The American Plan is the term that most United States employers in the 1920s used to describe their policy of refusing to negotiate with unions. The policy promoted union-free "open shops", where workers would not be required to join a labor union. It was endorsed by the National Association of Manufacturers in 1920. As a consequence of companies' promoting the "American Plan," as well as Supreme Court decisions hostile to labor, union membership shrank from 5.1 million in 1920 to 3.6 million by 1929. Employers called this a yellow-dog contract.
Employers discouraged workers from joining unions through welfare capitalism. More union[s]/members meant more strikes, which also meant more loss of money. Employers like, Henry Ford, gave shorter work hours, shorter work days, higher pay, and some vacation time to keep the workers from joining the Union.