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The Realities of
Unemployment
WORKS PROGRESS ADMINISTRATION

We cannot produce more and more goods
to employ our people unless we maintain
the purchasing power of these same
people to buy the goods produced.
His (the worker's) job must be as stable as
possible, his hours short enough to let
others also have jobs, and his buying
power must be high.
We must not lose sight of the fact that the
WPA's job is to create jobs—useful jobs,
of course, but jobs for people who can't
find work. That must remain our concern
ahead of anything else.
For the very life of business, the mass of
people must be able to buy, for mass production is the heart of the system. With
all this talk about taking care of the unemployed, what is going to take care of
the unemployed employer? NOTHING
EXCEPT THE CONSUMER'S DOLLAR.
Our aim is to supply to industry as many
physically strong, mentally alert, skilled
workers as we can.
The Federal Government cannot refuse
responsibility for providing jobs to those
whom private industry does not hire. . . .
I am sure America will win this fight
where other nations have failed. It will
win because it has the brains and the
wealth and the leadership.




The Realities of
Unemployment
BY HARRYL.HOPKINS
ADMINISTRATOR

WORKS PROGRESS ADMINISTRATION
WASHINGTON, D. C.




I

_T IS perfectly plain from remarks that
can be heard on every hand that very few people
have even a good working knowledge of the employment situation in which this country finds itself
today. And why should they? We have had unemployment in serious quantities for 40 years, but all
we ever did about it officially until less than 4 years
ago was to ignore it. The policy of the United States
toward the twin questions of unemployment and
relief has long been a source of amazement to economists and other interested persons. Let me quote
briefly from a recent issue of the London Economist:
"Until the onset of the Great Depression,
America prided itself on giving no thought to unemployment. Even in periods of abnormal activity there was always a body of unemployed workers who may well have been numbered in millions.
Indeed, unemployment is an inevitable concomitant of any dynamic community, and in a country
where conditions change so rapidly and so ruthlessly, and where 'labour turnover', voluntary and
involuntary, is so high, the normal minimum of
unemployment must necessarily be considerable.
But it was contrary to the established social philosophy of the country to admit that any ablebodied and efficient workman could remain out of
work for more than a temporary transitional
period, or that he should be assisted by the community if in want. The older and more settled
States on the Atlantic seaboard had inherited from
England a rudimentary Poor Law of an Elizabethan
character, but these institutions were not intended
for the able-bodied poor and made little contribution to the relief of destitution arising out of un-




employment. Broadly speaking, the only recourse
of the indigent working man was to charity, and
previous visitations of depression had always been
surmounted, not without great suffering, by special
efforts on the part of private and semiofficial charitable institutions."

What About This
Indictment?
What about this indictment ? Is the journalist being
unfair to us ? I think not. There has been an unemployment problem in this country for nearly half a
century. There are estimates of unemployment in
four basic industries (manufacturing, transportation, construction, and mining) since 1897. These
Unemployment Is Not New

show that an average of one able-bodied workman
out of every ten has been out of work. In these four
industries, in 1897, 1,200,000 Americans were out of
work—17 percent of all their labor. There was a
run of prosperity up to 1908 and the number dropped
to 600,000, but it skyrocketed to 1,650,000 in that
year. It was a million in 1911 and over 1,800,000 in
1914 and 1915. Even in the war period of 1917 and
1918, there were 800,000 people out of work in these
four industries. In the depression of 1921 the num-




ber of unemployed in nonagricultural industries
soared to over 4,200,000. Throughout the 1920's
the estimates range from \}{ to 3% million.
All these figures, remember, cover only part of the
total labor. It is likely that total unemployment in
the United States was consistently well above the
figures I have cited.
But the figures are only important in showing the
wide spread of the problem and how long it has been
with us. They only help to dramatize our social
blindness. As a people we ought to know infinitely
more than we do about this question. We should
have been discussing it publicly for at least 20 years.

How Many Are
Unemployed?
How many Americans were unemployed in March
1933 ? Call it 18 millions or 13 millions—the smallest
figure is bad enough. How many today? Eleven
millions or eight millions? In any case it is nearly
one employable worker out of five and at the lowest point of this depression it was almost one out
of three.
One major obstacle in the path of meeting the problem of unemployment has been the absence of really
adequate unemployment figures. In Europe they
know what their problem is. The unemployed must
register at an employment office to get their unemployment insurance benefits. These registrations
show how many are out of work in the insured
groups—and these insured groups include most of
the total workers. Some day when our unemployment insurance plans get into operation, we will have
information as good as this. We will know how many
are out of work and who they are.




At the present time all we have are estimates of
unemployment in addition to our relief figures, which
show how many unemployed are receiving public
assistance. But we know that many, certainly millions, of other workers have no jobs and receive no
public aid. How large this group is we don't know.
We should find out.
I am convinced that we ought to find out by taking
an unemployment census. A census will give us a
pretty exact picture of our present unemployment
problem—a much better picture than we have now.
I realize there are a lot of difficulties in taking a
census. It is no
1929 P r d u c t i o n I s Not E n u h
easy matter to de°
° 9
fine unemployment
for p u r p o s e s of
enumeration. The
part-time workers,
the self-employed,
and others create
census problems.
But the job must be
done. Despite the
difficulties we would
certainly know more about the problem than we know
now. Moreover, I think we should have censuses
of unemployment every few years. With periodic
censuses of unemployment it would be possible to
compile good estimates for the periods in between
enumerations on the basis of the employment
statistics.
This information would be a guide to policy. It
would eliminate much of the popular confusion arising out of the widely divergent estimates—both good
and bad—we find at the present time. In all fairness
to the public and to the unemployed we must know
more about this problem.




Unemployment
in the Future
What everybody wants to know, of course, is what
we may expect in the way of unemployment in the
future. I believe that under our present system we
will have to face indefinitely the fact that many
people will want jobs who cannot find them. There
will be differences of opinion as to how many of these
jobless are really able workers who could hold jobs if
they had them, and how many have been unable to
keep up in the ecoEach Worker Can Produce More

nomic Scramble and

should be retired under security provisions. The facts for
such discussions
should be developed
as soon as possible by
an unemployment
census, but even
these facts will change from year to year with
varying business conditions. For example, there
were many thousands more skilled people on the rolls
of the WPA at the outset of this year than there
probably will be in 1937.
A great many people keep voicing the hope that
American business can regain the production levels of
1929, and there is in these remarks the ingenuous
implication that when this happens our troubles will
be over. But in reality we are right now only about
10 percent below 1929 production, and the experts
feel certain that we will reach it in 1937. Yet the
end of our troubles seems a long way off. There were
about 1,800,000 unemployed even at the 1929 peak,
but next year, with the same volume of production,




carefully prepared estimates indicate that there will
still be some 6% to 7% millions unemployed. I use
the term "unemployed" to mean jobless workers.
You can subtract from it whatever number you feel
are not employable. This factor is highly debatable.
I know there are now a vast number of our jobless
workers who are exceedingly able, and who have
much to contribute to the American economy.

Causes of Continuing
Unemployment
The various causes of this continuing unemployment
are familiar to all of us, but too often we discuss them
individually rather than en masse, despite the fact that
their effect upon conditions is always a mass effect.
Due to the growth and improvement of machines the
average American worker in 1935 produced 39 percent more than he could in 1920. In 1935 he produced
10 percent more than he could in 1929. It follows
that to reduce unemployment to the 1929 level we
would have to produce 10 percent more goods and
services than we did in 1929. But that is on the
assumption that we have the same number of workers
now that we did then, and this is a false assumption.
Our population is growing steadily. About one-half
a million more young people enter the labor market
each year than the number retired because of age
and death in the older brackets. I mean half a
million net. This is nearly the equivalent of a city the
size of Washington, D. C. These young people are
eager and ambitious and willing to start at the bottom. They are particularly adapted to the high
speeds of mechanized industry. They have long
potential periods of usefulness. The result of this
competition has been to make it very difficult for




men over 40 or 45 to obtain any kind of work.
It is a growing practice in industry to limit the hiring
age to 40 or 45, and many of the older relief workers
probably will never find private work again.
The increase in labor supply, therefore, is another
major factor we must consider in the reduction of
unemployment. And it has been estimated that
with this element included, our total production
would have to be 20 percent above the 1929 level to
reduce unemployment to the proportions of 1929,
or 45 percent above what it is today.
Of course, even then we could not stand still for any
length of time. The very nature of American business is that it is constantly surging, shifting, and
changing. Machines will grow more and more
efficient, displacing more hand labor and requiring
greater production to provide the same number of
jobs. The population will continue to increase,
requiring still higher levels. As yet we have arrived
at no tested method which can prevent cycles of
prosperity and depression. Other types of business
change will cause added unemployment. There will
be stranded populations in the areas from which
industry has moved away, or in the sections where
soil or natural resources have been exhausted.

Fluctuations of
Employment
I don't want to paint a picture that is all blue, but I
think the time has come when it is vital that the
people of this Nation should face the facts and start
considering what they want to do about them. With
wisdom and foresight, the problem can be solved in a
way that will hurt nobody and will bring to the
people as a whole the greatest era of health and
prosperity and happiness ever attained in any nation.




But it can be done only if Government works with
business and business works with Government toward
a common end. We cannot produce more and more
goods to employ our people unless we maintain the
purchasing power of these same people to buy the
goods produced. As we progress along the line of
industrialization, the problem becomes more and
more complex. Practice has shown us that the
larger the industrial unit, the less secure are the jobs
of those who work in it. Monopoly controls price.
When price is not flexible and does not drop to meet
depressed conditions the only alternative is wholesale
dropping of production and, therefore, of workers.
By the same token the greatest industries produce
durable capital goods and durable consumers' goods
such as radios, automobiles, and electrical appliances.
As we progress industrially, more and more of our
industrial labor is involved in the production of these
durable goods. But when a crisis comes these are
things we can do without. It is not pleasant, but we
can do it. The result is that these industries suffer
heavy declines in production and throw increasingly
large numbers of workmen into idleness. And business itself cannot do without the dollars which these
workers spend as consumers, but which they cannot
spend when they are idle.
Here are some examples of how fixed prices are
accompanied by greater unemployment than are
flexible prices. Agricultural implements, motor
vehicles, and iron and steel are centralized industries
which were able to control prices pretty well. The
price of agricultural implements dropped only 6 percent and as a result production of these implements
dropped 80 percent. Prices of motor vehicles dropped
only 16 percent and here again their production went
down 80 percent. Iron and steel prices dropped only
20 percent while production fell 83 percent. In each




of these three industries far more than half of the
total workers lost their jobs. On the other hand, the
prices of textiles, petroleum, and farm products
dropped heavily to meet the reduced national income and their production and their workers suffered
less. Textile prices dropped 49 percent and their production dropped only 14 percent. Petroleum went
down 56 percent with production falling off only 20
percent. The prices of farm products fell 63 percent
and their production was off only 6 percent. You
can see that the necessary reductions in labor in these
industries were, therefore, much smaller.
I would not presume to detail the things that business and industry can do of themselves to help work
out the American answer, except to plead that the
key to it is the American worker. His job must be
as stable as possible, his hours short enough to let
others also have jobs, and his buying power must be
high.

What the Government
Can Do
The Government can do a great many things. It
can take the lead in such security measures as unemployment insurance and aid for dependent children. It can keep children out of the mills and
sweatshops and help young people to stay in school,
out of the labor market.
The idea of helping students to stay in school, so
that they may become better fitted for economic
competition, should be continued. In fact, we must
cut into the labor supply at each end—keeping
youngsters out of it while they study, and also lowering the minimum age at which the veterans may
retire on old-age pensions or insurance. Modern




industry demands a higher tempo. Why should not
the work-period be shorter?
The Government can strengthen public employment offices, and urge private business to use them.
It can aid in fostering low-cost housing. It can
attack the appalling health conditions now widespread, particularly in rural areas. It can explore
the desirability of health and disability insurance.
It can appeal to the States to act quickly and effectively on social security provisions.
Finally, the Federal Government can continue to
provide a program of public works like the WPA for
employable workers who cannotfindjobs. Laudable
as unemployment insurance is, it only covers about
half the workers, excluding agriculture. Its compensation period of 10 to 14 weeks will protect many from
job to job, but there will be many others whose
unemployment periods will be much longer.

Government Maintenance
of Labor Reserve
We have always had a labor reserve, perhaps because American business demands it. If so, this
reserve may need to be larger as our industrial structure becomes more complex. In the first 30 years of
this century, this labor surplus was maintained in a
meager, pitiful way by private charity and local
public relief. Industry paid a small part of the bill
for this charity, but the workers themselves paid the
dearest price of all, in degradation and misery.
American industry, the most efficient in the world
along technical lines, was inefficient in maintaining
its labor reserve. It was willing to keep its machines
well-oiled and cared for even when they were idle.




But it didn't see the need for keeping its workers
from going rusty.
"They also serve who only stand and wait." That
is a classic line. In recent years it became a very
tragic line. The workmen who wait so that industry
can be served in its busiest periods have done more
than their share of the service. They do not want
to stand and wait, they want to work. They have
had work under the WPA and they like it. And I
am convinced that the city and State officials responsible for a large part of the program, and the public,
like the program.
In such a plan the Government simply recognizes
the problem, puts it on a scientific basis and asks
The Jobless Can Build Needed Roads
IMPROVED

UNIMPROVED

business to contribute—not hit-or-miss, but on the
tax basis of ability to pay. The Government gives
work to this surplus labor, maintaining its skill
and its self-respect. This is industry's insurance of
reserve labor when it is needed. The more labor
which industry absorbs within itself, the less its taxes
will be—just as when you reduce an accident risk or a
fire risk, your insurance premiums are reduced. I
believe industry is beginning to understand that these
steps are as much in its interest as in anyone's
interest.
It isn't often realized, but in many sections of this
country we literally kept many industrial organiza-




tions together when they were not operating more
than a day in every week or two. In those terrible
times we employed their workers on Federal work
projects so that they could live. Thus we were
indirectly helping industry, for it was able to reach
out for its trained men when the demand returned.
Large numbers of other skilled workers are leaving
the rolls of WPA to take private jobs everywhere.
Isn't it a terrible indictment of our way of doing
things that there are still millions of unemployed,
and yet we are hearing repeated forecasts of a serious
shortage in skilled labor? Isn't that something to
be worked on promptly? Because the paralyzed
market was choked with idle men in the skilled
crafts, we did not train new craftsmen. If such a
shortage develops, ways must be found to train men
with the least possible delay. For every possible job
is going to count, and every key position which goes
unfilled will also leave unfilled the numerous jobs for
unskilled people which generally supplement it.
This wholesale departure of skilled workers from
the WPA rolls has, I am sure, worried those who want
us to do building-construction and other similar
projects. I want to remind you that four out of five
WPA workers have been unskilled or semiskilled
all along. Yet they have built parks and roads and
water and sewer lines and they can keep on building
them indefinitely without meeting the need. Improvements of this type increase the actual dollar
value of all property they touch. This increases local
tax revenues, as well as the liveability of your communities. I believe you also will admit that the
health, educational, and recreational and cultural
services of our white-collar workers are reducing the
costs of crime and disease and charity, and that
they are raising the whole standard of American
living.




Relation of W. P. A. to the
Unemployed, Unemployable
We must not lose sight of the fact that the WPA's
job is to create jobs—useful jobs, of course, but jobs
for people who can't find work. That must remain
our concern, ahead of anything else.
Let me take up again for a moment some of the
misunderstood points about unemployment and its
relation to the WPA. Many people still don't understand the fundamentals of this thing. They are still
saying: First, that the WPA is robbing the labor
market, because workers on our projects refuse to
leave them even when offered private jobs. Second,
they say the Administration's program is unsatisfactory because there are still from 8 to 11 million
unemployed. And third, they charge that with the
rapid pick-up in business, relief rolls have not
dropped as rapidly as they should. These allegations illustrate clearly the welter of confusion which
exists between the terms "unemployment" and
"relief."
Unemployment and relief are entirely different
things. Relief includes the unemployables. The
two groups represent different problems. We have
the facts about all the people who have been touched
by any public relief program—dole or work, Federal,
State, or local. But all of the relief programs never
cared for anywhere near all of the unemployed.
Probably no form of public aid ever reached more
than half of them. The other half are the people
who lost their jobs, but still managed to fight their
way through because they had savings they could
use, or relatives or friends who would help them.
It is generally agreed that there are from 8 to 11
million unemployed. The WPA now employs only




about 2,500,000. Manifestly it is ridiculous to charge
that the tail is wagging the dog.
There is another angle to this also that ought to be
answerable solely by plain horse sense. The average
earnings of a WPA worker are $50 a month. His
hours are limited so that he cannot exceed the allowable earnings. I ask you, is it reasonable to suppose
that an American worker who is the head of a family
will reject desirable private employment to remain in
such a situation? The answer, as we have found in
investigating thousands of cases, is that if there
actually was a job—which in many instances there
was not—there was something wrong with it—substandard wages, or the kick-back, or some other
unreasonable requirement.

Need for Continuing
Work Relief
This brings us to the question of why we must have
continuing work-relief with industry booming at its
present level.
Here again appears the confusion between unemployment and relief. Leaving out those victims of
depression who were unable to work because they were
too old or sick or handicapped, there were two distinct kinds of unemployed workers—those on relief
and those not on relief. Obviously the people not
on relief were the stronger. They had fared best
when the crash came. Either they had accumulated
savings, or their relatives had accumulated savings,
or they had not been fired until after the others.
They were the people industry was most reluctant
to discharge, and those whom it discharged last.
By the same reasoning, it took them back first.
All through the period during which industry was
getting under way again, these people who never had




been on relief were getting the bulk of the new jobs.
Moreover, a vast number of workers who never had
been actually unemployed, but who had been reduced
to part-time status, were recovering their full-time
work and pay. Obviously, when these nonrelief unemployed returned to work or when these part-time
workers returned to full-time activity there was no
reduction in the relief load. When, on the other
hand, one of them exhausted his resources and was
forced to go on relief, the relief burden was increased.
A year or two ago, this outlook was very discouraging. Today it is vastly better. Unemployment
Relief Parallels Unemployment
RELIEF

UNEMPLOYMENT

has dropped at least one-third from its peak—possibly 40 percent. At the same time the relief load
has dropped substantially. In August it was nearly
28 percent below the peak. For about 2 years,
relief has pretty well paralleled unemployment.
Now it is dropping, almost in the same ratio as unemployment; 417,000 heads of families and single persons have left the rolls in 1 year, and it is apparent
that industry is now reaching substantially into the
relief group for labor.

Cooperation of
Government and Business
I hope that in my eagerness to tell the whole story I
have not been too discouraging. I am not discour-




aged, or even doubtful. We can lick this thing. We
need the help of business. We have no hostility
toward business. Those who say we have are doing
a disservice, not only to business and to us, but to the
whole country. We have learned to distinguish
between business and business men. Business of
itself is not altruistic in nature. Many business men
are. Sometimes competitive industry may compel
business to do certain things against the public interest which many business men are hoping that with
Government aid they will not have to do.
There are plenty of business men who realize that
when millions are in actual need it is stupid for the
top one-tenth of 1 percent of the people to be getting
as much income as the entire bottom 40 percent. It
is as stupid as it was in the days of Louis the Sixteenth
when Marie Antoinette said: "If they have no bread,
let them eat cake."
For the very life of business, the mass of people
must be able to buy, for mass production is the heart
of the system. With all this talk about taking care
of the unemployed, what is going to take care of the
unemployed employer} Nothing except the consumer's dollar.
There has been a tendency to accuse the unemployed of being unpatriotic, of trying to get something for nothing. What can the worker without a
job say to the landlord when he comes to collect the
rent? Can he say: "You be patriotic and don't
evict me" ? What can he say to the milkman ? Can
he say: "I can't afford to buy milk for my babies so
you be patriotic and give it to them"? What can
he say to the doctor when there is desperate illness in
his home? Can he say: "You be patriotic and
waive the bill"?
What we have been doing is putting the burden
on the unemployed. We have told them to be




Wol
patriotic and to submit meekly to whatever comes,
taking what little is offered, letting their humility
prove, by some strange yardstick, the measure of
their loyalty to the
Family Incomes in America

country.

In a word, we
have asked them to
be better c i t i z e n s
than their landlords.
And unless we intend to ask others to
help them in something like the way I
have outlined, we
must create a situation in which they are able to pay their way.
The country is coming out of this depression. It
looks forward confidently to a period of business
activity and prosperity. The national income is the
best criterion of general economic well-being, for it
represents the money value put on all the goods and
services produced through the joint efforts of labor,
management, and capital.
Adequate recovery cannot be attained until the
national income exceeds that of 1929 by at least 20
percent. But why should we limit our national
income to that level? There should be no limit on
our efforts to raise the general economic level of the
American people. Certainly we have no right to
talk in terms of any set figures until our people are
adequately housed, properly clothed, fed with proper
regard to nutrition, and educated with a view to
releasing their latent abilities.
When we emphasize only the fact that 8 or 10
million people are still unemployed, we admit a
defeatist attitude toward our national destiny. That
is another way of saying that we do not know how




to utilize their brains and brawn to produce the
goods and services our people eagerly demand.
Unemployment has an economic as well as a
human aspect. Beyond what we owe to the unemployed, we owe it to our national economy to make
the maximum use of the energies which millions of
unemployed are now compelled to waste. ,
The American Nation cannot go forward to the
heights of economic well-being on which it has a right
to live unless its manpower is used. The conservation
of our human resources should be our guiding principle. It is of greater importance, even, than the
conservation of our physical resources. Indeed, the
former will automatically include the latter.
We in the WPA recognize that it is not enough
merely to provide the able-bodied unemployed with
jobs at security wages. That is the emergency phase
of our task. Now it is passing, and we move into the
reconstruction phase. Our aim will be to supply to
industry as many physically strong, mentally alert,
skilled workers as we can. We believe that will
prove to be one of the most effective ways of reducing
the relief rolls to a minimum. We know from
experience that the skilled man has a much better
chance of holding his job when business turns downward than the unskilled man. Increasing the skill of
those now on relief would not only be a service to
them but a service to the Nation by increasing its
productive power.
We ought to be able to go steadily forward to an
ever-rising standard of living, but in the meantime
we must be realistic about it. The Federal Government cannot refuse responsibility for providing jobs
to those whom private industry does not hire.
I am sure America will win this fight where other
nations have failed. It will win because it has the
brains and the wealth and the leadership.