An Historical Lesson in Economic and Union Policies: The Hormel Strike of 1985

 

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At the Eastside Freedom Library in Saint Paul, a deep collection of books — and conversations — center around labor history. I sat in on a group discussion about the year-long Hormel strike of 1985-86 in Austin, Minnesota, for a course about “Social Movements in Minnesota History” led by labor historian Peter Rachleff, and learned a lot. Here is a quick summary. 

 

The story of the Hormel strike of 1985 in Austin encapsulates, from a rearview mirror, how two views of economic policy collide. The vision of labor emphasizes shared community prosperity with strong unions. The vision of ownership prioritizes market scale and profitability. The strike was not merely about wages. It was a battle over which vision would define the future…

A Quick Lesson in Economics

By the mid-20th century, much of the industrialized world operated according to ideas associated with Keynesian economics. Policymakers believed governments had a responsibility to manage the economy, maintain employment, and smooth out the ups and downs of the business cycle. One of the most influential concepts was the Phillips Curve, which supposedly demonstrated a relationship between unemployment and inflation. The theory suggested that if unemployment rose too high, governments could stimulate the economy through spending, accepting somewhat higher inflation in exchange for lower unemployment.

For a time, this framework appeared to work. During the postwar decades, union membership was strong, wages rose alongside productivity, and many workers experienced increasing standards of living. In the United States, roughly one out of every three workers belonged to a union during the 1960s. Labor unions helped secure wage increases, benefits, and workplace protections, while governments played an active role in economic management.

Then the model began to break down. During the 1970s, economists observed a phenomenon that Keynesian theory struggled to explain: high inflation and high unemployment occurring simultaneously — the Phillips Curve had “shifted.” What had once been seen as an acceptable tradeoff between inflation and unemployment no longer seemed reliable. Instead of four percent inflation and four percent unemployment, policymakers confronted much higher rates of both.

This crisis opened the door to a different economic philosophy. Economists, corporate executives, and political leaders increasingly argued that government intervention itself was the problem. They advocated a return to market principles, deregulation, tax cuts, and reduced labor costs. This new approach became known as neoliberalism.

The election of Ronald Reagan in 1980 symbolized the political triumph of this ideology. Reagan famously declared that government was not the solution but the problem. Supporters of neoliberalism argued that economic growth would come not from government spending or strong unions but from reducing costs for businesses. Taxes would be cut, regulations weakened, and labor markets made more flexible. In practice, this often meant weakening unions and lowering wages.

This thinking was clearly illustrated in the Hormel strike of 1985–1986.

 

What Happened at Hormel?

Hormel, one of the most successful meatpacking companies in the United States, has deep roots in Austin. The company’s original plant there was built in the 19th century and had generated large profits over decades. By the late 1970s, however, company executives announced that the Austin facility was outdated and would need to be replaced.

Rather than treating Austin as the obvious location for a new plant, Hormel presented the situation as a competition. The company told local government officials, state officials, and union leaders to explain why the new facility should remain in Austin. The response revealed the emerging logic of neoliberalism.

The city offered generous tax concessions, including years without property taxes. The state pledged infrastructure improvements, rebuilding highway connections to facilitate transportation. The union agreed to a seven-year wage freeze. Together these concessions lowered Hormel’s costs and persuaded the company to construct its new plant in Austin.

To many workers, especially younger workers shaped by the political movements of the Vietnam era, the arrangement felt like a surrender. Instead of demanding that a profitable corporation remain loyal to a community that had enriched it for generations, local institutions competed to offer incentives. 

Workers voted out the existing union leadership and elected people determined to resist further concessions.

Conditions inside the new plant only intensified dissatisfaction. Hormel promoted the facility as a state-of-the-art operation filled with technological innovations. Among these was an automatic knife-sharpening system intended to replace traditional methods used by skilled workers. Employees soon complained that the machine produced inferior results. Workers who had once sharpened and maintained their knives by hand were prohibited from using their own techniques.

The consequences were serious. Duller knives required greater physical effort, and repetitive motions contributed to rising rates of injury, including carpal tunnel syndrome. Workers faced worsening conditions while their wages remained frozen.

When the seven-year wage freeze finally expired in 1984, employees expected negotiations to focus on raises that would compensate for years of sacrifice. Instead, Hormel proposed a 23 percent wage cut.

For many workers, this proposal represented the true face of neoliberalism. Costs were being reduced at every stage of production, including farmers receiving lower prices for livestock. 

The workers of Local P-9 refused to accept the concession. Their resistance reflected a broader movement emerging within organized labor. Across the country, unions were being asked to accept wage reductions and givebacks in exchange for keeping jobs. In response, activists created organizations such as the National Rank and File Against Concessions, arguing that workers should stop retreating and start fighting.

The Philosophical Divide

Yet the battle exposed deep divisions within the labor movement itself. The international leadership of the United Food and Commercial Workers Union believed the Austin workers were unrealistic. They argued that wages throughout the meatpacking industry were declining and that Local P-9 should accept this reality. Union leaders advocated what they called a “controlled retreat.”

The phrase captured the pessimism that had taken hold in many institutions during the neoliberal era. Instead of asking how workers could maintain or improve standards of living, leaders focused on how to manage decline.

Local P-9 rejected this logic. Drawing inspiration from earlier labor struggles, members organized campaigns to build solidarity. They formed motorcycle brigades that traveled to other cities, encouraging workers at Hormel plants elsewhere in the Midwest to support the strike. 

The conflict escalated further when the international union imposed trusteeship on the local. Elected leaders were removed and replaced by officials viewed as more cooperative with management. The company implemented the wage cuts it had demanded.

Restructuring continued. Hormel supported the creation of a separate company, Quality Pork Processors, which took over the most labor-intensive sections of production through an arrangement known as inside subcontracting. A wall was literally built inside the modern plant, dividing operations between Hormel and the new contractor. Workers performing some of the hardest jobs experienced additional wage reductions.

The arrangement became a textbook example of how corporations could fragment workforces, lower labor costs, and weaken collective bargaining while maintaining production. Over time, workforce turnover increased dramatically. Many longtime employees left, and new immigrant workers eventually became the majority of the labor force.

The strike also revealed the legal and political obstacles facing labor. When Local P-9 attempted to pressure financial institutions connected to Hormel, courts ruled that some of its tactics constituted illegal secondary boycotts under federal labor law. Strategic options were narrowed. Meanwhile, the precedent established by Reagan’s firing of striking air traffic controllers in 1981 encouraged employers to adopt a harder line. The possibility of permanently replacing striking workers fundamentally altered the balance of power.

By the time Hormel announced it would reopen the plant and hire replacements, the labor movement was confronting a new reality. Deindustrialization accelerated as companies shifted production to regions and countries with lower labor costs. Union density fell dramatically, dropping from roughly one-third of the workforce in the 1960s to about one-tenth in the early twenty-first century.

The Hormel strike became more than a dispute over wages in a Minnesota meatpacking plant. It symbolized a historic transition from the Keynesian era to the neoliberal era. The conflict demonstrated how corporations, governments, courts, and even segments of organized labor adapted to a new economic model centered on cost reduction, market competition, and weakened worker power.

At the same time, the strike revealed the persistence of resistance. Workers continue to challenge concessions, experiment with new organizing strategies, and attempt to build broader alliances for economic justice. Although they have not achieved all their goals, the labor struggle exposes the human consequences of economic transformation and raises enduring questions about who benefits from prosperity and who bears the costs of change.

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Peter Rachleff taught immigration and labor history at Macalester College from 1982 to 2012. He has taught courses in community education including: “Immigration in Minnesota: Past and Present;” “Minnesota Workers Make History” (offered again in Fall 2026); “Labor History and Organizing” (co-taught with Carson Starkey, North Central Regional Council of Carpenters).  He is the author of Hard-Pressed in the Heartland: The Hormel Strike and the Future of the Labor Movement, published in 1993 by South End Press, and a founding director of the East Side Freedom Library in St. Paul. eastsidefreedomlibrary.org.

Learn more at Minnesota Historical Society

 

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