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Chapter 7: Nixon and Ford Administrations, 1969-1977



Richard Nixon succeeded Lyndon Johnson in 1969 after defeating Hubert Humphrey in another close election. The Vietnam War wound slowly down and relative domestic tranquility, shattered in the 1960s by war, political assassinations, and ghetto rioting, gradually returned. Faced with inflation fueled by wartime conditions, the Administration briefly imposed wage and price controls. A start was made in "welfare reform." The apparatus of the "Great Society" was partially dismantled and significantly restructured, but many of the programs created under its banner were expanded. The program was redirected in line with the Administration's "New Federalism" program, which gave state and local government more control over federally funded programs.

After a landslide reelection victory in 1972, the fortunes of the Nixon Administration went quickly downhill. The revelation of improper activities in 1972 by the Nixon reelection campaign led to congressional investigations into what became known as the Watergate crisis. The investigations discovered a White House coverup of its role in these reelection activities. When the House of Representatives began voting on articles of impeachment against Nixon, he resigned in August 1974 rather than prolong the process. His Vice President, former minority leader of the House of Representatives Gerald Ford became President. The brief Ford Administration (1974-1977) continued Nixon's basic domestic program and presided over the Nation's Bicentennial in 1976.

A succession of five Secretaries of Labor served during the Nixon and Ford Administrations, two in Nixon's first term and three afterwards. Fortunately, this did not lead to administrative chaos. Four of the five Secretaries had worked extensively together on Labor Department matters. In fact, three of them worked together at the Department for a time. A varied and talented group with backgrounds in business, labor and academe, they were well aware of the policies and programs of the Department when they were appointed.

George P. Shultz was President Nixon's first appointee to head the Department. An economist with special expertise in labor problems and issues, Shultz was described as an "intellectual conglomerate." He was dean of the graduate business school at the University of Chicago at the time of his appointment and had served several Administrations in advisory capacities. While running the Department of Labor he also played a major role in formulating the Nixon Administration's economic policies. Shultz had excellent relations with organized labor and served as the Administration's chief contact with the AFL-CIO. Shultz left the Department in June 1970 to head the newly created Office of Management and Budget (OMB). While he only served 18 months as Secretary, Shultz's tenure set the general course which the Department followed until January 1977.

Shultz was succeeded by James D. Hodgson, his Under Secretary. Hodgson had 25 years of experience in personnel work with Lockheed Aircraft Corporation, rising to vice president for industrial relations. Well-regarded in both business and labor circles, Hodgson had a reputation for innovative labor-management programs and a particular interest in hiring and training disadvantaged workers. A self-described "people person," he concentrated on administering and strengthening the Department's programs in these and other areas. Shultz continued to serve as liaison with organized labor from his post at OMB and later as Secretary of the Treasury. At the end of President Nixon's first term he asked for and accepted the resignations of his entire Cabinet and their top staffs, resulting in the departure of Hodgson in January 1973. He subsequently accepted the post of ambassador to Japan.

The three secretaries who served from 1973 to 1977 had less opportunity to have as much impact on the Department as did the Shultz- Hodgson team. Succeeding Hodgson was Peter J. Brennan, an experienced unionist from the New York City building trades who was serving as president of the city's Building and Construction Trades Council. Brennan, who had served on various state and national advisory bodies, caught Nixon's attention when he led a group of New York "hard-hats" in a march in support of the President's Vietnam War policies.

Brennan served for a time under President Ford and was replaced in March 1975 by John T. Dunlop, a distinguished labor economist with long years of service advising the federal government on labor issues. Dunlop embarked on an ambitious effort to reexamine and improve a wide range of regulatory and employment and training programs at the Department. He served less than a year, resigning when President Ford vetoed a labor bill whose passage Dunlop had sought. Ford's second appointee, Willie J. Usery, was a familiar face at the Department. Another trade unionist, Usery was then serving as Director of the Federal Mediation and Conciliation Service. He had served as Assistant Secretary of Labor for Labor-Management Relations under Shultz and Hodgson before going on to the FMCS. Considered the best labor mediator in the country, Usery was an appropriate choice at a time when the country faced a round of important union contract negotiations. Usery's term ended in January 1977 when the Ford Administration left office.

The federal government and the Department of Labor were faced with challenging problems in the Nixon-Ford period and new approaches were employed to deal with them. Energy shortages imposed new hardships. The economy was troubled by inflation, recession and rising unemployment. The broad approach of the Nixon and Ford Administrations to these problems was to decentralize control of federally funded programs to make them more responsive to local needs. A "New Federalism" program promoted an equal partnership between the federal government and the states and localities. It sought to replace the federal presence, as much as possible, with local decision-making and flexibility. The main practical means of implementing this was through block grants and revenue-sharing. These allowed local authorities to decide which categories of federal programs to use and how much to spend on them.

Facing new problems under new presidential leadership, the Department of Labor revised and expanded its activities in this period. The Department's budget and responsibilities increased greatly, partly a result of new legislation. To implement New Federalism, it helped and encouraged local government to deal directly and flexibly with such problems as unemployment and underemployment. It also sought to expand programs to protect the physical and economic welfare of all American workers while assuring speedier and more efficient delivery of services. Government intervention in collective bargaining was kept to a minimum. Lastly, the Department's extensive regulatory activities which were mandated by Congress were examined, reformed and expanded.

Nowhere did the new approaches manifest themselves more fully than in the Department's labyrinthine employment and training program. Secretary Shultz compared the old Manpower Administration organization chart to a "wiring diagram for a perpetual motion machine." To reduce red tape and simplify bureaucratic procedures, the MA was restructured in 1969 to give the Manpower Administrator full authority for all programs and direct line authority over the eight field offices. Certain functions were combined and overlapping responsibilities eliminated. For example, the Bureau of Work Training Programs which had administered NYC and other programs was merged with the Bureau of Employment Security to form the new U.S. Training and Employment Service. A few years later the MA was renamed the Employment and Training Administration to meet federal guidelines for "sex-neutral" terminology.

Passage in 1973 of the Comprehensive Employment and Training Act (CETA) was the culmination of the process of "manpower reform" begun in 1969. CETA replaced the existing network of federal categorical employment and training programs with a form of revenue-sharing. Funds and decision-making authority were transferred closer to local elected officials. CETA "Prime Sponsors," mostly states, counties and cities, received funds and were commissioned to plan employment and training services for their local area.

The employment and training program received a huge, if temporary, expansion with the passage of the Emergency Employment Act of 1971. This anti-recessionary measure provided $1 billion for the creation of nearly 170,000 temporary public service jobs. There was also a long-term goal of opening up career public service job opportunities for needy people. The funds were channeled to communities with high unemployment. More than 40 percent of the jobs were in public works, transportation and education. Most of the jobs went to veterans, minority-group members and the economically disadvantaged.

In 1969 the Job Corps was shifted from the Office of Economic Opportunity to the Department. Created as part of the War on Poverty, the Job Corps provided job training for needy youths at residential centers, usually in rural areas. The ability of many of the centers to retain Corpsmen for the full training period or to place them in jobs had come under question. When the Corps was switched to the Department, half of the training centers were closed and the capacity was reduced by one-third. New centers were opened near urban areas and sought to provide Corpsmen with a wider range of training and employment services. These centers also had the advantage of being near the Corpsmen's homes, reducing emotional and behavioral problems associated with homesickness and unfamiliarity with a new area.

There were many other efforts by the Department in these years to benefit those needing training and employment. Computerized job banks were set up in several cities to speed up the process of matching jobs and job-seekers. A Jobs for Veterans program, conducted cooperatively by the Department and private business groups, placed millions of Vietnam era veterans in jobs or training. The Department played a key role in the Work-Education Initiative which focused on problems youths had in the transition from school to work. This program set up a pilot network of work-education councils to mobilize groups and institutions in local communities. Greater efforts were made on behalf of migrant workers to enhance their economic security and opportunities for year-round work. The Department also sought to help engineers, scientists and technicians who were jobless because of changes in national defense and space programs.

In 1971 the Department acquired one of its most important and demanding responsibilities ever with the enactment of the Occupational Safety and Health Act. This law requires the Secretary of Labor to set and enforce safety and health standards for almost all of the nation's workplaces. After several years of consideration and debate in the Congress beginning during the Johnson Administration, a compromise was reached between those who wanted the Department to administer the law and those who wanted an independent agency to do it. The final legislation gave the Department power to set and enforce standards but established a separate review commission to oversee enforcement. The Department set up the Occupational Safety and Health Administration (OSHA) to implement the law. New Federalism found expression in the provision that the Department would oversee, assist and partially fund the development and operation of state-operated safety and health programs. Eventually about half the states developed OSHA-approved plans, which meant OSHA did not have to enforce federal law in those states.

OSHA has been one of the most controversial programs in the Department's history. Early on, inspectors attempting to enforce privately developed safety and health regulations which the agency adopted hurriedly in 1971 ran into criticism, not all of it unfair, for being "nitpickers". As new health standards were developed, the costs of compliance caused much opposition from manufacturers. Attempts to accommodate them caused consternation among the unions. In 1975 the agency's program was reevaluated and a health scientist was brought in to redirect the agency to concentrate on the more serious workplace problems.

Promotion of equal job opportunity became an ever more important activity of the Department. Early in the Nixon Administration the Department sought to knock down barriers to blacks seeking jobs in the booming, high-paying, and largely white construction industry by promoting voluntary minority- hiring agreements between unions and contractors. There were some impressive results but progress was slow. To accelerate the process the Department adopted the "Philadelphia Plan." Based on a similar plan devised during the Johnson Administration but never implemented, the Philadelphia Plan set a range of percentages of minority hirings with which contractors would be required to make a "good faith" effort to comply. When ordered into effect in September 1969 in its namesake city, the plan aroused controversy and heated opposition. Congress considered but rejected legislation to ban it. In February 1970 the Department announced the plan would be extended to other cities unless they devised their own procedures for ending job discrimination in the construction industry. Developed with assistance from the Department, "hometown" solutions were adopted in many cities. Under these plans, local contractors, unions and minority organizations signed equal opportunity agreements covering private as well as federally funded construction. The Office of Federal Contract Compliance Programs (OFCCP) coordinated these and other equal opportunity efforts and helped to improve their management.

The income security responsibilities of the Department received a tremendous boost from a number of important laws enacted in this period. The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to protect the retirement benefits of American workers and to improve their opportunities to participate in pension plans. It requires the Department to see that over one million pension plans are managed soundly and for the benefit of the participants. The Congress raised the minimum wage in stages to $2.30 an hour by January 1976 and coverage was extended to 1.5 million domestic workers. Congress also attempted to include government workers but in a case brought by the National League of Cities the Supreme Court ruled against coverage of this group. The unemployment insurance system was improved in a number of ways: coverage was expanded to cover an additional 5 million persons; for the first time a permanent provision was made to extend benefits during periods of high unemployment; and, financing levels were increased to keep the system solvent. Finally, the Trade Reform Act of 1974 provided improved benefits for workers displaced from their jobs by import competition.

During this period the Department tried to avoid involvement in labor-management problems. The principal exceptions were a few transportation strikes that required federal intervention because they affected the national interest. An area of special federal government interest and involvement was labor relations with its own employees. During previous Administrations there had been growing recognition of the rights of federal employees to organize and bargain. In 1969 President Nixon signed Executive Order 11491 making sweeping improvements in the federal labor- management relations program and bringing it more into line with practices in private industry. An illegal strike by postal workers in 1970 severely tested the federal labor- management program. The Department played the lead role in mediating the strike. After troops were briefly called out, a compromise was reached with the militant postal unions and the strike was quickly ended.

Another area that was of special interest to the Department was labor-management relations in the construction industry. This was crucial because in the late 1960s inflationary pressures growing out of the Vietnam War buildup drove wages in this industry up at double-digit rates, making the costs of construction skyrocket. Labor shortages and high turnover were creating chaos in the industry. In 1971 the President temporarily suspended the Davis-Bacon Act, vital to the construction unions, in an attempt to control wage inflation. Shortly afterward he reinstated Davis-Bacon enforcement and ordered the establishment of the Construction Industry Stabilization Committee. This body oversaw a system of separate craft union boards and reviewed their contract settlements. By 1972 the program had brought annual wage increases down from almost 14 percent to under 6 percent.

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