An industrial relations system describes the basic values, laws, institutions, and organizational practices that govern employment relationships. To be effective, an industrial relations system must be well matched to its economic and social environment and able to meet the strategic needs of employers, the workforce, and the larger society. The current state of American industrial relations is assessed against these criteria. The general proposition advanced is that the U.S. system of industrial relations that grew out of the New Deal labor legislation of the 1930s performed effectively from the 1940s through the 1960s. Pressures for change on the system began to build through the 1970s because of changes in the economic and technological environment and in the strategic behavior and needs of the parties. These pressures erupted in the early 1980s to produce a period of experimentation and fundamental change in union-management relations. The critical question in industrial relations today is whether the process of adaptation will be sustained and expanded to cover a broader range of employment relationships.