Starting in the late 1800s, disputes between the working class and upper/management class escalated, partly because of industrialization. Industry de-emphasized agricultural and rural life, increased city populations, and made many people dependent upon factory or other organized labor as a source of income. In America, this shift represented a transfer of almost a third of the population away from rural agriculture and into cities.
Disputes between labor and management have had some common themes throughout history; labor seeks safety, good wages, and respect, while management seeks high profits, low expenses, and stability. Labor has always outnumbered management, while management has always controlled cash flow. Management has also, typically, held more power because it represents the order and control that the government and military wish to maintain. Karl Marx's ideas, as well as those of others who disagreed with the entire notion of capitalism, saw it as not only a right, but an eventuality for labor to use its superior numbers to overpower management, and take control on its own. The fear of this revolution fueled the labor disputes and the First Red Scare.
The conservative reaction can be predicted from these factors. In both America AND communist countries, a popular, "liberal" action was followed by a conservative response. The action of upheaval changed social dynamics and resulted in whoever ended up in power seeking to maintain that power; thus, both the American response and, say, the post-Bolshevik Revolution Soviet response could be said to be conservative in nature.
What factors drove these developments?
The American decision to enter WWI was used as a sort of excuse to address long-standing labor disputes; the forces of management could now use accusations of spying, treason or desertion to remove the labor forces that opposed them. Some of these actions also served to confirm suspicions of communist affections among labor groups; for example, labor activist "Big Bill" Haywood fled to Russia while his conviction on espionage was being appealed. The media was also successful in depicting labor activists and unions as troublemakers, anarchists and anti-American revolutionaries, which assisted in turning public opinion against them. Most Americans agreed that labor deserved fair wages and safer working conditions, but disagreed with any violent action to attain this goal; thus, emphasis was again placed on the status quo, the rule of law, and a conservative redress of grievances.
How did they shape the postwar spectrum?
The postwar spectrum wasn't much of a spectrum at all; every President was a Republican, the Democrats were a disunified mess with no new ideas, and the scattered radical elements, such as Socialists, Communists and Progressives, were likewise unable to mount any cohesive message or political action. Fear of a "Russian revolution in America" fueled distaste for radical politics, and the desire to return to "normalcy", as promised by President Harding. In addition, new laws favored conservative politics, placing restrictions on free speech, action or association, such as the continuation of the Espionage Act. Nevertheless, the American sentiment for the "working man" remained, as shown in the poor reputation Harding gained via his mismanagement of the Railroad Strike. Americans continued to desire a balance between labor and management that avoided violent action.