In the early 20^th century, San Antonio had become the center of a modestly lucrative industry – pecan processing.  Prior to the Depression, the business had started taking steps toward mechanization, but the country’s economic collapse began to reverse that trend.

By the early thirties, thousands of poor San Antonians, mostly Hispanic, were surviving on poverty wages working long hours shelling pecans by hand.  The business owners were making more money than ever, while mechanization halted, and poverty intensified across the city.

The situation in San Antonio attracted the attention of two different groups: Communist labor union organizers and Roosevelt’s new federal bureaucracy.

When I use the term “Communist” here, I’m not talking about the characters in a Glenn Beck episode.  I’m not talking about people who dress like Communists, or talk like Communists, or sat next to a Communist on a bus once.  Emma Tenayuca was a San Antonio native and Communist who was actually married to the leader of the Communist Party in Texas (that’s right, there was one).  She worked through the ‘30’s to organize the pecan workers in that city.

The classic Marxist union model for dealing with the workers’ economic problem was simple:  raise their “class consciousness” so that they could effectively organize as a unit;  secure higher wages through collective bargaining; then introduce other reforms that would prevent the workers from being fired or displaced.  It wasn’t just about wages or working conditions because the union had more worries than pay.  The union wanted to keep their power by preventing workers from opting out and by preventing owners from replacing workers with machines.

The Feds in this case, though generally friendly to unions, had a different priority – a blanket minimum wage.  They sought to put in place bureaucratic curbs that would create a kind of floor over the muddy bottom of American poverty.  A nationally standardized set of minimum working conditions were meant to change the incentives in the economy away from degradation and toward development.

After years of organizing and two prominent strikes, by 1938 Tenayuca’s union was able to achieve a few modest concessions from the business owners.  But her last major campaign was interrupted when the federal government finally imposed a minimum wage that would cover the workers.

What happened next is where the whole process gets really interesting.

Because of the federal intervention, wages for pecan workers skyrocketed overnight from a few pennies an hour to a whole, shiny quarter.  That was miles beyond what the union had been requesting.  The union didn’t need such high wages.  It was far more concerned with providing job security to protect their new power-base.  Having more dues-paying workers was far more important that having fewer, richer, dues-paying workers.  The new union actually petitioned the Feds to eliminate the minimum wage for the pecan shellers.  The Feds refused, and insisted on enforcing the new standard.

With wages increased to a reasonable level, it didn’t make sense for the processors to continue to employ thousands of people in degrading conditions.  The companies began an aggressive process of mechanization.  The number of people employed in that industry plummeted, from as many as 11,000 in the mid-thirties to about 600 by 1939.  At the same time (and this is very important) the wages of the remaining workers soared and the industry prospered.  The Pecan Workers’ Union had faded away by the late ’40′s.

Understanding why this was a good thing is critical to understanding why we are so rich today, why we don’t know it, and why we are in such danger of killing the goose that laid the golden egg.

It’s a topic for a follow-up article on Labor Day

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As an aside, there is an excellent account of the Pecan Shellers’ Strike in Robb Walsh’s The Tex Mex Cookbook: a history in recipes and photos.  That’s where I first learned of it.