Did US labor's post‐World War II successes lead to its subsequent woes?

Purpose - Whereas a combination of unique historical conditions and a specific set of public policies in the United States enabled labor to significantly increase its relative power during the quarter century following World War II, this halcyon period for labor was followed by a period of over two decades during which labor's relative status and power declined. This paper explores this reversal of fortunes. Design/methodology/approach - Although the current plight of labor has been extensively studied within the discipline of economics, these studies have typically focused upon specific aspects of labor's declining status. In this study, labor's plight is examined within the larger context of the institutions and dynamics of capitalism as a socio‐economic system. Within this broadened context, an exploration is made of whether the sustained period of progress for American labor set in motion the creation of forces that eventually led to reversal. Findings - Labor's relative successes in the quarter century following World War II encouraged behavior that enabled the interests of capital to politically legitimate policies that, combined with trends in international trade and technology, served to decrease the relative power and welfare of labor. Research limitations/implications - Further research is needed to determine whether there are other instances of a dynamic whereby labor's successes set in motion forces that lead to reversal. Originality/value - This study emphasizes the importance of a broaden institutional focus for grasping important economic changes in society.