Trying Again for Full Employment

As prominent progressives talk up a federal job guarantee, what can we learn from earlier attempts to legislate full employment?

By Gertrude Schaffner Goldberg | November/December 2018

This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org

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Leading progressives in Congress have recently revived the idea of full-employment legislation. This would be the third attempt by Congress to assure a job for everyone who wants one and to put an end to the scourge of unemployment. In the 1940s and again in the 1970s, Congress seriously debated full employment. Both efforts resulted in laws—but ones that fell far short of guaranteeing an economic right to living-wage work. What will it take to enact a job guarantee today? Examining the history of these earlier attempts can help assure success this time.

The First Try: Full Employment in the 1940s

The first congressional attempt to achieve full employment came at an opportune time: Americans had not forgotten the mass unemployment and widespread misery of the Great Depression. They had just experienced the salutary economic effects of wartime full employment, and they feared postwar demobilization and consequent job loss. Introduced by leading senators, the Murray-Wagner Full Employment Bill of 1945 (S. 380) stated: “All Americans able to work and seeking work have the right to useful, remunerative, regular, and full-time employment, and it is the policy of the United States to assure ... sufficient employment opportunities to enable all Americans ... to freely exercise this right.”

Murray-Wagner spelled out the federal government’s role in assuring full employment: the government would assess how big the labor force would have to be to achieve full employment; determine the total national production needed to provide jobs for that labor force; encourage, if necessary, additional non-federal investment and expenditures to stimulate private-sector employment; and make investments to close any remaining gap. However, missing from these means of achieving full employment was direct job- creation—in which government hires, manages, and pays unemployed workers. This was the New Deal model of putting millions of jobless people to work and at the same time rebuilding the nation’s infrastructure, preserving its natural resources, creating recreational facilities, and making the arts widely available to Americans otherwise unable to afford them.

The bill that eventually passed the Senate by the very wide margin of 71–10 still retained a commitment, albeit in softened language, to the right to work. However, it no longer guaranteed the funding necessary for the federal government to close the economy’s job gap. Also absent from the act was a mechanism by which workers could claim their entitlement to remunerative work.

The Senate-passed bill maintained the substantive provisions of the original version of S.380, although some liberal adherents felt that one of the amendments left it with nothing specifically providing jobs for anybody. Whatever remained of the entitlement to employment in the Senate version did not survive the House of Representatives, where Southern Democrats led the opposition and were joined by Midwestern Republicans. Mobilized mainly after Senate passage of S. 380, opposition came from the National Association of Manufacturers, the Chamber of Commerce, the American Farm Bureau Federation, and a mostly hostile press. Moreover, by the time the House debated full employment, the legislation seemed less necessary because the mass unemployment that some feared during demobilization had not occurred.

Most observers hold that the House version differed greatly from the Senate’s, that it omitted “full employment” and countercyclical, compensatory spending by the federal government that would have financed jobs for all. What emerged from the Conference Committee to resolve differences between the House and Senate versions was the Employment Act of 1946, with “full” employment conspicuously absent from its title. Instead of full employment as an unambiguous priority, the goal was “maximum employment,” meaning that the government commitment was limited to “all practical means consistent with the needs and obligations of national policy.” The terms could seem interchangeable, but they were not. As leading Republican opponent of full employment Senator Robert Taft (R-Ohio) told the Senate in the final 1946 debate: “I do not think any Republican need fear voting for the bill because of any apprehension that there is a victory in the passage of the full employment bill, because there is no full employment bill anymore.” However, the Employment Act of 1946 did initiate federal responsibility for the nation’s economy and create such important economic planning measures as the President’s Council of Economic Advisors (CEA) and the Congressional Joint Economic Committee.

In the years following passage of the Employment Act of 1946, the nation did not achieve full employment. Yet mass unemployment, a recurring calamity in prior U.S. history, did not occur in the postwar decades. Rates of unemployment ranged from a low of 2.9% at the height of the Korean War to highs of 5.9% and 6.8% in 1947 and 1960, respectively. In other words, “maximum employment” could mean relatively high unemployment. Following the Korean War, during which black workers maintained their World War II employment gains, the black unemployment rate climbed, averaging over 9% in the Eisenhower years with the emergence of a persisting pattern of black unemployment that was double the rate for white workers.

Thirty Years Later: A Second Try

Nearly three decades after the Employment Act of 1946, Congress once again took up full employment. The guiding spirit of the second attempt was Rep. Augustus Hawkins (D-Calif.), a founder of the Black Congressional Caucus who represented the Watts area of Los Angeles. With Rep. Henry Reuss (D-Wisc.), Hawkins introduced the Equal Opportunity and Full Employment Bill in June 1974. Soon after, Senator Hubert Humphrey (D-Minn.), former vice president and Democratic presidential candidate, introduced an identical bill in the Senate—clearly a high-profile advocate of full employment.

In the first half of 1974, when Hawkins and Reuss introduced their bill, official unemployment averaged just under 5.2%. As usual, though, real unemployment—which includes involuntary part-timers and those who want jobs but are not actively looking—would have been double that amount, producing a chronic job-gap of millions of people, even at the top of the business cycle when unemployment is expected to be low. Hawkins understood the key role of full employment in reducing social and economic problems. He knew firsthand the extent and toll of unemployment in districts like the one he represented. In November 1966, when the national unemployment rate was an unusually low 3.4%, the average rate in ten urban low-income areas was nearly 10%. A “subemployment” survey of those areas that was conducted that year by the Department of Labor included groups omitted from the official count, such as involuntary part-time workers, discouraged adult-male workers who wanted a job but had stopped looking, half of missing males not counted in the census, and full-time adult workers earning less than the poverty threshold. On average, subemployment in those areas was more than three times the official rate.

This full-employment bill also went through several versions prior to passage. The first version introduced by Humphrey, Hawkins, and Reuss guaranteed a right to a job that was said to be enforceable in court. Even though on examination this would have been a weak guarantee at best, this is an important concept and a key objective of current job-guarantee proposals. Most of the needed jobs were to be created by an expansionary economic policy, but the shortfall would be made up through federally financed employment designed by local planning councils, a direct job-creation policy on which Rep. Hawkins insisted. A great increase in unemployment, from 5.4% when the bill was introduced to 8.6% the following year, led to further revisions, including the establishment of interim unemployment goals that seemed more realistic in view of economic conditions but meant that full employment would not be an immediate goal. With the third version in 1976, the job guarantee was out, planning mechanisms were increased, and direct job-creation was a diminished last resort.

Lukewarm to full employment, Jimmy Carter had endorsed Humphrey-Hawkins during his 1976 campaign for the presidency—as a nod to left and minority constituencies. Carter’s Chairman of the CEA, Charles Shultze, later led the charge against Humphrey-Hawkins, arguing that controlling inflation took precedence over job-creation and that specific targets for unemployment and the creation of public-service jobs threatened price stability and should be removed from the bill. An inflationary hawk in the 1970s, Schultze was reportedly involved in the Johnson Administration’s efforts to cover up the rapidly escalating costs of the Vietnam War, which proved to be highly inflationary. An important inflationary culprit in the 1970s was sharply rising gasoline costs owing to policies of the Organization of Petroleum Exporting Countries (OPEC). The bill, it should be noted, gave only cursory attention to how full employment could be achieved without aggravating inflation.

Keynesian economics had been in the ascendancy during the 1940s, and with it a belief that government stimulation of the economy could increase demand enough to achieve full employment. The “stagflation” crisis of the 1970s challenged that faith in the Keynesian full-employment strategy. With unacceptably high rates of inflation continuing, even during the worst recession since the 1930s, most economists came to believe that stimulating the economy would result in surging inflation before full employment was reached. Conservative economists, and eventually the bulk of the economics profession, started using the term “full employment” to refer to the lowest rate of unemployment an economy could achieve via economic growth, irrespective of whether the growth was spontaneous or resulted from Keynesian stimulation of the economy. The “non-accelerating-inflation-rate of unemployment,” or NAIRU, replaced genuine full employment (decent jobs for all job seekers) as the policy goal most economists sought to achieve. There were dissenters, however, such as economist Ray Marshall, Secretary of Labor in the Carter Administration. In his 1992 presidential address to the American Economic Association (AEA), Nobel prize-winning economist William Vickrey called the “natural” rate of unemployment “one of the most vicious euphemisms ever coined” and urged “chock full employment.” Robert Eisner, also a president of the AEA and an economic advisor to President Bill Clinton, concluded from his research that “there is no basis for the conclusion that low unemployment rates threaten permanently accelerating inflation.”

The Humphrey-Hawkins Full Employment Act was signed into law by President Carter in October 1978. The price of his endorsement was flexibility in achievement of the legislation’s employment and price stability goals—meaning he wasn’t obligated to meet them. Humphrey-Hawkins set an “interim” unemployment target of 4% adult unemployment in five years, hardly the equivalent of a job for everyone who wants one, nor the target famously set by the major architect of full-employment policy, Sir William Beveridge, who called for more available jobs than job seekers. At the five-year mark, unemployment stood at 9.6%, more than twice the already high target rate, having been in the double digits for more than a year during the interim period. Inflation initially surged but was controlled under the Reagan administration at the price of high unemployment—brought on by the restrictive monetary policy of the Federal Reserve, chaired by Carter’s appointee, Paul Volcker.

Political and Popular Support

These earlier efforts owed even their limited success to important political advantages, particularly in the 1940s. Powerful, highly committed senators led the struggle for S.380. In the 1944 presidential campaign, not only President Roosevelt but his rival Republican candidate, Thomas Dewey, endorsed full employment. President Harry Truman would seem an ideal head of state to achieve full employment. He had served on the Senate committee responsible for postwar reconversion and was a joint sponsor of an earlier full-employment bill. His first major speech to Congress on legislative priorities, just after the end of World War II, called for full employment, citing President Franklin D. Roosevelt’s Economic Bill of Rights, which began with, “The right to a useful and remunerative job in the industries, or shops or farms or mines of the Nation.” Truman, moreover, publicly favored the Senate version. In response to formidable opposition in the House, including from members of his own party, he agreed that he would not insist on the Senate-passed bill or one with the words “full employment” in order to achieve passage of at least some bill in the House. He continued to favor the Senate version publicly and perhaps hoped for improvements in the Conference Committee. However, some infighting among cabinet-level officials assigned by Truman to promote passage of the Senate version resulted in the absence of an administration-approved substitute. Opposition, it should be emphasized, came from the same conservative forces that, even at the height of FDR’s power, forced the omission of farm and domestic workers from social insurance programs and other illiberal provisions in otherwise progressive New Deal legislation. As for the second attempt in the 1970s, the legislative leadership was there, but presidential support was equivocal. In the final analysis, however, failure was attributable largely to insufficient public pressure to bolster proponents and overcome expected opposition.

Public opinion favored the goal of full employment during the 1940s effort. In September 1945, the National Opinion Research Center found that 79% of those polled thought that it should be up to the government to see to it that there are enough jobs for everybody who wants to work. But such support, was not necessarily attached to specific legislation. A July 1945 poll of an Illinois congressional district in which 83% were in favor of a bill resembling the Senate version of full employment, found that only 17% had ever heard of that full-employment bill.

Gaining public support for the Murray-Wagner Full Employment Bill (S.380) during the 14-month effort to achieve Senate passage was among the tasks undertaken by the highly competent staff who had drafted the legislation. Among their efforts to sway public opinion were consultation by mail with 1,500 formers of public opinion; drafting speeches, articles, and conducting letter campaigns; and mobilizing and unifying support of the likely liberal and labor (Lib-Lab) supporters through the formation of a “Continuations Group” that met weekly to discuss strategy and held several larger “pep” meetings. During a period of ten months, they had the full resources of the Union for Democratic Action, a prestigious but not particularly powerful group that provided a full-time Washington representative. The National Farmers Union was another enthusiastic supporter. Within the Lib-Lab block there was, however, dissension. Support from organized labor, a much more powerful movement than today, was not strong; some leaders feared the issue could detract from more pressing ones such as unemployment insurance and wages. Yet most of labor officialdom gave some support to the bill, and they brought the issue to the rank and file through various labor publications—with an estimated combined readership of 15 million families (much larger in relation to the population than that number today). Although the struggle was otherwise lacking in mass demonstrations, 1945 Labor Day celebrations—then commonplace in cities and towns across the United States—featured signs labeled “Full Employment” and “Jobs for All.”

How was support mobilized for Humphrey-Hawkins? Established in 1974, the National Committee for Full Employment/Full Employment Action Council (NCFE/FEAC) had two prestigious co-chairs: Coretta Scott King and Murray Finley, head of the Amalgamated Clothing and Textile Workers Union. The NCFE brought together leaders in liberal, labor, religious, civil rights, black, ethnic, women’s, and senior citizens’ organizations and others with a stake in full employment. Included were the National Council of Churches, the Union of American Hebrew Congregations, the U.S. Catholic Conference, the National Organization for Women, League of Women Voters, National Urban League, National Association for the Advancement of Colored People, United Auto Workers (UAW) and United Electrical Workers (neither union part of the AFL-CIO). According to one observer who participated in the movement, Humphrey-Hawkins lacked support from the AFL-CIO, which was opposed to the legal guarantee, perhaps because it feared that it would flood the labor market with job-seekers. Only when the guarantee was removed from the bill in 1976 did the AFL-CIO support it.

At the founding of the NCFE, UAW president Leonard Woodcock called for the formation of a committee of 100 to establish a “committee of one million” to work for full employment, but that committee was not established. The NCFE remained mostly a Washington-based organization bringing together leaders of various groups. Grassroots organizing began in 1976, with major stimulus from the National Council of Churches, which held conferences not only nationally but at the regional level in Kansas City, Boston, Chicago, Detroit, San Francisco, Denver, Buffalo, Sioux City, Des Moines, Omaha, and elsewhere. Local full-employment coalitions came into being in numerous cities. The NCFE/FEAC organized a Full Employment Action Week in 1977 that mobilized more than 1.5 million people in protests and actions in 300 cities. Sixty thousand people turned out to rally in Buffalo, for example. However, there were no mass demonstrations in Washington, D.C. to focus national attention on the issue and put pressure on Congress and the president—nothing to compare with the mass mobilizations in the 1930s or the civil rights and anti-Vietnam War demonstrations of the preceding decade.

What Will It Take?

How can we achieve full-employment legislation that is not watered down, that starts out with and holds onto a genuine, enforceable job guarantee? Make no mistake about it. Such legislation would be transformative, removing an essential source of disciplining the labor force, freeing workers of the threat of unemployment, and providing them with labor rights that are all too scarce in today’s “precarious” workplace. Of course, we need stronger and more sustained efforts to mobilize public support and create a powerful social movement, but that will depend partly on legislation worth fighting for—legislation that guarantees a job to anyone who needs and applies for one; has safeguards against inflation; specifies a living wage; and has an adequate funding source that is likely to be acceptable to a wide swath of the public, such as the financial transfer tax proposed in the Jobs for All Act (H.R. 1000) that will be reintroduced in the 116th Congress by Rep. Frederica Wilson (D-Fla.). Whereas earlier proposals failed to specify “remunerative” employment, current proposals call for wage levels; compatible with those of living-wage advocates such as “Fight for Fifteen”—important potential participants in a jobs-guarantee campaign.

Experts consulting with legislators who favor a job guarantee agree about the general goal of a permanent job guarantee and about the essential component of direct government job-creation but disagree on some other elements of design. It is important for experts to reach consensus so supporters won’t be divided. The experts are beginning to confer, explain their decisions, explore their differences, and hopefully achieve some common ground.

The two previous attempts to achieve full employment were led by committed and powerful legislators, but presidential leadership was either lacking or insufficiently strong. High-profile legislators will be needed again, but powerful presidential advocacy is essential. A third try for this “fundamental” economic right is most likely to succeed if meeting the requisites for a living-wage job guarantee is a major campaign promise of a winning presidential candidate whose party gains control of both houses of Congress—and who, in his or her halcyon days, makes passage of a job guarantee a top policy priority. The campaign for the presidency would be a powerful means of mobilizing public support—along with advocates’ continuing efforts to convince a wide range of interest groups that their goals would be aided by enactment of this “fundamental” economic right. A major vehicle for that is an online Jobs for All Newsletter that the National Jobs for All Network will begin publishing early in 2019. Perhaps an endorsement of a jobs guarantee by powerful politicians will enable advocates to raise sufficient funds—heretofore elusive—for more vigorous and successful movement-building.

Public support for a solution to a social problem depends partly on whether the problem is considered widespread. Because the official unemployment rate is a serious undercount that minimizes the problem, the National Jobs for All Network has long called attention to “The Full Count” that is always more than twice the official number. Each month when the Bureau of Labor Statistics releases unemployment data for the previous month, Jobs for All not only posts the official rate on its website (njfac.org) but what it refers to as “hidden unemployment”—the number of people who are forced to work part-time or who want a job but are not actively looking, perhaps because they are discouraged or lack transportation or day care. Advocates of full employment should also propose and promote research resembling the “Subemployment Survey” undertaken by the Department of Labor in the 1960s—a survey that would undoubtedly demonstrate how widespread the problem is in low-income areas.

When the official unemployment rate is low, like the current 3.7%, some may object that a job guarantee is not necessary. How should advocates respond to this? First, we should point out that, even in times like this, the labor market is millions short of providing jobs for everyone who wants work and that including “hidden unemployment” more than doubles the number of unemployed, bringing the current total to 15.8 million people. Moreover, the Department of Labor bases these statistics on the “civilian labor force,” thereby leaving out the the military and the oversize population of prisoners, many of whom would be unemployed.

We need to think of a job guarantee the same way that we regard unemployment insurance—protection that is always needed but for which the level of need varies. During downturns like the Great Recession, need skyrockets. Today, the need is reduced but still present, and for people who need work the consequences of not having it are just as devastating as they are for greater numbers of people during recessions.

Despite the similarity in fluctuating but omnipresent need, there is an important difference between unemployment insurance, for which most job seekers do not qualify, and a job guarantee. A job guarantee is just that: available to all job seekers for whom jobs do not exist in the regular labor market. And unlike unemployment insurance, it would allow them to earn their own livelihood instead of keeping them on half rations until they find a job (which in a job-short economy will always mean that someone else will go jobless).

Current job-guarantee proposals create jobs through an updated model of the New Deal work programs that vastly expanded our national resources during the Great Depression. Updated how? They guarantee employment, whereas the New Deal work programs, though unprecedented in size, did not serve all of the unemployed and often short-changed women and black people. The direct government job-creation approach has the added benefit of being anti-inflationary, because it can target job-creation to unemployed workers in contrast to an overall stimulus like a tax cut, which can heat up an economy in areas where there is little surplus labor. The updated New Deal model is a potential political asset. In a recent campaign to promote a municipal Jobs for All program, the National Jobs for All Coalition distributed a Map and Guide to New Deal Public Works in New York City showing that many of the iconic sites associated with New York were created by workers employed in New Deal work programs. (See Gertrude Schaffner Goldberg, “The Living New Deal,” D&S, September/October 2017.) A job guarantee achieved through direct government job-creation would not only provide employment and training to unemployed workers and reduce the debilitating social problems caused by joblessness that are so costly to both the unemployed and to society. Jobs-for-all legislation would employ workers in upgrading the nation’s depleted physical, human service, cultural, and environmental resources. This is a persuasive rallying cry: that conquering unemployment by government job-creation would not only benefit jobless people, their families, and communities—it would benefit all of us.

GERTRUDE SCHAFFNER GOLDBERG is professor emerita of social work and social policy at Adelphi University. She is co-founder and chair of the National Jobs for All Network.

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