NLRB v. Jones & Laughlin Steel - Supreme Court Upholds Wagner Act in Constitutional Revolution

On April 12, 1937, the Supreme Court rules 5-4 in NLRB v. Jones & Laughlin Steel Corporation to uphold the constitutionality of the National Labor Relations Act (Wagner Act), reversing years of judicial hostility to federal labor regulation and fundamentally expanding Congress’s commerce clause authority. Chief Justice Charles Evans Hughes’s majority opinion holds that labor relations at a large manufacturing company have such a close and substantial connection to interstate commerce that Congress may regulate them, overturning the cramped interpretation of federal power that had struck down the NIRA and other New Deal legislation.

The decision represents a dramatic about-face for the Supreme Court, which just two years earlier in Schechter Poultry had unanimously struck down the NIRA using a narrow definition of interstate commerce that excluded manufacturing. Justice Owen Roberts, who had voted to strike down New Deal programs in 1935 and 1936, provides the crucial fifth vote to uphold the Wagner Act. This shift, coming just two months after Roosevelt’s announcement of his court-packing plan, is widely characterized as “the switch in time that saved nine”—a tactical retreat by conservatives to preserve the Court’s institutional power by eliminating the political rationale for expanding its membership.

Jones & Laughlin Steel Corporation had fired ten employees for union activity, and the NLRB ordered their reinstatement with back pay. The company argued Congress lacked constitutional authority to regulate labor relations at manufacturing plants, relying on precedents distinguishing “direct” from “indirect” effects on interstate commerce. The Court’s rejection of this distinction fundamentally transforms constitutional law, establishing that Congress may regulate any activity having a substantial effect on interstate commerce. The four conservative justices—Sutherland, Van Devanter, McReynolds, and Butler—dissent, warning that the decision grants Congress unlimited regulatory power. The Jones & Laughlin decision, along with companion cases upholding the Wagner Act, marks the end of the “Lochner era” of judicial obstruction of economic regulation and establishes the constitutional framework for the modern regulatory state.