as they realize that they can do that, Truman increasingly has no mass base for this effort and it falls apart.

It's really in that process, which culminates at the end of the 1940s, that health insurance gets linked to employment. It’s a fateful linkage that we have down to the present in this country: You get access to care through your job. That's because of this weird way that unions are really well established economically, but really weak politically.

Governing: But their victories are also quite fragile. Deindustrialization begins much earlier than is popularly understood. Allegheny County, and the Mon Valley (in western Pennsylvania) in particular, begin losing population in the 1930s. In 1962, unemployment was 20 percent and, even during the boom in the later 1960s, Black unemployment was 16 percent. It’s this very narrow industrial and geographic base that this private welfare state, and narrow social equality, springs from.

Winant: This is a problem with the labor movement everywhere, because you have to organize groups of workers where they are. But where workers are always changes because capital is always trying to move from high-cost to low-cost places and replace workers who are high cost. And so, of necessity, worker organization and worker power moves slower and changes slower.

The steel industry reached economic maturity in the interwar period. It grew up alongside the railroad industry in the late 19th century. That was its period of real dynamism because railroads were its main consumers at that point. It reached economic maturity in the ‘20s and ‘30s and then had a new spasm of growth toward war production in the ‘40s and ‘50s. But that was very heavily dependent on federal subsidies to continue expansion and maintain full employment. Through the cyclical ups and downs, the secular trend from 1950 onward is simply down.

That's replicated across lots of industries. New England towns are losing their textile mills starting after World War II. Lots of industries in cities like Philadelphia are moving by the '50s. With steel, it's not that easy to move because the scale of the capital investment is just enormous: A steel mill is a mile long. But they can certainly shrink employment, which they start to do.

The result of this is that even by the mid-to-late '60s, which is the high point of the postwar boom, there are major pockets of structural unemployment. That's the source of a very familiar political phenomena from the late '60s: the urban uprisings, the Black Panther Party, Black Power, the turn toward anti-poverty campaigning in the civil rights movement. All that is because the jobs that Black people migrated to northern cities for are going away.

The economic side of racial inequality is forcing itself onto racial justice struggles and that's the main way we can recognize the economic process that was happening. That needs to be more important in how we remember postwar industrial work and the social world that it made. It's easy in retrospect to say there were ups and downs, but basically wages were high and benefits were good. But people had to navigate those ups and downs, and it was not straightforward!

Governing: You emphasize that the health industry, largely fueled by union insurance and welfare state expansions like Medicare and Medicaid, began picking up slack as the industrial economy continued slowing and then shuddered apart. But the wages are far worse, and unionization emerged much later. 

Winant: There's a few different dimensions of this. One has to do with economic quality and health-care work, the way in which it's labor intensive as opposed to capital intensive. That means the employer has a fundamental structural incentive to control their labor costs. They can't really do that by replacing labor with capital in health care, instead they try to hold wages down as well as staffing levels. That's true throughout the history of the industry.

That means a lot of jobs in health care are at the bottom end of the labor market. They are done by people who have the least power in the labor market, which has historically been women and people of color. In Pittsburgh that means African Americans; elsewhere, it's immigrants. It's been culturally understood as like housework or wife work in some way.

That's why, until the ‘70s, health care was not regulated by labor law. Hospitals were able to say, we're not commercial institutions, we shouldn't be subject to these rules. Everyone knows that what we're doing when we run a hospital is really much more like running a combination of a church and a family and an orphanage. So these cultural prejudices, which also represent economic pressures, gained the force of law to some degree.

Governing: How did local and state governments react to the trends of deindustrialization and the rise of health care? At the local level, it seemed like there weren't any good options. A lot of these towns were getting half their revenue from property taxes on industry. How did these nonfederal tiers of government handle this social crisis and economic turnover?

Winant: Local government is totally overwhelmed. It has very little in the way of fiscal capacity to buffer people against the economic shock in any except the most basic ways, like shelters for the homeless. Even that is overwhelmed. To some degree that is true of states, too. The state administers unemployment insurance, Medicaid, as well as various other federal programs like AFDC and food stamps.

But Medicaid and Medicare are entitlements that accrue to the individual who carries it with them to the point of service. The scope of what [Medicaid] provided for shrank slightly as the overall volume of care that it bought grew, because more people were meeting the means test, because more people were being immiserated. The result is that the footprint of Medicaid as well as Medicare grows quite significantly through this social and economic crisis as the population gets older and poorer and sicker all at once and virtually nothing else is available in terms of social support, except for punishment.

That's the main alternative that local and state government have. Although they spend a ton of money on it, in some ways it is cheaper than other forms of social provision. Pennsylvania invests very heavily in its prisons over the course of the early 1980s. There was a blue ribbon commission arguing for shrinking the incarcerated population and the state Legislature says no, we're going to go in the opposite direction. We have to build more prisons and have harsher sentences. That’s the only really planned response they had, besides cutting. They shrank various kinds of income assistance and support. But they didn't really exercise much control over the flow of health-care money, which is why it was able to grow.
Pittsburgh's skyline. The heavily unionized steel mills no longer dominate the view or the economy, and have been replaced by sectors of growth in education and health care.
Governing: Your book is about the fall of this old industrial model and the union movement that organized it. Now we’ve seen the rise of a new industry, health care, to replace it, but the unionization of that sector again seems very patchwork. What are the barriers to this new labor movement, besides the obvious unfavorable federal labor laws?

Winant: In any given year, health-care workers are going to account for more strike activity than most other workers. Even in the "Red for Ed" years of 2018 and 2019, that was pretty close to true just because there's so many of them. But there's huge obstacles to organizing in that industry. You're right somewhat to point to the geographical problem, although the health-care industry is uneven in space nationally. Every metro area has a health-care system. Most small towns have some kind of health-care system, particularly ones that have industrial history. It's true across Appalachia, for example; most counties in Appalachia have very large health-care workforces.

The real problem for the possibilities of worker organization is the fragmented industry. There's the stratification of the health-care workforce from doctors at the top to nursing assistants, cafeteria workers and custodians at the bottom. There's a lot of social distance across the hierarchy, more than you would find, for example, in a school where there are teachers, principals are management. Then you have custodial workers and cafeteria. But teachers are larger in number, proportionally, than any comparable group in hospitals.

You also have nursing home care, long-term care, home care and so on. Then there’s public-private ownership and administration and public subsidy and regulation. Players in this industry will often say we would love to pay our workers more, but our margins are basically set by the rate at which insurers reimburse us. We can't really do anything about that, its ultimately determined in the state legislature and in Washington.

They always have more room to move than they're saying, but there’s some truth in it. Public policy does create the parameters in which health-care workers work. It's a very large-scale version of problem that, for example, McDonald's workers have if they try to unionize. The franchise owner would say, 'My costs are fixed by McDonald's HQ.' That basic problem also applies to the entire health-care industry except, instead of McDonald's HQ, you have the federal and state government.

Governing: At the end of your book, you mention that in the early 1990s a surprising victory for the Democrats in a Pennsylvania Senate race signaled that health care was this huge policy concern going into the Clinton administration. How do you see health care playing into the heated gubernatorial and Senate races in Pennsylvania this year?

Winant: We should continue to expect at the level of statewide government, that Democrats are somewhat accountable to Service Employees International Union (SEIU), but are also somewhat accountable to hospital companies and insurance companies. They can split the difference by finding ways of modestly increasing Medicaid budgets and that's good for everyone in that coalition, potentially.

I'm sure if [Pennsylvania Attorney General] Josh Shapiro wins [the election for governor], he will try to navigate among those things and the Republican Legislature will make that harder. But when Democrats control state governments, there is this interesting coalition that often emerges between SEIU and hospitals and nursing home operators around Medicaid reimbursement. It could get harder with the nurse staffing law that the nurses’ union has also been pushing for and could divide that coalition. It's really around the regulation of staffing that questions of distribution between labor and capital in health care gets complicated. If you're just growing the pie, increasing Medicaid reimbursement, everyone gets some. But when you say this much has to go into employment, that coalition splits.

Ultimately in federal politics, the question of "Medicare for All" is going to keep coming out. But it's not going to happen in the near term. Medicaid is where the action is politically in the near term. There are all these gaps in Medicaid that have to get plugged, and a lot of that was in Build Back Better. The size of Medicaid as a program has caught up with Medicare, which means that it's a new kind of political constituency. There's all these organized constituencies, in particular SEIU and [organizations like the] National Domestic Workers Alliance, which have built a lot of pressure around extending and improving Medicaid for home- and community-based services. That's a really big deal, it matters a ton as home care's significance is going to grow and grow and grow for the foreseeable future, as nursing homes are shrinking in the long-term care world. That ought to come up in the election. Pennsylvania remains a very old state.

It seems to me that the Democrats ought to be able to figure out how to get some traction in these deindustrialized towns that were once their strongholds that they've lost their grip on. Those places are really health-care economies. All around Southwestern Pennsylvania, all around Northeastern Pennsylvania. Even setting aside the cities, the Mon Valley towns, all the former coal towns and steel places in the northeast have this pattern where health care is over one in five jobs. Medicaid and Medicare are huge sources of local income, and residual retiree benefits still matter. The idea of increasing the generosity and scale of those programs in order to improve caring conditions and working conditions simultaneously — that ought to play.
Jake Blumgart is a senior writer for Governing and covers transportation and infrastructure. He lives in Philadelphia. Follow him on Twitter at @jblumgart.
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