However, despite this prosperity, in 1940 he and his wife Marjorie were divorced.

Despite being one of the highest paid animators at Disney, Babbitt was sympathetic to the cause of lower echelon Disney artists seeking to form a union. Most of the strikers were in-betweeners, cel painters, and other less-well paid employees, who in 1941 began industrial action in pursuit of better working conditions. As a top animator, Babbitt was one of relatively few well-paid artists to join the strike, and he became one of the strike leaders. One morning, as Disney drove through picketing workers on his way to the studio, Babbitt heckled him through a bullhorn. Disney exited his car to confront him, and a fistfight was only prevented by the intervention of others.

Known in the animation world as one of the art’s most accomplished teachers, in 1973 Canadian animator Richard Williams brought Babbitt to his London studio in Soho Square to deliver a series of lectures on animation acting and technique that subsequently became famous among animators. Some of Babbitt’s final work was on the characters King Nod and Phido, the vulture, in Williams’ film The Thief and the Cobbler. He also animated the Camel with Wrinkled Knees in William’s Raggedy Ann and Andy: A Musical Adventure.

On the film Pinocchio, Babbitt animated the character of Geppetto, and became a directing animator. Of all Disney’s films, Pinocchio was the feature which Babbitt most admired, and which he regarded as the finest achievement of the studio during the “Golden Age” of animation. Babbitt also animated the characters of the Dancing Mushrooms, Dancing Thistles, Dancing Orchids, Zeus, Vulcan, and Boreas in Fantasia. On the feature film Dumbo, Babbitt was again made a directing animator, and animated the character of the stork. When animating the stork, he made him resemble his voice actor, Sterling Holloway. Babbitt is also credited with developing the character of Goofy, a character which he later described in the 1987 documentary film “Animating Art”:

In 1991 Disney Company chief Roy E. Disney, the nephew of Walt, contacted Babbitt and they ended the long feud. Babbitt’s former rivals, the pro-Walt animators Frank Thomas and Ollie Johnston, gave Babbitt a warm and moving eulogy at his funeral service. He was interred in the Forest Lawn Memorial Park (Hollywood Hills).

His first wife (1937–1940) was Marge Champion, a dance model in Snow White and the Seven Dwarfs. His second wife was Dina Babbitt, an artist and a Holocaust survivor. He had two daughters with Dina, L. Michele Babbitt and Karin Wendy Babbitt. His third wife until his death was actress Barbara Perry. His step-daughter from Barbara is Laurel James. Babbitt died of kidney failure on March 4, 1992. In the late 1980s, a British television documentary titled Animating Art was broadcast, celebrating Babbitt’s life and work. The documentary was produced and directed by Imogen Sutton (Richard Williams’ wife), and features extensive interviews with Babbitt and his then employer, Williams. Babbitt was posthumously named a Disney Legend in 2007.