The Employers Association of New Jersey: helping good employers be better with advice, counsel, education, training and access to benefits plans.;xNLx;
The Employers Association of North Jersey, an unincorporated, voluntary association comprised of dues paying manufacturers in Newark, New Jersey is formed. Its first documented president is Clarence Newell Wheeler, Yale graduate and son of Schuyler S. Wheeler, the imminent engineer, inventor and co-founder of Crocker – Wheeler, manufacturer of electric fans, motors and generators. Newark is a great industrial city comprised of textile, chemical, leather, machinery, automotive parts and other manufacturers of the everyday necessities for a growing Americans middle class. Meeting at the Downtown Club, the group has come together to protect their interests in the face of a wave of legislation on the national and state level, including child labor, minimum wage, overtime, an 8-hour workweek and workers compensation insurance. Having ratified the 16th Amendment in 1913, enabling a federal income tax, and having elected Woodrow Wilson on a progressive reform platform, the country is changing rapidly, as government regulation increases. But the group’s chief worry is labor union organizing and its primary objective is to ensure Newark remains an open-shop. Immediate concerns are 1,600 cutlery workers who strike for higher wages and a shorter workweek and over 10,000 machinists, exempt from military service, who disrupt the production of vital war material. Also, over a presidential veto, Congress restricts immigration, shrinking the labor pool and emboldening unions across industries to aggressively assert their demands.
With the end of the Great War, labor unions press their demands. Newark remains an open shop city, but striking workers demand a 44-hour workweek and a 10 percent increase in piece work pay. New Jersey courts recognize the right of workers to strike but not to intimidate employers into agreeing to the closed shop. Thus, each strike is litigated over individual facts and circumstances. The cutlery manufacturer R. Heinisch Sons is shut down by a strike and settles with the United Brotherhood of Metal Workers. The International Jewelry Workers Union demands a 20 percent raise, double-time for overtime pay and the end to the “slaving piecework system.” EANJ’s Secretary, Arthur M. Torrey, writes that “closed shop unionism stifles initiative by holding down performance to the level of mediocrity and that the closed shop is unfair to the independent worker, to industry and the public.” He also argues that open shop workers are paid more. Destined for the Supreme Court, Duplex Printing Press v. Deering is making its way through the federal court as employers seek court orders to end strikes. Secretary Torrey also serves as a delegate to the National Immigration Committee, which is headed by the renowned constitutional and civil rights lawyer Louis Marshall. The Committee lobbies Congress to eliminate literacy tests as a condition of immigration. The Association fears a near total loss of unskilled workers from southern and eastern Europe, thus shrinking the labor pool further and raising wages well above what employers are willing or able to pay.
As the United States withdraws the last of its troops from Germany and with prosperity returning, unions press aggressively for wage increases. However, the U.S. Supreme Court has held that while collective bargaining is legal, striking, picketing, boycotting or other coercive measures to promote bargaining could be unlawful. A wave of labor unrest across the country inspired by socialist agitators is no doubt worrying EANJ board members. Even Sinclair Lewis’ Zenith descends into two belligerent camps comprised of owners and workers. The board president, Charles B. Johnes, co-owner of Benjamin & Johnes, a manufacturer patented corsets, braziers of other ladies’ under garments, and other board members begin discussing incorporating the Association as a nonprofit organization, hiring a staff and expanding membership beyond Newark. The voluntary association is soon dissolved and EANJ incorporates to, among other things, advance “the principles of individual freedom in industrial relations” to “secure property rights and freedom of contract” and promote “just and equitable dealings whereby their relations will be improved and the interests of both properly served.” Among the board’s first official acts is to hire Arthur Torrey and an assistant, A. Hoehne, and to establish committees to track legislation and provide information to members for “employee education.”
Working from offices at 45 Academy Street, the Association expands its interests and engages in state and national issues, including worker health and safety and the child labor constitutional amendment. The board opposes the metric system, supports covering occupational disease with workers’ compensation insurance and is concerned with ongoing attempts to organize women who work in the factories. They support technical and vocational training and establishing an engineering college in the state. Charles Johnes retires and resigns from the board. The Association’s new president, Cyrus H. Loutrel, a Harvard graduate and engineer and president of the National Lock Washer Company, serves in the N.J. Assembly and on the board of the Newark School of Engineering. Secretary Torrey serves on various committees and commissions to broaden the mission but a big meeting with a national keynote speaker is cancelled due to lack of interest among the membership. Newark remains the home of small manufacturers and marginal job shops, soon to be overwhelmed as the industrial economy changes dramatically. A financial panic quickly spreads to the bricks-and-mortar economy. As the new decade approaches, manufacturers consolidate, cash out, move out of state or go out of business. An economic calamity engulfs the nation and the overall negative business conditions warrants the Association’s first member promotion campaign.
The stock market crash, financial panic and the long desperate years of economic decline wreak havoc on the Association's membership. Many manufacturers close, others slash jobs and wages. The mills of Passaic, Paterson and Clifton are plagued with walk-outs and sit-down strikes. Violence erupts and local authorities find it difficult to restore order. The EANJ board contemplates withholding municipal taxes until the city of Newark can restore order. The election of Franklin D. Roosevelt and the flurry of economic and labor regulations that follow, add to the intense sense of urgency felt by the Association. While the National Industrial Recovery Act is invalidated by the Supreme Court, the National Labor Relations Act and Fair Labor Standards Act are upheld. A wave of aggressive union organizing is unleashed. Big national industries, such as autos and steel, accept union shop agreements and are encouraged by the Roosevelt Administration to form cooperative arrangements, resembling cartels, to fix prices and production quotas. But to local proprietors, union shop agreements remain anathema to their business models. Even as membership dues decline due to economic depression, the new labor-management regime of institutional conflict ensures the Association's relevance. The employer-employee relationship has been forever transformed by the New Deal.
Always concerned with the potential that labor unions would become instruments of socialism, Secretary Torrey testified against the National Labor Relations Act before the Senate Labor Committee, predicting that it would promote “class antagonism.” Indeed, Newark’s laboring and ownership classes are bitterly divided between social and labor reform and free enterprise. More than that, all of Europe is divided over militant ideologies. The Association works closely with the National Association of Manufacturers on federal issues but much of the concern is local and immediate, as worker walk-outs and sit-downs continue. Newark has elected a pro-labor city council and the manufacturers are on the defensive. But the tumult in Europe cannot be ignored as federal government spending increases for national defense and men are conscripted into the military service. The EANJ board grows concerned about the shortage of skilled labor and discusses training “women in men’s jobs.” A survey is taken to identify skilled workers essential to local defense industries and to advise them on sponsoring deferments. Franklin Roosevelt is elected to an unprecedented third term and it is clear that the dreaded closed-shop has been imbedded into law and national policy. The Association has lost the long struggle against the closed-shop. As the nation prepares for war, no one can predict the profound and unalterable changes world war would produce.
A critical year on the American home front. The Japanese attack on Pearl Harbor, followed by a series of U.S. defeats in the Pacific, left many feeling demoralized, vulnerable, and anxious. The government is in desperate need of a plan to boost morale and raise funds for the war. After a brief surge in response to Pearl Harbor, war-bond sales had dropped dramatically. The Association buys war bonds. As war production expands, bringing economic recovery to some industries, others are hampered by material shortages and restrictions. Fearing over regulation of production, EANJ opposes a mandate by the War Manpower Commission designating Newark a Critical Labor Area but endorses instead a voluntary plan on a trial basis. Secretary Torrey serves on the local manpower committee. Other local concerns are addressed, including “the drafting of men who are needed urgently in production of war materials” “the unpatriotic nature of unwarranted absenteeism by workers on important war materials” the “education of new employees” and the “substitution of women in men’s jobs.” The Association supports a national registry for labor unions, an amendment to the Selective Service Act making foremen ineligible to join a union and promotes the recruitment of business executives to serve on the National War Labor Board. Secretary Torrey serves on the NWLB’s Appeals Review Committee. But EANJ’s board also recognizes that the war is an existential struggle for democracy. It supports a panel discussion convened by the Council for Democracy to address the “integration of Negroes into industry.” But always with a steely eye on the preservation of the free enterprise system, the board authorizes Secretary Torrey “to purchase and distribute to clergymen, teachers and others an adequate number of reprints of a Readers Digest article entitled “What is Profit?”
The Association hires Harold R. Hawkey as assistant secretary. At the time, post-war walk-outs and strikes are paralyzing transportation and commerce. Even coffin makers walk off the job. Educated at Princeton and with a law degree from Columbia, the new assistant secretary is energetic, with a keen eye toward public relations. Indeed, a Republican majority in Congress enacts the Taft-Hartley Act over President Truman’s veto, providing employers with new legal tools to remain union-free, including the ability to speak freely with employees and the public about the dangers of unionization. Under Secretary Torrey’s direction, the Association launches a campaign to “uphold the principle of the right to work without paying tribute” and “protect the public from Communist control of labor unions.” But the Secretary’s zeal is stymied by ill health and the assistant secretary is promoted to succeed him after his death. Arthur M. Torrey served EANJ for over thirty-years, advancing its mission through world war, stock market crash, financial panic, economic catastrophe, the rise of unions and big government, and the legalization of labor-management conflict. He was in the middle of it all, serving tirelessly on national and state boards, committees and commissions, working with clergy, educators, legislators and business leaders to promote the American ideals of freedom of contract and private property. He foresaw the changing nature of social and economic relations, the new science of “personnel management” and the role of the expert in business operations. But in the Age of the Expert, it would be Harold Hawkey, an Ivy League-educated lawyer who served on the Wage and Price Stabilization Board during the war, who would shift the Association’s focus from public and civic leadership to technical expert advice.
As Big Business, Big Labor and Big Government cooperate to stabilize the economy, flatten out the boom-and-bust cycles and more efficiently allocate resources and distribute wages, New Jersey remains a small business state, comprised of small shops. Second-generation owners remain cheek-to-jowl with workers on the shop floor. The closed-shop has given rise to a curious combination of paternalism and vigilance. To remain union-free, employers promote teamwork and fair play but must also apply technical legal standards to the employer-employee transaction. Too much teamwork violates the law; too little invites union organizing. Too much fairness risks the loss of authority and the perception of weakness; too little stokes resentment. Secretary Hawkey is a master of the legal rules as employers increasingly seek out his advice. Association membership grows beyond the greater Newark area, as employers begin to hire labor relations specialists who need access to techniques and expertise. Arthur Torrey was a conscientious booster of the free enterprise system, a believer in the natural law of private property, a champion of sacred ideals. In contrast, Harold Hawkey is the consummate expert, confident that the right technical advice will solve most any problem, a champion of the technical solution. The workplace has gotten real complicated, real fast and soon EANJ will become the premier employers’ organization for critical advice, counsel and information.
The civic-minded, noblesse oblige of owners toward their employees has now given way to hired operatives applying human relations techniques on the shop floor and the Association's mission to secure and preserve the natural rights of private property becomes irrelevant. More than that, the small shops in Newark begin to close. Paradoxically, as business and industry less a local affair, the Association turns inward. The board members, still comprised of owners and general managers of local manufacturing firms, are holdouts to the old paternalistic order. Board meetings are a safe haven for men to mimic the conventions and mores of their fathers and to enjoy the camaraderie of like-minded fellows. Since the legal reality of the union shop, there is no great cause to arouse the emotions and formal board actions are more or less symbolic gestures like discussing whether to have term limits or whether they should change the venue and time of monthly meetings. The board does vote to change Secretary Hawkey's title to Executive Secretary But as the board dithers, the ne-named Executive Secretary does indeed find a cause. On the one hand, he is an Ivy League trophy for a board that enjoys the privilege of feeling like they have expert legal counsel on retainer. But on another, he is the driving force to ensure the Association's relevance. His cause is serving board members personally with advice and counsel and by extension, the membership at large. Staff is hired to engage the membership and fulfill the organization's primary mission - exchanging information on wages, fringe benefits, unions and labor relations techniques - as Harold Hawkey sets up shop and a new board charts a course into the new frontier.
Even during the war, when Newark's industries clattered and hummed 24-7, small manufacturers had trouble competing against the economies of scale of the big firms. As New Jersey's suburbs expand, business and industry follows and the city is left to economic decline and political corruption. At his last press conference, President Eisenhower had warned the nation against a permanent "military-industrial complex." But one man's complex is another's market niche. New Jersey is now home to hundreds of small, niche manufacturers, employing thousands of workers, producing all manner of devices, switches and electronics for national defense contractors. In a closed-shop state, EANJ remains relevant but for big firms with unions, wage increases are easily passed on to customers. While Mr. Hawkey is keen to demonstrate EANJ's value to these big, complacent firms, the new, mostly college-educated management class is trained to cajole the workforce and they view EANJ as a relic from a more fractious era. Moreover, comfortable in their own niches, EANJ board members are somnolent in the face of impending, dramatic change. The Executive Secretary sees the writing on the wall and senses that the Association must adapt to a changing economic order. For smaller firms, his proposal to stem increasing healthcare costs with an Association medical and hospital plan is tabled by the board. They do not sense an existential threat to the organization. Mr Hawkey is energetic but remaining relevant during a paradigm shift requires strategic leadership.
Board leadership does not materialize, as membership dips below 400. Still declining, there is a palpable sense of urgency and with it, a renewed sense of purpose, although the board is dead-locked on whether to permit non-manufacturers into the membership. On an annual budget of about $140,000, two-full time clerical staff handle correspondence and filing, as three staff members conduct research and surveys and convene seminars and workshops. The assistant secretary, Mathew Rinaldo, a graduate of Rutgers University and with an MBA from Seton Hall University, is a dynamo at promoting the organization. He visits potential new members and hob-knobs in Trenton when the legislature is in session. He would leave after five years to serve in the N.J. Senate and later in the House of Representatives (R, 12th Dist) but not before helping to increase membership significantly. Harold Hawkey, remains the expert, handling all of the labor relations issues and publishing reports and bulletins, but he has relied on his assistant’s marketing acumen to increase membership. Nevertheless, Mr Hawkey lays out a growth strategy, which would include sponsoring a group disability and life insurance plan for members and providing on-site supervisory training. The insurance plan is rejected by the board because it would only attract small employers that pay minimum dues. The training could pay for itself but concerned about its tax exempt status, the board is reluctant to charge a fee. Even though the Equal Opportunity Employment Commission has been authorized to investigate and remedy workplace discrimination, initiating an “equal employment opportunity” program to help employers comply with the law is tabled. But due to modest membership growth, frugal budgeting and wise investing, the Association has built up a Reserve Fund that can be invested in new programs, if and when there is a strategy that can be agreed upon.
Successive recessions, inflation and oil shocks throw the economy for a loop. And high unemployment, mounting plant closings and declining manufacturing employment causes EANJ’s membership to decline precipitously. As large employers begin to defect and attendance at meetings decline, there is conflict among board members on whether to raise dues (which haven’t been raised in a decade) and whether to expand membership to banks and hospitals. There are discussions about a possible merger, term limits for directors and a succession plan for Mr. Hawkey. John M. Ricker, owner of the metal fabricator Falstrom Company (est. 1870) is elected board president and fills a leadership void. Dues are raised but a critical board decision is also made to tap the Reserve Fund in order to subsidize operations and to expand services. A compensation specialist and program assistant are hired, a computer is purchased and fees for all seminars and programs are reduced. Another critical decision is the expansion of membership to non-manufacturers and to recruit new members in “south Jersey.” To reflect this aggressive growth strategy, the name of the organization is changed to the Employers Association of New Jersey, its offices are moved to a prestigious West Orange location and Mr. Hawkey is given a one-year term as Executive Director, renewable year-to-year at the Board’s discretion. But in the end, the decisions to deficit-spend during this period of rapid deindustrialization and to diversify membership beyond manufacturers prove monumental and are tantamount to the first important restructuring of the Association since its inception.
While the Association board has allocated reserve funds to pay the bills and to invest in expansion, it is not sanguine over the prospects of a recovery. Most of Newark’s manufacturing base has left and only the ruins of a by-gone era remain. Indeed, the long, painful hollowing out of the state’s economy triggers a protracted evaluation of how to survive until the next boom cycle. A rift opens between Mr. Hawkey, whose imperious lawyerly skills are not well suited for marketing and promotion, and some board members who are pushing for an aggressive growth strategy. Nevertheless, there is agreement on increasing the quantity and quality of Association publications, including a manual that codifies federal and state labor and employment standards. Given Mr. Hawkey’s credibility as an expert, the publication soon reaches iconic status, eventually making its way onto every bookshelf. Updates provide a useful way to remind employers of the value of EANJ membership. The board struggles for a strategic plan, committees are formed and reports are issued. More study and frustration follows. But in the end, a strong economic recovery boosts membership growth. As new members are mostly small establishments, the Association will remain vulnerable to the capriciousness of the boom-and-bust-cycle. But growth among the emerging service sector is solid and, importantly, membership growth is statewide. Resort to reserve funds and even to a line of credit remains necessary but the Association, Mr. Hawkey and perhaps the whole country, have dodged a bullet.
In his Montclair High School Year Book, Harold Hawkey’s selected an obscure English scientist for his quote - “The world knows little of its greatest men.” Mr. Hawkey, the Ivy League-educated lawyer, did not labor in obscurity and his love for EANJ was not unrequited. He is recognized as one of the foremost labor lawyers of his generation and his dedicated and distinguished service to EANJ, ending with his retirement in 2000, represented 52 years of unwavering commitment to servicing the Association with an exceptionally high standard of excellence. With the passage of the Taft-Hartley Act in 1948, the closed shop was outlawed but the union shop was legalized and Mr. Hawkey found himself in the forefront of post-war industrial relations. He never billed by the hour so his unrelenting drive for outstanding service came completely from within. But ever the pragmatist, such a practice endeared him to employers who never got a bill. However, lawyers do not necessarily make good leaders; they expertly apply the facts to the law but most do not imagine new possibilities. Without new opportunities for growth, the Association was more or less left to the vicissitudes of the economy. With job growth in the state, the Association grew but without robust economic activity, it remained vulnerable to stagnation and decline. Near the end of Mr. Hawkey’s tenure, the Association’s market space had been permanently altered by long term trends that simply accelerated over his past few years. Chief among these trends were the continued depletion of manufacturing in New Jersey, the consolidation and relocations of the state’s major industries, the de-skilling and outsourcing of the of the HR function, the decline of labor unions, and a state government at or near bankruptcy. The Association had reached the end of another era, requiring new leadership to re-imagine, restructure and realize new opportunities for membership growth.
New Jersey’s manufacturing hollows out and unions descend into a death spiral. Most of the small manufacturing that remain are scattered throughout the state and employ mostly immigrant labor. The national labor law lies dormant but the U.S. Department of Labor alone is enforcing 180 laws, rules, regulations, standards and executive orders and for business and industry that now competes globally, it seems like the worst of all possible worlds – small margins and big government. Additionally, the state Supreme Court permits at-will employees to sue for wrongful termination and the state legislature enacts some of the most pro-employee laws in the country. The plaintiff’s bar has filled the breach once occupied by labor unions. Pamela Bronander, co-owner of Scandia Packaging Co. is the first women appointed president of the EANJ’s board (her father Wilhelm, served thirty years earlier) and with the executive committee, John J. Sarno, an experienced lawyer, manager and educator, is hired as the Association’s third executive director. Mr. Sarno brings a skill-set that increases membership growth and generates new revenue. He also has the imagination and energy to provide national and statewide thought leadership. In his first year, the Association enrolls over one hundred new members, the first time in its history. With renewed vigor, the Association is poised to become a premier employers’ organization.
At the turn of the century, extraordinary effort, continued improvement and focused innovation results in tangible bottom line results, including the biggest percentage increase in new member enrollment in history and increasing revenue. As the state’s economy continues to roil and churn, Mr. Sarno and the board pursue a strategic vision value innovation. Every new dollar revenue is invested directly into expanding products and services. Productivity is sustained at exceptional levels and a large and robust group of loyal members take an active role in growing the membership through word-of-mouth referrals. Even the state Department of Labor is actively referring employers to EANJ. Mr Sarno creates and teaches HR law classes and certificate programs and he and the staff expand seminars and introduce webinars. He produces a cable television show and appears frequently on local radio. He travels the state, speaking to thousands of employers, and writes articles and manuscripts. He and the staff provide training to employers so that they comply with labor and employment laws. The Association advocates for employers in the courts and comments on pending legislation. A premier website is launched, featuring compliance and training tools. As most of Mr. Sarno’s work takes place at the intersection of business, law, government and academia, he is a frequent panelist, moderator, keynote speaker and media commentator. When hiring John Sarno, the EANJ board knew that they were getting a fine lawyer and astute manager. To their surprise and relief, they also got an innovator and promoter.
The first decade of the twenty-first century is a watershed for the Association. In significant ways, this decade demonstrates the Association’s resilience and adaptability, and its ability to create value and revenue in spite of a drastically shrinking pool of employers. Even as the state’s economy deteriorates, the Association’s revenue remains robust until the economy becomes engulfed by what commentators have called the “Great Recession.” According to The Wall Street Journal, “the U.S. hasn’t seen a contraction as deep as this one since before World War II, and employers have cut workers faster than history suggested they would even in a recession as deep as this one.” Indeed, this era “will go down as one of the worst years in U.S. history.” For most of the state, this is a time of simmering agony as a constant spate of layoffs and pay cuts roil the membership. Even local and state government furlough workers. But perhaps the most profound and transformational change to the Association’s business model has been to incorporate member enrollment and retention in the value chain. In other words, the activities and energies of the staff are focused simultaneously on delivering quality services to members and increasing the value of the Association’s brand. The result of this value strategy is that revenue increases as membership declines. But even this strategy has limits in the new normal economy. More troubling, the HR function – EANJ’s internal customer - is fast becoming marginalized and thus highly vulnerable to basic, low (or no) cost HR solutions from websites, brokers, insurance companies, payroll firms and PEOs. As small employers traditionally represent at least one-third of the Association’s membership, it is now faced with an existential decision on how to create a sustainable business model in the face of a permanently changed market space. HR solutions have become commoditized with cheap, even free, products, de-skilling the HR function. But the Association sells value.
After desperate years of economic restructuring and upheaval, the Association's value strategy has reached a diminishing return. Now, as membership and revenue both decline, the Association’s bylaws are revised to create the office of the president and with new executive authority, Mr Sarno is able to make organizational and financial decisions as necessary. Using new media to deliver just-in-time programming and live programs in a built-out training room, he and the staff remain focused on value. But it’s another president, Barack Obama, who changes the trajectory of EANJ when he signs the Affordable Care Act. Together with Rich Balka, chairperson of the board, John Sarno sifts through the political, legal and business uncertainties and explores the potential opportunities created by this transformative law. In short order, in an epochal vote, the board approves the formation and funding of a Multiple Employer Welfare Arrangement - a healthcare trust for small employers to fund their healthcare benefits. Mr Sarno travels the state, explaining the Affordable Care Act to employers - its mandates, penalties, standards and requirements - and promoting the healthcare trust as an alternative to Obamacare. He becomes an expert in healthcare law and serves on academic and government panels. Small employers are oblivious until the ACA grandfather rules expire in 2014. That year, EANJ doubles enrollment, as 2,000 employers with non-compliant healthcare plans flock to EANJ to fund their healthcare insurance from the trust. When U.S. Supreme Court declares the ACA constitutional, the Association realizes the full measure of the historic moment.
At EANJ’s inception, America was a manufacturing colossus and a nation of employees. It was a time of militant unionization and vigorous countermeasures by employers. Indeed, in his first message to Congress, President Theodore Roosevelt characterized the struggle between capital and labor as “the most vital problem with which the country or, for that matter, the whole civilized world has to deal.” During its first century, the Association’s moral arc has bent toward freedom and equality. In it advocacy for the open shop, EANJ insisted on the freedom to hold a job and make a living without paying tribute to either owner or union. Similarly, the Association promoted equality between employer and employee, both free to bargain to their fullest and best advantage. Certainly, in the era of big corporations and bureaucratic management, worker freedom has been curtailed and the workplace has become unequal. In attempting to level the playing field, well intentioned government regulation has created a toxic litigiousness and a noxious distrust. But the human spirit is not crushed beneath the heel of big business, big government and big labor because willing employers continue to employ willing workers under terms that are both fair and equitable. Notwithstanding the Information Age, employment remains a human transaction. Surely, every employer is a business and must be profitable; but not every business is an employer. In truth, a business views labor as a cost of production, taking the opportunity to reduce it whenever possible and de-skill and degrade it when necessary. In contrast, an employer views labor as an asset, looking to enhance and up-skill it when possible. A business cuts costs to produce more with less; an employer invests in human capital to increase productivity. A business competes on price; an employer on talent. It is with this distinction in mind, through a century of conflict, struggle and upheaval, that the Employers Association of New Jersey has promoted the cause of human dignity and the mutuality between employers and employees to make a better quality of work life for this and future generations.
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