Postwar tax exemptions for employer benefits expanded coverage down to white working-class taxpayers

Evidence

At the same time, Congress enacted the Stabilization Act of 1942, which created wage controls limiting raises, but excluded benefits such as health insurance and pensions from those controls. The Revenue Act forced employers to find new ways to compete for the best workers (who in their minds were white), and tax-free benefits were a way to attract them. Two key provisions of the Revenue Act led more employers to provide more benefits: One required pension plans to cover at least 70 percent of employees in order for the employer to receive tax breaks; and a second stated that the calculation of benefits could not be skewed in favor of high-income workers. Employers can’t, for example, agree to a 1 percent 401(k) contribution for wages up to 50,000 and then an additional 15 percent contribution for the excess over 50,000, because it would benefit higher-compensated employees. So as the percentage of Americans subject to tax increased, these tax-free benefits moved down the income scale from higher-income to lowerand middle-class white working taxpayers. Between 1941 and 1945, contributions to pension trusts went from 171 million to 857 million, and by the end of World War II, health insurance coverage tripled and pension coverage increased by a third. — Dorothy A. Brown, The Whiteness of Wealth, 357

Categorization

• XREF: Links to the reader’s goal: this is the mechanism portion of the story — the Revenue Act’s anti-discrimination rules (70% coverage, no skew to high earners) pushed benefits down the income scale, which is how a facially race-neutral rule spread coverage to whites but deliberately excluded blacks via the FLSA exemption. — connects to: Silent Majority politics fused working and middle class whites via taxpayer and meritocratic identity. — Matthew D. Lassiter, The Suburban Origins of “Color-Blind”…, 80