Carnegie Steel and UPMC: Philanthropy and Social Control*

*originally published in the blog/zine Penn Avenue Journal, February 2014

 

 

In the late 19th century, the most powerful big business empire in Pittsburgh spied on, harassed, and fired underpaid employees who tried to form unions, infiltrated the community through massive land acquisitions and tactical donations and takeovers of social institutions, and hoarded enormous fortunes for its top executives while fighting against all competitors to control the market of a necessary resource to build a modern society.  A creator of jobs paying a poverty wage, the empire also practiced philanthropy, both as a calculated form of public relations to deflect criticism and to control the working community it relied upon for cheap labor to build its vast fortune.

That empire was called the Carnegie Steel Company, later incorporated into US Steel, who would build the tallest skyscraper in the city as its headquarters.  The US Steel Building is occupied today by Pittsburgh’s largest empire, UPMC.

The Carnegie Steel Company was instrumental in building the 20th century landscape.  Bridges, railroads, skyscrapers, ships, as well as countless industries all benefited from the steel that came from massive facilities like the Homestead Works.  UPMC provides some of the best medical care in the country, if you’re allowed access to it.  .

One of the effects of industrialization was to replace skilled craftsmen with machines and cheaper unskilled laborers.  As iron gave way to steel, skilled artisans were replaced by new technology and cheap unskilled labor.  The community became more and more divided along economic lines. Andrew Carnegie and his partner Henry Clay Frick were not only pioneers in the manufacture of steel; they also forged new ground in the manufacture of a post-Civil War class of wage slaves.

A deep well of cheap labor is essential for the flow of resources to the top of the economic pyramid to be hoarded by emperors.  Long hours and low wages are extremely beneficial to those at the top of big business empires.  In addition to keeping profits high and production cheap, low wages also prevent workers from saving money and affording higher education.  A worker with less money is less likely to strike or leave employment to find other work or to pursue opportunities in education that exist to someone making a middle class wage.  Limiting opportunities for advancement keeps people in a position where they have no choice but to either accept low wages and poor working conditions or rely solely on charity.

Big business empires who are public about their philanthropy often contribute to the need for it in the first place.  Late in 2013, media accounts surfaced of Wal-Mart workers having to hold a food drive for their own Thanksgiving dinners and McDonald’s HR department instructing employees on how to obtain food stamps.  Maintaining an unemployed, unskilled labor pool reliant on government assistance and/or charity to survive ensures “troublemaking” employees (anyone attempting to negotiate the sale of their labor or demanding to be treated fairly) can be easily replaced with cheaper, more desperate workers.

In her work on turn-of-the-century Pittsburgh history, The Shadow of the Mills: Working Class Families in Pittsburgh, 1870-1907, SJ Kleinberg describes the conditions immigrant communities had to endure.  Men in the mills worked 12 hour days, and to survive the brutal heat drank 20 or 30 buckets of raw, unfiltered water from the rivers poisoned with the pollution from the mills and the sewage from outhouses.  The working poor lived in squalor alongside the loud, unregulated, smoke-belching mills in neighborhoods such as the Southside and the Point.  Meanwhile, Pittsburgh city council, instead of responding by installing a sewage system or collecting garbage, paved streets in the affluent East End where Henry Frick resided (Carnegie despised the smog and left Pittsburgh to reside in more comfortable environments in Manhattan and rural Scotland),  while in muddy, sewage laden poor neighborhoods disease would spread, infants would frequently die of dehydration from diarrhea, and wages weren’t high enough to keep a large portion of the population from suffering from malnutrition.

Women were not permitted in the mills. Steel being the dominant industry, women were kept out of work to a greater level in Pittsburgh than in other cities in turn-of-the-century America, thus “industrial patterns channeled women’s and men’s lives into totally different spheres.”[1] Family life, Kleinberg points out, had fractured from an artisan existence where home and work was combined in the shop or on the farm, to the industrial life, where mothers essentially became a single parent as fathers lead a completely detached existence with only enough time at home to eat and sleep.

In Homestead: The Glory and Tragedy of an American Steel Town, William Serrin writes of Carnegie’s efforts to influence the culture of the community as a response to the 1892 uprising against Carnegie Steel in Homestead.  One such method was Carnegie’s founding of a library:

The gift of the library was representative of the ways in which, after the 1892 strike, the Carnegie Company worked to establish control in Homestead and the other steel towns. The company men knew that it was not enough to break the union; the towns themselves had to be broken. The company strove diligently to seize the institutions of community life–newspapers, churches, schools, social clubs, police, and municipal government. Only by doing this could they ensure that unionism would not rise again.[2]

That charity was used for social control was not lost on working class Pittsburghers of the time.  Kleinberg writes:

Andrew Carnegie gave millions to establish libraries and other cultural institutions.  The daily press lauded him, told how much Carnegie did for the working-class family and, in the sarcastic words of [the labor journal] Commoner and Glassworker, “they ought to fall down and worship his body for it.”

The price of relief was acceptance of those whose wage and work policies made aid necessary in the first place.  The Irish Pennsylvanian [August 15, 1891] asserted that “if all were just charity would be unnecessary.”  Those who prided themselves on what they did for the poor really received charity from them in the form of “unearned luxuries” but returned very little to the producing classes.

Steelworkers told the Pittsburgh Survey “We’d rather they hadn’t cut our wages and let us spend the money for ourselves.  What use has a man who works twelve hours a day for a library, anyway?”  Contributions from Pittsburgh’s “broadcloth and lace society” eased the guilty consciences of the donors but did nothing to improve the conditions under which working-class families labored and lived.[3]

Pittsburgh’s upper middle class broadcloth and lace society made no bones about being an arm of social control of the working class, as it often refused to hand out charity during times of strike.  One relief institution, during a strike at the Clark Mills, maintained “that work was available, to which the unions responded that the only employment was at the struck mill, so a return to work would ‘defeat the workingman and give victory to the manufacturers.’  In this way, charity became a tool of class warfare.” [4]

The working class itself understood these charitable exercises as a mixed blessing at best.  They recognized the need for assistance in hard times and for the families of disabled or dead workers, but they resented accompanying attempts to control behavior, an attitude expressed most clearly during strikes and other class conflicts.  One women’s relief association refused assistance to millworkers’ families when the Boilers’ Union went on strike in 1875…

During another prolonged labor struggle in 1879, the “charitable ladies” of the Pittsburgh region, led by a prominent minister and abetted by the manufacturers, again declined support[5]

Today, UPMC, who employs thousands of low-wage service workers, helps feed an economy where charity and public assistance is necessary, while defending its tax-exempt status as a “public charity”.   UPMC’s tax-exemption costs the city of Pittsburgh and Allegheny County over $200 million per year in tax breaksThe cost to the city in money from a decent wage that a stronger working community would spend locally can only be estimated.

Many Pittsburghers today hold the same sentiments as expressed in the 19th century labor press, and are not at all fooled by UPMC masking itself as a charitable institution.  From the worker advocate organization MakeItOurUPMC…

Does a real charity

-close a hospital in a needy neighborhood to open one in a well-off area just to threaten a competitor?
-make almost a billion dollars in profits over two years and take $42 million in tax exemptions annually while our community is forced to lay off school teachers and eliminate bus routes?

-use our healthcare dollars to harass and intimidate employees who are working to climb out of poverty by forming their union?

-lock out doctors with whom it has a dispute, forcing expectant moms and dads to scramble for care? [6]

“With thousands of service workers earning a starting wage of as little as $10 an hour and an estimated median wage of $12.18 an hour, UPMC is fueling a low-wage economy that has sent one quarter of Pittsburghers into poverty” write John Welch and Sam Williamson in the Pittsburgh Post-Gazette  1/5/14.  “Meanwhile, UPMC paid 27 key employees more than $1 million each in 2012”.

In February 2013 the National Labor Relations Board filed a complaint alleging 80 workers’ rights violations and illegal union busting including firing four employees for trying to organize.  Ron Oakes, one of the service workers and a member of the Service Employees International Union who was fired and then reinstated as part of the settlement,  told hosts of The Union Edge podcast ( 9/12/2013 episode), “When I came back I was bulls-eyed again, big target on your back.  Three days later, after the day the city made the announcement they’re going after their tax status and everything, they fired me again.”

Gabe Kramer, another SEIU member, said on the Union Edge, that after the settlement:

 “They haven’t mitigated their behavior.  They’ve sort of doubled-down on their whole strategy, firing Ron Oakes a few weeks after he was brought back to work, firing other activists as well, continuing their practice of surveillance on people and intimidating people, harassing people for union activity.  They called Pittsburgh Police into a cafeteria when a group of union activists were talking about the union on their own time over lunch.  They called the cops to break up the conversation.  It’s a level of intimidation which is really designed to chill the atmosphere.”

This is the same sentiment Carnegie Steel Company employees had about the espionage state instituted within the company by Frick, as outlined by Serrin in Homestead, creating a snitch culture in the community, paid informants infiltrating the working public, who would rat out any workers trying to better their situation.  Workers knew they could face termination and blacklisting for even talking about forming a union.

In the late 19th century workers did not have the benefits of decades of labor struggles that we have today.  There was no NLRB nor was there a sympathetic city council to check the abuses of the Carnegie Steel Company.  Today, city, county and federal government is responding to worker efforts and attempting to hold the UPMC empire accountable (though some might argue the response is not strong enough).

After the settlement of the February complaint failed to change UPMC’s actions, the NLRB filed another complaint in October 2013 with more allegations of illegal workers’ rights violations.  The City of Pittsburgh sued UPMC to challenge its tax-exempt status, and city council issued a proclamation in support of UPMC workers, acknowledging that workers “were told they could not speak about the union on or off the clock at work, or even in their own homes.”  Former Mayor Luke Ravensthal and current Mayor Bill Peduto have made statements against UPMC and in favor of their employees.  Allegheny County Controller Chelsa Wagner issued a report in June 2012 titled “Taxpayer Alert: Property Tax Exemptions Cost Taxpayers Millions” which points out that UPMC is costing the county $7.4 million in property taxes alone (in 2012, they have since acquired more land).

The legal wrangling of UPMC’s lawyers has been well publicized.  In October 2013 William Pietragallo, an attorney representing UPMC in the city’s tax-exempt status lawsuit, famously claimed UPMC has no employees, with a straight face, while all over its website UPMC brags about being Pittsburgh’s largest employer, “with over 55,000 employees”.  Also the cutthroat political activity, challenging politicians who they don’t like with campaign style attack ads, challenging affirmative action rules in federal court, the conflict of interest in a hospital system which also sells health insurance, and of course the very public struggle with Pittsburgh’s health insurance empire, Highmark, as UPMC plans to cut-off patients with Highmark insurance, have all made UPMCs status as a public charity a joke.

Hoarding a fortune based on a service provided by the labor of citizens, who are both under-compensated and in some cases prevented from accessing the service, gives the citizenry no choice but to fight the hoarders.

Beyond that is the inefficiency of a wacko economic system which impoverishes those who are employed with propping it up.  Energy is wasted on greed and its bureaucratic web and the needless struggle of workers to crawl through it.  Americans pay into a healthcare system gutted by looting in the form of charging citizens almost 10 times the cost of the service.[7]

A UPMC patient relayed the experience of his treatment for pain from a kidney stone.  “The bill was $5,000 to get a shot of morphine and lay on a gurney.  That’s about twenty for the morphine, a few bills for the nurse, a couple hundred for the doc, and the rest, I guess, goes to the Chipmunk.”  The Chipmunk he was referring to is Jeffrey Romoff, the UPMC president who looks like a bald, sun-dried chipmunk.

An empire built on the backs of sick and dying citizens cannot be trusted to behave morally.  The health industry is proudly corrupt and sociopathic to its core.  Until we decide that a system based on a foundation of greed is not the best way to deliver world-class medical care to sick and dying people, we can expect UPMC executives to search under the mattresses of deathbeds for coins to fight over with Highmark, then heir the money to the families as a show of charity.

Further Reading:
·        Our not-so charitable charity: UPMC should do more for the city and its own employees By John Welch and Sam Williamson Pittsburgh Post-Gazette January 5, 2014
·        Meet the chutzpah hospital!: Healthcare giant defies feds, denies it has employees Josh Eidelson salon.com Friday, Jan 3, 2014
·        Looking the Carnegie Gift Horse in the Mouth: The 19th-century critique of big philanthropy.By David Nasaw  Nov. 10 2006 slate.com


[1] Kleinberg, SJ.  The Shadow Of The Mills: Working-Class Families in Pittsburgh, 1870-1907. Pittsburgh: University of Pittsburgh Press, 1991.

[2] Serrin, William. Homestead: The Glory and Tragedy of an American Steel Town. New York : Times Books, 1992.

[3] Kleinberg p 299.

[4] Kleinberg p 299

[5] Kleinberg p 298

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