Full text of Employment, Growth, and Price Levels : Hearings Before the Joint Economic Committee, Congress of the United States, Eighty-Sixth Congress, First Session, Pursuant to S. Con. Res. 13 (1959) : Part 3 -- Historical and Comparative Rates of Labor Force, Employment, and Unemployment, April 25, 27, and 28, 1959

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

EMPLOYMENT, GROWTH, AND PRICE LEVELS

HEARINGS
BEFORE THE

JOINT ECONOMIC COMMITTEE
CONGEESS OE THE UNITED STATES
E IG H T Y -S IX T H CONGEESS
FIR ST SESSION
PURSUANT TO

S. Con. Res. 13
APRIL 25, 27, AND 28, 1959

PART 3—HISTORICAL AND COMPARATIVE
RATES OF LABOR FORCE, EMPLOYMENT,
AND UNEMPLOYMENT

Printed for the use of the Joint Economic Committee

UNITED STATES
GOVERNMENT PRINTING OFFICE
38563

WASHINGTON : 1959
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington 25, D .C . - Price 35 cents




JOINT ECONOMIC COM M ITTEE

(Pursuant to S. Con. Res. 13, 86th Cong., 1st sess.)
PAUL H . DOUGLAS, Illinois, Chairman
W R IG H T PAT I

.N, Texas, Vice Chairman

SENATE

HOUSE OF R E P R E SE N TA TIV E S
R ICH AR D BO LLIN G , Missouri
H AL E BOGGS, Louisiana
H E N R Y S. REUSS, Wisconsin
F R A N K M . CO FFIN , Maine
T H O M A S B. CURTIS, Missouri
C LA R E N C E E. K IL B U R N , New York
W IL L IA M B. W ID N A L L , New Jersey

JOHN SP A R K M A N , Alabama
J. W IL L IA M FULB R IG HT, Arkansas
JOSEPH C. O’M A H O N E Y , Wyoming
JOHN F. K E N N E D Y , Massachusetts
PR ESCO TT BUSH, Connecticut
JOHN M A R SH A L L B U T L ER , Maryland
JACOB K . JAVITS, New York
R o d e r ic k

H.

John T

Study

of

[le y ,

Executive Director
Clerk

L ehm an,

E m ploym ent, Grow th ,

and

P r ic e L e v e l s

Technical Director
J o h n W . L e h m a n , Administrative Officer
J a m e s W . K n o w l e s , Special Economic Counsel
O t t o E c k s te in ,

II




CONTENTS
WITNESSES IN ORDER OF APPEARANCE
Page

Ewan Clague, Commissioner of the Bureau of Labor Statistics (accom­
panied by Robert Pearl, Chief of Economic Statistics Branch, Popula­
tion Division, Census Bureau; Louis Levine, Assistant Director for Pro­
gram, Bureau of Employment Security; and Harold Goldstein, Assistant
Chief, Division of Manpower and Employment Statistics, Bureau of
Labor Statistics)______________________•______________________________
Peter Henle, assistant director of research, A F L -C IO ___________________
Myron S. Silbert, vice president of Federated Department Stores, Cin­
cinnati, Ohio (also chairman, Committee on Manpower and Employ­
ment Statistics, Business Research Advisory Counsel to U.S. Bureau of
Labor Statistics)_____________________________________________________
Clarence D. Long, professor of economics, the Johns Hopkins University-_
Stanley Lebergott, Bureau of the Budget, on leave_____________________
Joseph Childs, vice president, International Union, United Rubber, Cork,
Linoleum, and Plastic Workers of America, A F L -C IO _______________
Gerry E.xMorse, vice president, Industrial Relations, Minneapolis-Honeywell Corp____________________________________________________________

467
511

527
539
567
587
595

STATEM ENTS AND EXH IBITS
Childs, Joseph, vice president, International Union, United Rubber, Cork,
Linoleum, and Plastic Workers of A m erica,'A F L-C IO ________________
Clague, Ewan, Commissioner of the Bureau of Labor Statistics (accom­
panied by Robert Pearl, Chief of Economic Statistics Branch, Popula­
tion Division, Census Bureau; Louis Levine, Assistant Director for Pro­
gram, Bureau of Employment Security; and Harold Goldstein, Assistant
Chief, Division of Manpower and Employment Statistics, Bureau of
Labor Statistics)_____________________________________________________
Exhibits:
Average family size and average number of children under 18,
by family type, for the United States, 1947-58_______________
Comparison of actual and projected total labor force, annual
average, 1950-58_____________________________________________
Employment and hours of work in manufacturing industries,
seasonally adjusted, January 1948 to date____________________
Employment in goods-producing industries compared with em­
ployment in service industries, annual averages, 1919-58_____
Employment in three postwar recessions, selected industries,
seasonally adjusted__________________________________________
Growing proportions of white-collar workers in major industries,
1947 and 1957, nonproduction or supervisory workers as a
percent of total employed____________________________________
Increasing family size and family incomes_____________________
Levels and percent changes in per capita income from 1947 to
1957 (in current dollars) for family persons and other individ­
uals in the United States___________________________________
Long-term unemployment in three recessions, persons unem­
ployed 15 weeks or more____________________________________
Nonagricultural employment, seasonally adjusted, January
1948 to date_________________________________________________
Persons unemployed 15 weeks or more by age and sex, March
1957, 1958, and 1959________________________________________
Persons unemployed 15 weeks or more by color and sex, March
1957, 1958, and 1959_________________________________________




nr

587

467
518
485
493
486
490
487
517
518
492
489
484
484

IV

CONTENTS

Clague, Ewan, etc.— Continued
Exhibits— Continued
Persons unemployed 15 weeks or more by industry, March 1957, page
483
1958, and 1959______________________________________________
Persons unemployed 15 weeks or more by major occupation
group, March 1958 and 1959_________________________________
483
Production and nonproduction workers in manufacturing, season­
ally adjusted, January 1948 to date__________________________
488
Total and long-term unemployment, 11 months after trough in
3 postwar recessions_________________________________________
534
Unemployment as a percent of the civilian labor force, seasonally
491
adjusted, 1948-50, 1953-55, and 1957 to date________________
481
Unemployment by age and sex, March 1957, 1958, and 1959_____
Unemployment by color and sex, March 1957, 1958, and 1959____
482
Unemployment by industry, March 1957, 1958, and 1959_______
480
Unemployment by major occupation group, March 1958 and
1959________________________________________________________
481
Unemployment by marital status, March 1957, 1958, and 1959. _
482
Unemployment by weeks of duration, March 1957, 1958, and
1959________________________________________________________
482
Henle, Peter, assistant director of research, A F L -C IO ___________________
511
Exhibits:
524
Seasonally adjusted rate of unemployment_____________________
Total and percent unemployed, March 1957, 1958, and 1959_____
525
Wage and salary jobs in nonagricultural establishments, season­
ally adjusted________________________________________________
524
Lebergott, Stanley, Bureau of the Budget, on leave_____________________
567
Exhibits:
Business declines 1837-1915 (ranked by relief load rise), per­
centage changes in___________________________________________
585
Business dollar declines 1900-54 (ranked by unemployment rises),
percentage change___________________________________________
585
Long, Clarence D., professor of economics, the Johns Hopkins University. _
539
Exhibits:
Association between labor force participation rates of females
and males: 5 countries, various years, 1890-1951_____________
565
Germany, including the Saar, Austria, and the Sudetenland:
558
population and labor force by sex, 1939-44______ ____________
Labor force compared with Armed Forces and the unemployed,
United States, 1940-56 (labor force per 1,000 in same popula­
tion group)---------------------------------------------------------------------- ----559
Labor force of native white, foreign-born white, and colored
persons: United States, census dates, 1890-1950_____________
564
Number of persons by which the labor force during the severe
unemployment of April 1940 differed from the average of the
moderately high-employment census dates April 1930 and
1950, in relation to population and unemployment by sex and
age group, United States and its urban and rural areas_______
557
Number of persons by which the labor force of the depression
years 1934-36 differed from that of the April 1930 and 1940
average in relation to population and unemployment, by sex
and age group, four States____________________________________
556
Persons 14 years and older in the labor force per 1,000 in same
population group: Five countries, various years, 1890-1951;
and standardized for age and sex__________________________ 562, 563
Variation in the proportion of the labor force to population and
the corresponding range of error in the labor force sample esti­
mates, United States and Canada, 1946-52 (per 1,000 popula­
tion of same sex and age)___________________________________
560
Morse, Gerry E., vice president, industrial relations, Minneapolis-Honeywell Corp___________________ _______ _— .-------------------------------------------595
Silbert, Myron S., vice president of Federated Department Stores, Cincin­
nati, Ohio (also chairman, Committee on Manpower and Employment
Statistics, Business Research Advisory Counsel to U.S. Bureau of Labor
Statistics)________________________________ ___________________________
527




EMPLOYMENT, GROWTH, AND PRICE LEVELS

SATURDAY, A P R IL 25, 1959
C ongress of t h e U n it e d S t a t e s ,
J o in t E c o n o m ic C o m m it t e e ,

Washington, D.C.

The committee met at 10 a.m., pursuant to notice, in room P-63,
Old Supreme Court Chamber, the Capitol, Hon. Paul H. Douglas,
presiding.
Present: Senator Douglas; Representative Patman, Coffin, and
Widnall.
The C h a i r m a n . The com m ittee w ill come to order.
The committee today starts the third set of hearings in connection
with our study of economic policies which are being conducted under
the general title of “ Employment, Growth, and Price Levels.”
After our opening hearings which presented general points of view
on the economy at midcentury, we began to lay the groundwork of
historical facts on which to base our conclusions, by looking at the
overall measurements of performance in the economy, of prices, and
productivity.
The hearings we are now about to begin, will set forth clearly and
dispassionately the facts about employment, unemployment, and the
labor force generally.
We have asked the witnesses today to focus on how unemployment
and employment are measured and what the data reveal about the
characteristics o f the unemployed.
I know that the members of the committee who are absent today
are sorry that conflicts in their schedules have prevented their partici­
pation in today’s discussion. Congressman Curtis asked especially
to have his regrets expressed to the witnesses, but wishes to assure them
that their remarks will be carefully read in the transcript.
Our first witness is an old friend, Mr. Ewan Clague, Commissioner,
Bureau o f Labor Statistics.
STATEMENT 0E EWAN CLAGUE, COMMISSIONER OF THE BUREAU
OF LABOR STATISTICS ; ACCOMPANIED BY ROBERT PEARL, CHIEF
OF ECONOMIC STATISTICS BRANCH, POPULATION DIVISION,
CENSUS BUREAU; LOUIS LEVINE, ASSISTANT AND DIRECTOR FOR
PROGRAM, BUREAU OF EMPLOYMENT SECURITY; AND HAROLD
GOLDSTEIN, ASSISTANT CHIEF, DIVISION OF MANPOWER AND
EMPLOYMENT STATISTICS, BUREAU OF LABOR STATISTICS

Mr. C l a g u e . Mr. Chairman, I have a moderately long statement,,
complete with tables and charts. It is too long for me to read.
Chairman D o u g las . We will make it a part of the record.




467

468

EMPLOYMENT, GROWTH, AND PRICE LEVELS

(The complete statement follows:)
T e s t im o n y

by

E

w an

C l a g u e , C o m m i s s i o n e r o f L a b o r S t a t i s t i c s , U .S . D
m e n t of L abor

epart­

Mr. Chairman, and members o f the committee, your committee has asked me
to discuss the Government’s measures of unemployment, employment, and the
labor force. Yol have also asked me to comment on how these statistics can
provide us with insight into the problem of unemployed workers, and how such
factors as technological changes, pension plans, and other factors affect the
mobility of the unemployed and their reemployment.
FEDERAL STATISTICS ON EMPLOYMENT AND UNEMPLOYMENT

The Government’s statistics on employment, unemployment, labor force, and
hours of work have received concentrated attention in the past 18 months as
we moved through the recession and into the period of business recovery. These
figures are indeed basic indicators of the state o f our Nation’s economy. For
this reason we are constantly trying to improve not only the accuracy o f the
data, but the manner of presentation and interpretation. At this very time we
are in the midst of working out arrangements for the expected transfer o f
responsibility for the monthly report on the labor force from the Bureau of the
Census to the Bureau of Labor Statistics. Before I discuss this transfer and
other developments in some detail, I would 11ke to describe briefly the programs
which provide these important measures of employment, unemployment, and the
labor force.
The statisics are compiled from three major sources: household interviews,
payroll reports from employers, and administrative records of unemployment
insurance systems.
Data based on household interviews are obtained from a sample survey of
thye population. The survey is conducted each month by the Bureau o f the
Census and provides a comprehensive measure of the labor force, i.e., the total
number o f persons 14 years o f age and over who are employed or unemployed.
It also provides data on their characteristics such as age, sex, color, and marital
status. The information is collected by trained interviewers from a sample o f
about 35,000 households in 330 acres throughout the country and is based on
the activity or status reported for the calendar week including the 12th day of
the month.
The employed total from the household survey includes all wage and salary
workers and self-employed persons who worked at all during the survey week
or who had jobs or businesses from which they were temporarily absent be­
cause of illness, vacation, industrial dispute, bad weather, or various other rea­
sons, regardless of whether pay was received. It also includes unpaid workers
in family-operated enterprises who worked 15 hours or more during the survey
week. Employed persons are classified as working in agriculture or nonagricultural industries; those holding more than one job are counted only once,
and are classified according to the job at which they worked the greatest number
of hours during the survey week.
The unemployed total from the household survey includes all persons who
did not work at all during the survey week and were looking for work regardless
of whether or not they were eligible for unemployment insurance. Also included
as unemployed are those jobless persons who (a) were waiting to be called
back to a job from which they had been laid off; or (6) were waiting to report to
a new wage or salary job within 30 days (and were not in school during the
survey week) ; or ( c ) would have been looking for work except that they were
temporarily ill or believed no work was available in their line of work or in
the community. Prior to 1957, persons on layoff for definite periods o f less
than 30 days were classified as employed rather than unemployed as were all
persons waiting to start new jobs within 30 days. The shift in definition of
these two groups from the employed to the unemployed categories (amounting
to about one-fourth million persons) was instituted following recommendation
by the Review of Concepts Subcommittee of the Budget Bureau’s Technical
Committee on Labor Force, Employment, and Unemployment. The subcommit­
tee gave careful consideration to the proper classification o f these and other
groups whose employment status could be considered ambiguous.
Data based on employers1 payroll records.—The Bureau of Labor Statistics
has developed, over a period of many years and with the cooperation of the



EMPLOYMENT, GROWTH, AND PRICE LEVELS

469

Bureau of Employment Security and State agencies, a comprehensive body of
historical and current data on wage and salary employment, hours, earnings,
and labor turnover both for the Nation and for States and areas. Each month
the Bureau prepares estimates of the number of employees on the payrolls of
nonagricultural establishments with detailed information on some 150 indus­
tries. Employment of production or nonsupervisory workers, average weekly
hours and average hourly and weekly earnings are also available for a large
number of industries.
The figures are based on payroll reports from a sample o f 180,000 employers
covering about 25 million workers. The employee figures include all workers
(full time or part time) who received pay during the payroll period ending
nearest the 15th of the month. Persons on paid sick leave, paid holiday, or
paid vacation are included, but not those on leave without pay for the entire
payroll period. Persons on the payroll of more than one establishment during
the period are counted each time reported. Proprietors, the self-employed,
unpaid family workers, and workers in private households are excluded. Be­
cause of these exclusions, the number of employees on payrolls of nonagricul­
tural establishments is, on the average, about 7 million smaller than total non­
agricultural employment based on household interviews.
Data from administrative records of unemployment insurance systems.—Data
on insured unemployment published by the Bureau of Employment Security
are obtained as a byproduct of the operations of the State employment security
programs. Weekly reports, for the Nation and by State, are issued on the
volume and rate o f insured unemployment and the number of initial claims
under State programs, including the program *of unemployment compensation
for Federal employees. Figures are also issued by State on the volume of un­
employment compensation for veterans and nationally for the Railroad Retire­
ment Board program.
Insured unemployment represents the numbed of workers covered by State
programs who have been unemployed for at least 1 week and are claiming
benefits. It includes some persons who are only partially unemployed but
excludes persons who have exhausted their benefit rights, new workers who have
not earned rights to unemployment insurance, and persons losing jobs not covered
by unemployment insurance systems (agriculture, State, and local government,
domestic service, self-employment, unpaid family work, nonprofit organizations,
firms below a minimum size). As a result, insured unemployment includes only
about two-thirds o f total unemployment as measured by the household interviews.
Initial claims are notices filed by workers losing jobs covered by State and
Federal employee programs that they are starting periods of unemployment. A
claimant who continues to be unemployed a full week is counted in the insured
unemployment figures.
In addition to data from unemployment insurance systems, area labor market
reports are prepared at bimonthly intervals by State employment security agen­
cies for 149 major labor market areas. These reports contain statistics and
analyses on employment, anticipated labor requirements, and labor turnover,
by industry; unemployment, including insured unemployment; and labor demand
and supply, by occupation. Statistics on employment and labor turnover de­
veloped in the joint BLS-BES agency programs are used in these reports for
areas for which they are available.
Area classifications according to relative adequacy of local labor supply are
assigned to the 149 major areas by the Bureau o f Employment Security on the
basis of the information in the bimonthly area labor market reports. The pro­
gram of classifying areas, introduced during World War II, is designed to permit
ready comparisons of general labor market conditions among areas. Under
present area classification procedures, the 149 major areas are grouped into six
major labor supply categories. The classification groupings are designated by
letters ranging fr'om A to F, with group A reflecting the relatively tightest labor
supply and group F the relatively greatest unemployment. Areas classified in
categories D, E, and F are regarded as meeting the requirements for designations
as “ areas o f substantial labor surplus” under existing Federal programs to
. alleviate localized unemployment. In addition to the major areas, smaller areas
with relatively substantial labor surpluses are reported semiannuallvTRANSFER OF TH E M O N T H L Y REPORT ON TH E LABOR FORCE FROM CENSUS TO BLS

Assuming approval by the Congress, the Bureau of Labor Statistics will have
the responsibility for the content and analysis of data from the Monthly Report




470

EMPLOYMENT, GROWTH, AND PRICE LEVELS

on the Labor Force beginning next fiscal year. The Bureau of the Census will
continue collecting and tabulating the data.
The transfer of the MRLF analysis function to BLS means that the Labor De­
partment will have the primary responsibility for the Federal Government’s
analysis of all data relating to labor force, employment, and unemployment.
This move represents a significant forward step in the Department’s program of
providing statistical data relating to the welfare of workers. It will now be
possible for one agency to make the most efficient use of the analysts working in
the field, and to provide integrated analyses of all data from household enumer­
ation, from employer reports, and from unemployment insurance data.
In our continuing program of expanding and improving the data on employ­
ment and unemployment it will now be possible to take fully into account the
interrelationships of the three basic series. All of these developments will
result in better information on growth in the economy, and on the extent and
nature of unemployment problems.
Public understanding of the statistical reports will also be considerably en­
hanced by regular press conferences. These conferences will give reporters an
opportunity to ask questions and our technicians a forum for explaining the sig­
nificance of changes in labor force, employment, and unemployment. As you
probably know, the Bureau o f Labor Statistics for years has used this procedure
in releasing data from the Consumer Price Index. The Government’s reports on
employment and unemployment requires explanations of the figures fully as
much as the report on prices.
The transfer of the analysis function from the Bureau of the Census to the
Bureau of Labor Statistics is proceeding smoothly with the excellent cooperation
of the census staff. We have met with several groups, both outside and inside
Government, to get their advice on how the materials should be published, and
what kinds of additional information they would like to have in the future.
Among the groups consulted have been both the Business and Labor Research
Advisory Councils to the BLS and the Federal Statistical Users’ Conference.
The conference with this latter group was attended by Mr. James Knowles of
your committee staff.
Arrangements have been made to transfer key personnel from the analytical
staff of the Census Bureau. Since last month, BLS and census staff members
have functioned as a team so that BLS personnel can become familiar with the
flow of data from the field through editing and tabulating into the final printed
analytical report. We are now at the point of turning our attention to a number
of housekeeping items and technical details connected with the transfer. Alto­
gether, the whole transfer operation is working out very well, and in July we
hope to be able to publish an integrated report without any difficulty.
PLANS FOR IMPROVING TH E STATISTICS

As useful as all of these statistics have been in giving us insight into what is
going on in the economy, there is still a need for extending them. For example,
some of the broad questions which you have asked me to discuss can only be
talked about in a general way. There is a distinct need for broadening our
statistical programs so that we can describe and measure with accuracy the
forces influencing our economic well-being and their results.
The existing statistical programs also need and are receiving attention directed
to improving their accuracy and increasing their usefulness. All too often, I
would guess, you have wanted precise information about some critical segments
of economic activity and found that no figures were available. Or you may have
wondered how significant a movement in one of the published series might be and
have been told that no conclusion could be drawn because the figures were not
precise enough.
I think we have been making major strides in bridging these gaps of ignor­
ance. For example, the statistics we derive from establishment reports have
been continually refined over the past few years and their usefulness to the pub­
lic increased. With the cooperation of State agencies we have increased the
coverage o f our payroll employment sample from about 160,000 establishments
in 1957 to 180,000 in 1958. The reports from these establishments now cover
about a half of the Nation’s nonfarm wage and salary jobs. We can, from
these reports, give you the figures you want on employment, hours, and earnings
for detailed industries and for many local areas as well.
We have been engaged in a continuing program of controlling the quality of
these payroll statistics. This piogram has involved personal surveys of many of




EMPLOYMENT, GROWTH, AND PRICE LEVELS

471

our employer reporters and detailed analysis of their response to our regular
payroll inquiries. The objective of this has been more than the pursuit of sta­
tistical perfection. It has enabled us to make our employment, hours, and earn­
ings statistics more accurate and meaningful; it has given us a better idea of
the types of information that are available; it has permitted us to frame our
inquiries in terms which employers can readily respond to from the records
they keep. For the time being, operations under our quality control program
have been reduced, but we hope to be able to resume them on a larger scale
when our resources permit.
Our program for labor turnover statistics has also been expanded so that we
can now publish hiring, layoff, and other turnover data for a number of individ­
ual States as well as for the Nation as a whole. We hope eventually to be
able to extend this program to cover all States and also to be able to provide data
in greater industrial detail than is now possible.
We are now proceeding with the rather complicated job of converting all of
our payroll statistics to the new standard industrial classification system, to
keep these statistics comparable with others which will be put out according to
the same standards and to bring our industrial groupings up to date with current
economic practices.
We also have under consideration the presentation of our payroll statistics
separately for plants of different sizes in individual industries. Such strati­
fication of our statistics by the size of establishment would give us some idea
of trends in growth among different size groups, and how well small business
firms are doing compared with larger firms in each industry. It will also add
to the accuracy of our data on earnings by industry. What we will be able to
accomplish in this direction will depend on the availability of resources.
We also hope some day to be able to present, for all nonfarm wage and salary
workers, figures on hours of work which will have as much authority and be as
useful in gaging economic developments as those we now publish for manufac­
turing industries and a few nonmanufacturing industries. This, however, will
be a formidable task that will require considerable expansion o f our current
resources. In the light of the usefulness of our present hours and earnings
figures in appraising economic developments, I believe that a program for meas­
uring hours of work in the whole economy is a well worthwhile objective.
The household survey has also been extended and improved over the years
in the Bureau of the Census. The sample has been enlarged to provide addi­
tional detail on the characteristics of workers and to improve the quality of the
statistics. Ever since the survey was established there has been a continuing
program of increasing its efficiency. Questions have been sharpened to prevent
ambiguous responses, industrial and geographical representation has been im­
proved, and increasingly high standards of performance have been applied to
all of the survey operations. One of the most dramatic examples of increased
efficiency has been the shift from the use of mechanical tabulating to electronic
equipment.
I wish to assure you that the drive to constantly improve the Monthly Report
on the Labor Force survey will continue. No major changes are planned for
the next fiscal year but we hope to publish a few additional details from the
statistics already available. It is planned, for example, to resume publication
o f data on the movement of workers from one labor force category to another—
for example, how many who are unemployed one month get jobs the next, and
vice versa. Another way in which we hope to improve the usefulness of these
statistics is to make them available in forms which will be equally informative
to technicians and laymen alike. Those of you who have seen the chartbook
we recently published on “ Who Are the Unemployed?” will know what I have
in mind.
Potentially the MRLF survey can provide answers to some o f the questions
you have raised about the relationship of labor mobility and unemployment to
certain factors such as seniority, pensions, and supplementary unemployment
benefits. However, it is no simple matter to get information on these subjects
through household enumeration. The value of getting additional information
must be weighed against the effect of overburdening the respondent and thus
jeopardizing the basic survey questions. Availability of space on the question­
naire is another important consideration, since space for supplementary ques­
tions is in great demand and is normally scheduled many months in advance.
Cost is another factor, because additional questions mean printing costs, training
of enumerators, programing for machines, analytical time, etc. For these rea­
sons, asking additional questions or any changes in the survey must be carefully
considered and must necessarily be introduced slowly.



472

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Further work is being done on seasonal adjustment of the unemployment and
other labor force data. As you know, there is a high degree of seasonality in
unemployment. In the winter months the total number of jobless increases as
outdoor work is curtailed, then declines until early summer when large numbers
of students enter the work force to seek postgraduation or temporary summer
jobs. By October, unemployment is usually down again to the year’s low point.
In order to clarify the basic economic changes, the Census Bureau has de­
veloped seasonal adjustment factors which attempt to allow for these recurring,
swings. On the basis of these factors the Census Bureau publishes both the
actual and the seasonally adjusted rates of unemployment each month. These
adjustment factors are not considered entirely satisfactory and research is still
going on to improve them.
The Bureau of Employment Security is working with the State agencies on a
series of studies to assist in measuring and making adjustments for administra­
tive factors which tend to distort interstate comparisons. Beginning with the
unemployment insurance claims information to be submitted in July o f this
year, the State agencies will adjust these data, when necessary, to eliminate the
effects of rescheduling of claimants on the insured unemployment figures. The
basic objective is to assign the weeks claimed by rescheduled claimants to the
week in which they would have filed if the usual routine had been followed.
Because the volume of exhaustions can seriously affect the level and trend of
insured unemployment statistics, the Bureau of Employment Security instituted
weekly reporting of exhaustions by the eight largest States in the spring of 1954.
These eight States together usually account for about 50 percent of the national
total. All States report exhaustions on a monthly basis.
Important information on the problem of unemployment is related to what
happens to claimants after they exhaust their benefit rights. Since they are no
longer required to report to the local employment offices, this information cannot
be obtained as a simple byproduct of regular operations. Instead, it requires
special contacts with the former claimants to determine their current labor force
status. During the last several years, studies have been made of postexhaustion
experience of claimants in more than half the States. These studies follow a
uniform method which assures comparability of data among the States. These
data are valuable, not only for economic analysis purposes, but also in evaluat­
ing the benefit duration provisions of unemployment insurance laws.
LABOR FORCE TRENDS

I
believe it would be useful to turn next to a brief discussion of the basic
trends shown by the data on labor force, employment, unemployment, and hours.
As I pointed out in January 1959 when I appeared before this group during
hearings on the Economic Report of the President, labor force growth from year
to year is very uneven. In the 8 years from 1950 to 1958, growth averaged about
three-fourths of a million persons a year, but the increase ranged from less than
400,000 in one year to almost 1% million in another. We know that the size of
the labor force is closely related to the number of persons o f working age in the
population. If population growth alone determined labor force growth it would
be a simple matter to calculate the expected size of the labor force at some fu ­
ture date within a 10- or 15-year period. One would have only to take projec­
tions of population already born in the base year and apply age-specific rates of
labor force participation.
But there are three population groups whose rates of labor force participation
have been showing a secular trend as well as considerable response to general
economic conditions. These groups are (1) married women whose rates of labor
force participation have been increasing over a long period of time; (2) men 65
years of age and over whose rates have been dropping over the years as retire­
ment has become more feasible and prevalent; and (3) young persons of school
age whose labor force activity has also declined in the long run as a result of
extended schooling and basic shifts from farm to urban living and the attendant
changes in work patterns of youth. The long-range trend in the rates for these
groups has been quite clear, but the amount of that change is quite sensitive to
the job situation. When the economy is expanding at a great rate and jobs are
readily available women tend to enter the work force in greater numbers; more
youths in school find part-time jobs and older men may postpone retirement.
They respond to the demand for labor. It may be that the entry of women and
youngsters in greater-than-usual numbers represents a borrowing ahead o f labor
supply that Would have been available a few years later. This may account in



EMPLOYMENT, GROWTH, AND PRICE LEVELS

473

part for a dampened rate of entry in the year immediately following. In addi­
tion to this possibility, there have been at least 2 years since 1950 when less-thantrend growth in these labor force groups could be ascribed to lack o f job oppor­
tunities.
These irregular changes can be seen in chart 1, Starting with 1950, the labor
force increased by 1% million in 1951 as production was increased and the
Armed Forces expanded following the Korean outbreak. The almost 500,000
greater-than-trend expansion was supplied to a large extent by youths and adult
women. In the following two years, the growth was greatly dampened with a net
addition to the labor force of barely 1 million for the 2-year period. As of 1953
the average size of the labor force was back on the trend line. In the 2 years
following the 1951 sharp expansion, rates of labor force participation for youths
and men 65 and over had dropped back; increases in rates for adult women were
much smaller than average.
In 1954, when job opportunities became scarce during the economic downturn,
the labor force growth remained small—less than one-half million—and the
total was 300,000 below the trend line. The groups which were responsive to
the earlier expansion were now below trend. Then followed 2 years o f great
expansion. Almost 1.1 million persons were added to the work force in 1955
and another 1.5 million in 1956. About three-fifths of the net additions in the
2 years were supplied by adult women. As the chart shows, the total labor
force was back on the trend line in 1955, and in 1956 it exceeded the expected
level by 700,000.
As labor demand slackened in 1957, fewer women were added to the work
force and labor force participation rates for young workers and men 65 and over
dropped more than expected on the basis of long-term trends. For the year as a
whole, the labor force showed only 350,000 net increase and was back again on
the trend line.
In 1958 labor force growth was again much less than average, and the total
dipped below trend value by about one-fourth million. The scarcity o f jobs
apparently discouraged some school-age youths from seeking employment. Older
men retired from the labor force in greater numbers than usual. Adult women
continued to be added to the work force but in reduced numbers. The total
number of women in the labor force was back to about the size indicated by con­
tinuation of trends in labor force participation rates and their number in the
population.
Labor force growth so far this year is running about one-half million above
a year ago. I f the labor force returns to projected trend by 1960, about 2%
million workers would be added in the 2 years between 1958 and 1960.
We are in ,a period when the population of working age is beginning to
increase somewhat more rapidly than in the past decade. The really sharp
population gains in the young working ages will begin in the early I960’s. For
a few years these population increases will be concentrated in the age groups
whose principal activity will still be attending school. As long as they are
still students, some of them may postpone their entry into the labor market if
jobs are not plentiful. But by the mid-1960,s this large group of young people
will be in their late teens and at this point many will be ready for fulltime
career jobs. These years will be critical in terms o f having enough economic
growth to provide jobs for the large number o f youths entering work career.
CH ANG ING IND U STRIAL DISTRIBUTION OF EM PLO YM ENT

To provide an estimate o f how the future labor force will match job oppor­
tunities, BLS made long-range studies o f the changing industrial and occupational
patterns o f employment. Over the past century the country moved from a pre­
dominantly farm economy with some craft industry into a predominantly
industrial economy with a much reduced farm sector. The rapid technological
changes that are in progress now, and that are expected to prevail over the
next 20 years, indicate that the pattern of employment distribution will continue
to change in the future. I would like to briefly describe the major changes
that have occurred in the distribution of employment over the past several decades
and also to suggest what continued changes we might expect over the next
decade and ,a half.
First, the most obvious and important change is the continued growth of total
employment. Between 1929 and 1957, employment increased by about 36 percent.
Over this same period, there was a continuing shift in employment from the
goods-producing industries (which include the extractive industries, construc­




474

EMPLOYMENT, GROWTH, AND PRICE LEVELS

tion, manufacturing, and agriculture) to the service-producing industries (which
include trade, finance, transportation, public utilities, government, and mis­
cellaneous service industries) (chart 2 ). In 1929 employment in the goodsproducing sector accounted for 59 percent of total employment while that in
the service-producing sector accounted for 41 percent; In 1957, the correspond­
ing ratios were 47 percent and 53 percent. During this period, goods-produeing
employment increased by only 8 percent, while the service sector had an increase
of about 77 percent. (The recent business decline affected goods-produeing
employment more sharply than service industry employment and exaggerated
these ratios for 1958.)
The much slower growth in the goods-produeing sector resulted mainly from
an absolute decline in employment in agriculture and mining. Construction
grew at a faster rate than total employment during this period. Manufacturing
also showed an increase in employment proportionately greater than the total
labor force for the period as a whole, although employment in manufacturing
has been increasing at a slower rate in the post-World War II period.
All the industry divisions in the services sector increased in employment
over the period, and only in one of them— transportation and public utilities— did
employment increase at a slower rate than employment as a whole. By 1975
we expect that the service-producing industries will make up an even larger
proportion of total employment.
The growth of our working population and the changing industrial distribu­
tion of employment has been accompanied by some major changes in the occu­
pational structure of the labor force. The attached chart 3 shows the kind of
change that has taken place. It shows that white collar workers—nonproduc­
tion workers in manufacturing and mining, and supervisory employees in public
utilities, trade and construction—have increased greatly as a proportion of the
total employment in these industry divisions. For example, nonproduction
workers, as a percentage of total manufacturing employment, increased from 16
percent to 23 percent between 1947 and 1957.
In fact, during the 1947-57
period when nonproduction workers increased by more than 50 percent, there
was virtually no increase in the number o f production workers.
In 1956, for the first time, white-collar workers (professional and technical
workers; managers, officials, and proprietors; and clerical and sales workers)
exceeded the number of blue-collar workers (craftsmen, operatives, and
laborers). White-collar occupations accounted for about 22 percent of total
employment in 1910, but by 1957, the proportion was 41 percent. On the other
hand, blue-collar workers accounted for 38 percent of total employment in 1957,
unchanged from its proportion in 1910. In the next decade, each of the whitecollar groups is expected to grow faster than the labor force as a whole. It is
anticipated that the professional and technical workers groups will show the
fastest rate o f growth. Our projections indicate that this group will increase
more than twice as fast as the labor force as a whole. (In addition to the bluecollar and white-collar groups, there are two other large occupational cate­
gories— service workers and farmers and farm workers. The service group in­
creased somewhat faster than total employment in 1910-57 period. However,
farmers and farm workers declined substantially in employment during this
period. In fact, today, there are fewer farmers and farm workers than pro­
fessional and related technical w orkers; whereas in 1910 the farm group was
more than 6 times as large.)
THE RECENT RECESSION

The economic situation has improved since I delivered my testimony before
you in January. At that time, the various measures of employment had for
several months shown only modest gains and the pattern of recovery was not
very clear. During the last few months, however, we have had a succession of
reports indicating sustained improvement in the job situation as well as in
general economic conditions.
This committee is familiar with the picture, but it may be useful to review
the course of the recent recession. Even while we were reaching new peaks
of industrial activity in 1957, several situations were developing which, acting
together, were to result in the business downturn we experienced.
These developments centered about the durable goods sector of the economy.
Business spending for new plant and equipment dropped off sharply after 2
years of record growth which temporarily expanded our production capacity
beyond the current levels of demand. At the same time, demand for new




EMPLOYMENT, GROWTH, AND PRICE LEVELS

475

automobiles and other durable goods was falling. Homebuilding activity de­
clined, partly because of conditions in the money market. In addition, the
Government slowed down its procurement of military goods while a reappraisal
of our defense policy was underway and major decisions were being made
regarding new fields of weapon development. In addition, businessmen cutback
on production still further in order to liquidate inventories.
The results were evident through the fall and winter of 1957-58. The gross
national product declined by $20 billion (at annual rates) from the peak of $446
in the third quarter 1957 to the first quarter of 1958. The number of job® in the
nonfarm economy dropped by 2.4 million (allowing for seasonal variation) or
4y2 percent, between August 1957 and April 1958. (Chart 4.) Manufacturing
employment fell by 10 percent as the payrolls o f durable goods industries were
cut sharply. The number of unemployed swelled by 2% million (seasonally
adjusted), an increase of almost 80 percent over the jobless levels which had
previously been relatively unchanged for 2% years. About 7y2 percent of the
labor force was completely idle. In addition the factory workweek dropped by
1 y2 hours as large numbers of workers were reduced to part-time. The number
of full-time workers whose hours were cut below 35 totaled 2*4 million at the
depth of the recession compared with about 1 million in August 1957. Labor
income dropped by $9 billion (at annual rates) between August 1957 and
April 1958.
As I stated in January, the duration of this business downturn was relatively
brief, and the sharpness of the decline was blunted by a number of forces work­
ing in the other direction, some o f them exerting such noticeable effect for the
first time.
The effect of these forces was to shore up consumer income and provide a
basis for sustaining consumer demand. In fact, total consumer income remained
relatively high throughout the downtown, and the demand for nondurable goods
and for services continued strong. More than half of the $9 billion drop in
labor income was offset by increases in transfer payments!—unemployment bene­
fits, payments under old-age and survivors insurance and under other Govern­
ment retirement and welfare programs. Unemployment benefits, which were
the most important factor, were extended for longer periods under temporary
unemployment compensation plans becoming effective in July 1958. As a result
of these increased payments the total decline in personal income amounted to
less than 1y2 percent.
In addition to Government programs, expanded private programs helped to
moderate the decline in income. These involved plans for supplementary un­
employment compensation, severance pay and retirement. Also contributing
to the stability of personal income was the maintenance or increase in general
wage rates, the rise in farm income, and the keeping up of dividend and interest
payments even while profits fell.
An additional factor adding to the general stability of employment and
consumer income was provided by the continued growth of service-type in­
dustries and the general maintenance of job levels among so-called nonpro­
duction workers whose work in research, administration, and sales continued
even in the face of declining business.
These influences did not tip the beam in the direction of recovery until
after April of last year, partly because the business recession may have been
extended and aggravated by exceptionally bad weather during the late winter.
After April, however, business conditions began to improve. Relatively rapid
recovery followed in employment and hours for about 5 months, but unem­
ployment remained high. From September until the end of the year the econ­
omy seemed to hesitate even though output continued to move back to prere­
cession levels. It was with this background that I spoke to you in January.
Since that time, however, we have had a resumption of recovery in employ­
ment and most other economic activities as well. For a couple of months there
was some lag in the unemployment situation but last month— March—we had
a heartening reduction in the number of jobless.
Where do we stand now? In March we were in our 11th month of recovery
following the low point o f the recession. W e have recovered more than half
the loss in total payroll employment. We have regained a somewhat smaller
proportion of factory jobs, but the job situation in this crucial sector never­
theless continues to improve. (Chart 5.) W e have also wiped out half of the
recession increase in unemployment. The unemployment rate, which had
reached 7y2 percent, has come down to about 6 percent. (Chart 6.)




476

EMPLOYMENT,, GROWTH, AND PRICE LEVELS

While the job situation is about halfway back to prerecession levels, the pic­
ture of recovery is quite different when measured in other economic terms.
Gross national product for the first quarter of this year will probably come to
about $465 billion, almost $20 billion higher than the prerecession peak in cur­
rent dollars, and roughly half that amount if allowance is made for price in­
creases. The volume of factory output has also climbed back to its peak. How­
ever, manufacturing employment is still 5 percent below its prerecession level
and unemployment is still higher than we would want to see it.
Total unemployment, at 4,362,000 in March 1959, was 840,000 below a year ago,
but was still 1% million higher than in March 1957.
W H O ARE T H E UNEM PLOYED?

Considerable Government information is available on this question and also
on the identification of those groups which are now experiencing the heaviest
incidence of unemployment.
Workers from durable goods manufacturing and mining industries, hard hit
by the recession, still account for a disproportionate number of the unemployed.
They have the highest rate of unemployment except for construction workers
who always have very high rates in the winter months. Trade and service
account for a large number of unemployed since they are big industries.
Rates of unemployment in March were below a year ago in all major industries
except mining, which was one of the hard hit industries during the yecent
economic downturn. The unemployment rates in durable goods manufacturing
and transportation, which were also among the most severely affected industries
during the recent recession, showed the sharpest drops over the year. Within
the durable goods sector, rates were down considerably in primary metals (13
percent to 5% percent) and in automobile manufacturing (25 percent to 10 per­
cent), although the rate in autos was still relatively high. Joblessness in con­
struction and service was little changed from the previous year. Compared to
2 years earlier, however, unemployment was still significantly higher in all
major industries (table 1)Blue collar workers (laborers, operatives, and craftsmen), who are concen­
trated in the recession-affected industries and in construction, had the highest
rates of unemployment in March. Nearly 6 out of every 10 jobless workers were
from these 3 occupational groups.
Joblessness among operatives was down sharply from a year ago when factory
production was severely curtailed. Operatives accounted for nearly 70 per­
cent of the 800,000 drop in total unemployment since March 1958. Craftsmen,
who were also severely affected by the recession contributed another 18 percent
of the total decrease in unemployment (table 2).
The unemployment rate for men (6.5 percent in March) was not much higher
than the rate for women (6.2 percent). A year ago, during the depths of the
recession, unemployment was considerably more severe among men than women
(8.2 percent for men versus 6.6 percent for wom en).
Compared with prerecession levels of 2 years ago unemployment among men
was 1 million higher; among women 460,000 higher. For men 25 to 54 years of
age, most of whom are married men with families, unemployment was up 600,000
over 2 years ago. Young workers under 25, many of whom are single, had the
highest rates of unemployment. This is true, however, in good times as well as
in recession periods, because they frequently move between jobs as well as into
and out of the labor force and these movements often mean temporary periods
of job hunting (tables 3 and 4 ).
Older men were not as severely affected during the period o f job cutbacks, but
those who lost jobs have been having greater difficulty than other men in find­
ing jobs during the period of recovery.
Out of every 10 persons jobless in March, 2 were males under 25 years of
age, 5 were males 25 years old and over, 1 was female under 25, and 2 were
females 25 and over.
Nonwhite workers continued to account for approximately one out of five
of the total number of unemployed persons in March, twice their proportion in
the labor force. The rates of unemployment among nonwhites were 13.6 percent
for men and 11.4 percent for women, compared with 5.7 percent for white men
and 5.5 percent for white women. In part, these high rates for nonwhites are
explained by the fact that they are heavily concentrated in unskilled jobs which
always have high rates of unemployment for both white and nonwhite workers.
Another factor is that many nonwhites are low on the seniority ladder because
they got jobs in industrial areas in recent years (table 5).



EMPLOYMENT, GROWTH, AND PRICE LEVELS

477

Long-term unemployment throughout this recession has been greater than in
the two earlier recessions (see chart 7). Even though the number of long­
term unemployed was about 350,000 below its April 1958 peak, it was still nearly
2% times as great as in March 1957 and 350,000 above the peak level of the
1949-50 recession. Long-term unemployment last month was high among job­
less persons in durable goods manufacturing, transportation and mining, among
operatives and nonfarm laborers, among men over 45, and among nonwhite males.
About 40 percent of all the unemployed in each of these groups had been jobless
for 15 weeks or more (tables 6-10).
Half of the long-term unemployed (nearly 800,000) were out o f work for
27 weeks or more. This number was nearly double that of a year earlier and
was 300,000 higher than the peak number in the 1949-50 recession.
Communities hardest hit were those with heavy concentration of factories
producing autos, steel, machinery, and other durable goods. In March 1959, 74
of the 149 major labor market areas were classified as areas of substantial
labor surplus. Among the large metropolitan areas with heavy labor surpluses
are Buffalo, Charleston (W. Va.), Detroit, Providence, and Pittsburgh. Most
of the labor market areas are looking toward relatively small and predominantly
seasonal improvements in the next couple of months. Small-to-moderate ex­
pansions are looked for in steel, electrical machinery, and fabricated metals. On
the other hand, reports from major auto and aircraft centers indicate con­
tinuing uncertainly in the employment outlook.
In brief, serious unemployment and long duration of joblessness continue
among workers from certain industries and in the areas where these industries
are concentrated. It is also still high among nonwhite workers, and is not
showing much improvement among older workers. Why do these problems
persist when the economy is showing a significant general improvement? Many
individuals have offered a wide variety of explanations. I should like to briefly
discuss four general factors which I believe have an important bearing on this
question.
1. Longer workweek and improvement in efficiency
When business starts to pick up, employers tend to increase their workweek
rather than hire additional employees (chart 8). For one thing, if they have
been operating on a part-week basis it is usually more efficient to add hours
instead of workers. However, even when a shop is working full time, there
are reasons for putting men on overtime before increasing the workforce. It
costs money to put men on the payroll; an employer incurs obligations for
severance pay, unemployment insurance and supplementary unemployment bene­
fits, and health and welfare benefits, which may run far higher than overtime
pay if these new men have to be laid off soon after they are hired. Moreover,
there is the problem of community relations. Hiring workers may make a
bigger splash in the local papers than increasing hours, but the splash is also
louder when the firm has to lay the men off. For these reasons, when a busi­
nessman isn’t quite sure how long a pickup will last, he is going to give more
serious consideration to increasing hours than to hiring new men.
There are also improvement factors, which tend to push up output faster than
employment during a recovery period. Management is not only more cost con­
scious as a result of having been over the coals of a recession, but it is also in
a better position to do something about it. They may have a choice of the
production facilities which need to be started up again, and they will tend to
choose the most efficient.
2. Effect of labor force expansion on the number of unemployed
Another factor which tends to keep up the number of unemployed during a
period of recovery is the tendency for the labor force to grow faster when job
opportunities are expanding. As I pointed out earlier, larger numbers of
youngsters and women .enter the labor force when jobs are plentiful. Many of
these workers get jobs immediately, but others spend short periods of time in
search of jobs and add to the number of unemployed. If, for example, the labor
force should expand as rapidly as it did during 1955 and 1956, when a total of
2.6 million workers were added, jobs would have to expand at an equally rapid
rate to keep unemployment from increasing. It is, of course, unlikely that we
will have such an exceptionally high rate o f growth during the next 2 years,
but it is important to bear in mind that as job opportunities expand, the labor
force also grows. Because such labor force growth occurs almost entirely




478

EMPLOYMENT, GROWTH, AND PRICE LEVELS

among women and youth, the unemployment engendered is much less serious
than that created by a recession, when a large proportion of the unemployed
are family breadwinners.
W H Y ARE UNEMPLOYED WORKERS “ ST U C K ” IN

DISTRESSED AR E AS?

As in all recessions, the unemployed are concentrated in the communities
which contain the hard-hit industries. Because prosperity has returned to some
sectors of the economy, one frequently hears the question, “Why don’t the
unemployed shift to an expanding industry or move to other areas where there
are jobs?”
It is often difficult for an unemployed worker to shift from his regular line
of work into a new field. Even when there are openings in his community,
they may be in trade and service activities which hire mostly women and young
workers. Moreover, employers may be reluctant to hire workers whose expe­
rience and training has been in manufacturing or mining, particularly if they
have reached middle age. The problem becomes even more intense when the
unemployed worker is living in a distressed area where jobs of any kind are
likely to be scarce.
Frequently, the unemployed worker has to decide if he should accept wages
which are considerably lower than those he is accustomed to getting, or keep
on looking for a job which matches his old one. If he has lost a job in manu­
facturing, mining, or railroading and finds another one in trade or services
activity, he is likely to have to take a sharp cut in wages. Here again older
workers with families are at a particular disadvantage because they have be­
come accustomed to a certain level of living. A drop in earnings affects the
kind of house the family can afford, what they eat, and all of their social
activities.
These impediments to changing jobs and industries are minor in comparison
with the obstacles an unemployed worker faces when he is forced to consider
leaving his hometown.
A man with several years of service with a particular company has built up
a structure of seniority and pension rights, vacations, and sick benefits. The
holding power of this investment in the job is reflected in the long-run decline
in the BLS quit rate in manufacturing (see Employment and.Earnings, Decem­
ber 1956, pp. iii-ix ). The value of his investment with a company is of course
commensurate with the number of years he has worked. In many cases he has
developed a specialized skill which is not readily transferable to another em­
ployer’s operations. All of his vested interests in the job lead the unemployed
worker to hang on as long as possible before leaving the area.
In addition to an investment in his job, the worker usually has an investment
in a home, and the intangible, emotional ties of his entire family to friends,
schools, churches, or perhaps a favorite fishing spot. Owning a home is per­
haps the most formidable barrier to moving out of a labor surplus area. Most
houses are purchased when times are good and house prices are high. Prices
of houses are down when an area is depressed, and indeed, selling is often
difficult at any price. Under these conditions, selling a house could mean a loss
of several thousand dollars, representing a lifetime debt for most workers.
Moreover, the unemployed worker presumably would be moving to a growing,
prosperous community, where house prices probably would be far higher than
in his hometown. When one adds to this potential loss the ordinary costs of
moving, it is easy to see that leaving a community cannot be undertaken
casually.
Aside from the financial barriers, the workers must also wrestle with the ques­
tion of tearing up his roots. These roots are shallow for the young unmarried
worker, who can pack a suitcase and be off, if he has the bus fare. It’s not quite
so easy for the man with a wife, but unless he has bought a house and has young
children, moving is still a relatively simple matter. For the man with a house and
children in school, moving away becomes complicated indeed. By this time the
family’s roots have sunk deep. Not only the parents but the children have a
myriad of ties to the community—friends, schools, social organizations. Unfor­
tunately, those with the deepest roots—the older ones— also have the poorest
prospects for getting a job in a new community.
When an unemployed worker faces the prospects of losing his hard-earned
job rights, a substantial loss in selling his house, and tearing loose from his
community ties, it is understandable that he would convince himself that he
might get his old job back if he could only hang on a while longer. A number of




EMPLOYMENT, GROWTH, AND PRICE LEVELS

479

studies, including several done under tlie auspices of the Labor Department,
have found that the unemployed tend to be optimistic about recovery in their
industries. This attitude is likely to be particularly prevalent in, areas which
have been hit by two previous postwar recessions and managed to make come­
backs.
The possibility of significant losses in income is an additional factor holding
workers to the areas where they have held good jobs. The unemployed in high
wage areas know that it would be unlikely that they could match their previous
earnings in other communities. Semiskilled workers in particular would be
aware that their highly specialized skills are hard to sell in other industries and
that they have to take unskilled jobs. The most extreme cases would be Negro
workers who originally came from farms and whose chances of doing as well
somewhere else would be almost nil.
T H E D Y N A M IC LABOR FORCE AND SHORT-TERM U N E M PLO YM EN T

The factors I have just described contribute to immobility of workers and
help to explain why unemployment persists in certain communities and among
particular groups of workers such as older men and Negroes. Paradoxically, a
considerable volume of unemployment is also found among workers who change
jobs readily. In a free and growing economy some of this unemployment is un­
avoidable. There are always millions of workers on the move in our large and
rapidly expanding country, because workers are free to make their own decisions
about seeking better jobs, moving to areas of greater economic opportunity, or
even simply finding a better climate. For the most part, these are young work­
ers and adult women for whom the unemployment connected with job shifting
or entry into the labor force is usually not as protracted or as serious a problem
as it is for adult men.
In 1957, a total of 33 million people, or 1 out of every 5 in the population,
changed their places of residence, and 5% million moved across State lines, many
of them to California and the Southwest States where the climate is pleasant.
In the same year more than 2% million persons voluntarily left their jobs in
manufacturing industries alone. In an average month, 3 or 4 million persons
enter the labor force and nearly the same number leave.
Most of these are women and students who take seasonal jobs in the garment
trades, canneries, in stores during the Christmas season, etc.
There is always heavy turnover among the unemployed, too. Of the 4%
million unemployed in February, for example, 2 million were no longer unem­
ployed in March— 1.4 million had found employment and 600,000 had left the
labor force. Between February and March, on the other hand, 1.6 million
persons were added to the unemployed group as 900,000 lost jobs and 700,000
came from outside the labor force.
Another factor which contributes to the large volume o f job shifting in this
country is the strong desire of our workers to establish their own businesses.
Because everybody is free to go into business for himself, thousands of new
firms are organized every year. When new businesses fail, both the employers
and the employees must find new jobs.
As a result of all this shifting and moving, which appears to be unique to the
United States, there are always some workers temporarily between jobs and who
are counted as unemployed. As I have already indicated, if the individual is not
working and is looking for work, even for a part-time job, he is counted as un­
employed regardless of his economic circumstances. Obviously, the count of
unemployed includes persons who do not experience the hardships that are often
connected with unemployment.
LONG-TERM CHANGES IN LABOR FORCE COMPOSITION

Most of the shifting in and out of the labor force is accounted for by house­
wives and students, for whom jobs are often of secondary importance, and who
often are not compelled to work out of necessity. Not all housewives, however,
are in that part of the work force that moves back and forth between home
duties and outside work. Women have made up an increasingly large propor­
tion of the Nation’s regular labor force in recent years, making up for declines
among older men and youths.
One might ask why this is happening when per capita income is higher than
it was 30 or 40 years ago. The answer seems to be that rapidly expanding trade
38563—5i9—pt. 3------2




480

EMPLOYMENT, GKOWTH, AND PKICE LEVELS

and service industries have created a need for more women workers, and the
introduction of technology into the home has made it possible for housewives to
fill this need. Years ago housewives spent most of their time shopping, cooking,
sewing, washing, and ironing. These burdensome chores have been dramatically
lightened by home technology, including washing machines, frozen and prepared
foods, readymade clothing at reasonable prices, etc. The time saved through
use of laborsaving devices in the home has given women the opportunity to take
outside jobs, to buy bigger homes, new cars, and to pay for college educations for
their children, which have become as much a part of the American standard
of living as food, clothing, and minimum shelter. The availability o f women
workers has permitted the economy to expand, but of course has also made addi­
tional workers vulnerable to unemployment.
The increase in women workers has been the most significant change in the
composition of the labor force during the last 40 years, but particularly since
World War II. In 1020, 24 percent out of all women over 14 years of age were
in the labor force. Today the proportion is 1 in 3.
In looking at the years immediately ahead, we can expect to find young work­
ers contributing the greatest numbers to the labor force. This will occur despite
declining worker rates among the young because their numbers in the popula­
tion will be growing so greatly. By 1965, there will be nearly 40 percent more
workers under 20 in the labor force than there are today. Greater numbers of
youth will mean greater competition for the jobs for which they can qualify.
At the same time, the kinds of jobs which can be filled by inexperienced and
untrained workers, as I said earlier, are diminishing relative to those calling for
a higher degree of training. The coming together of those two forces is likely
to mean greater unemployment among our youth unless measures are taken to
meet this situation.
While this is a matter which merits serious consideration by the Congress,
it is important to note that many of the unemployed youngsters will be high
school and college students looking for part-time work. In developing programs
to promote employment opportunities for youth it will be necessary to distin­
guish between the problems of potential full-time workers and the student job­
seekers.
T a b l e 1.-—

Unemployment by industry, March 1957, 1958, and 1959
Number (in thou­
sands)

Percent distribution

Rate of unem­
ployment

Industry
1959

1958

1957

1959

1958

1957

4,362

5,198

2,882

100.0

100.0

204
F a rm ---------------------- ---------------------Nonfarm------- --------------------- ------------- --- 3,844
Wage and salary----------------------------- 3,730
80
M in in g .----------------------- ---------752
Construction__________________
Manufacturing------- ------------------ 1,199
745
Durable------------- ---------------Primary metal_________
68
81
Fabricated metal______
Machinery except elec­
77
trical________________
100
Electrical machinery___
Transportation equip­
166
ment________________
101
Auto__ _ ------------65
All other__________
253
Other durable.................
457
N ondurable _____________
222
Transportation________________
708
Trade__________________________
677
Service__________
- ---------------83
Public administration------- -------

279
4, 679
4,537
82
742
1,777
1,191
169
108

123
2,519
2,414
50
445
771
409
36
51

4.7
88.1
85.5
1.8
17.2
27.5
17.1
1.6
1.9

5.4
90.0
87.3
1.6
14.3
34.2
22.9
3.3
2.1

155
111

31
58

1.8
2.3

367
263
104
281
586
366
807
659
102

84
49
36
149
362
164
537
396
42

3.8
2.3
1.5
5.8
10.5
5.1
16.2
15.5
1.9

Total1______________

_________

1959

1958

100.0

6.4

7.7

4.3

4.3
87.4
83.8
1.7
15.4
26.8
14.2
1.2
1.8

3.8
6.2
6.7
13.1
18.8
6.9
7.4
5.6
7.1

5.2
7.6
8.2
12.7
20.0
10.1
11.6
13.2
10.4

2.2
4.1
4.4
7.5
12.5
4.3
3.9
2.6
4.2

3.0
2.1

1.1
2.0

5.0
7.9

8.9
8.8

1.8
4. 5

7.1
5.1
2.0
5.4
11.3
7.0
15.5
12.7
2.0

2.9
1.7
1.2
5.2
12.6
5.7
18.6
13.7
1.5

6.9
9.7
4.8
4.9
6.2
5.0
6.6
4.4
2.6

14.5
24.7
7.1
6.2
8.0
7.9
7.7
4.5
3.3

3.1
4.1
2.5
4.8
4.9
3.5
5.2
2.8
1.4

1957

i Includes the self-employed, unpaid family workers, wage and salary workers in forestry and fisheries
and persons without work experience, not shown separately.
Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and
Employment Statistics, Apr. 10,1959.




481

EMPLOYMENT, GROWTH, AND PRICE LEVELS
T a b l e 2 . — Unemployment

by major occupation group, March 1958 and 1959
Number (in
thousands)

Percent dis­
tribution

Rate of un­
employment

1959

1958

1959

1958

1959

4,362

5,198

100.0

100.0

6.4

7.7

118
17
94
387
213
659
1, 077
131
501
160
695

128
23
146
430
189
809
1,654
130
463
229
760

2.7
.4
2.2
8.9
4.9
15.1
24.7
3.0
11.5
3.7
15.9

2.5
.4
2.8
8.3
3.6
15.6
31.8
2.5
8.9
4.4
14.6

1.6
.6
1.4
4.1
4.7
7.3
8.6
5.6
7.8
7. 5
16.6

1.8
.7
2.1
4.5
4.4
8.9
12. 7
5.4
7.6
11.3
19.1

Major occupation group

Total i

_____________________________________

Professional, technical, and kindred workers_________
Farmers and farm managers_____ ____________________
Managers, officials, and proprietors, except f a r m .___
Clerical and kindred workers____ ____________________
Sales workers____ _____________________ . __________
Craftsmen, foremen, and kindred workers____________
Operatives and kindred workers_____ ________________
Private household workers_______ _____ _____ _____ _
Service workers, except private household____________
Farm laborers and foremen____ ________ __ _
____
Laborers, except farm and mine_____________________

1958

1 Includes persons without work experience, not shown separately.
Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10,1959.
T a b l e 3. — Unemployment

by age and se®, March 1957,1958, and 1959

Number (in thousands)

Percent distribution

Rate of unemployment

Age and sex

Both sexes:
14 and over______ _ _ _
14 to 24________________
14 to 19________________
20 to 24________________
25 to 34______________
35 to 44________________
45 to 54________________
55 to 64
____________
65 and over__ _________
Male:
14 and over _ _____
14 to 24 ______________
14 to 19________________
20 to 24
______ ____
25 to 34________________
35 to 44.________________
45 to 54________________
55 to 64________________
65 and over______ _____
Female:
14 and over__ _________
14 to 24________________
14 to 19___________ ____
20 to 24________________
25 to 34________________
35 to 4 4 _______________
45 to 54________________
55 to 64________________
65 and over__ _________

1959

1958

1957

1959

1958

1957

4,362
1,297
606
691
903
795
706
503
158

5,198
1,419
603
816
1,190
1,036
828
561
164

2,882
889
497
392
556
506
457
349
127

100.0
29.7
13.9
15.8
20.7
18.2
16.2
11.5
3.6

100.0
27.3
11.6
15.7
22.9
19.9
15.9
10.8
3.2

100.0
, 30.8
17.2
13.6
19.3
17.6
15.9
12.1
4.4

6.4
11.9
13.0
11.1
6.2
4.9
4.9
5.5
5.0

7.7
13.4
13.5
13.4
8.1
6.5
5.9
6.2
5.0

4.3
8.5
10.8
6.7
3.8
3.2
3.4
3.9
3.8

2,971
846
394
452
642
510
474
373
127

3,743
1,021
423
598
870
679
615
418
138

1,950
586
331
255
350
342
303
270
98

68.1
19.4
9.0
10.4
14.7
11.7
10.9
8.6
2.9

72.0
19.6
8.1
11.5
16.7
13.1
11.8
8.0
2.7

67.7
20.3
11. 5
8.8
12.1
11.9
10.5
9.4
3.4

6.5
12.9
14.2
12. 0
6.2
4.7
5.0
5.9
5.5

8.2
16.3
16.1
16.4
8.3
6.3
6.6
6.7
5.7

4.3
9.5
12.3
7.3
3.3
3. 2
3.3
4.3
4.0

1,391
451
212
239
261
285
232
130
31

1,456
398
180
218
320
356
213
143
26

932
302
165
137
206
163
154
79
29

31.9
10.3
4.9
5.5
6.0
6.5
5.3
3.0
.7

28. 0
7.7
3.5
4.2
6.2
6.8
4.1
2.8
.5

32.3
10.5
5.7
4.8
7.1
5.7
5.3
2.7
1.0

6. 2
10.4
11.3
9.7
6.3
5.5
4.6
4.5
3.7

1959

1958

6. 6
9.3
9.7
8.9
7. 76.9
4.5
5.2
3.0

1957

4.3
7.1
8. 7
5. 7
4.9
3.3
3.4
3.0
3.3

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10, 1959.




482

EMPLOYMENT, GROWTH, AND PRICE LEVELS

T a b l e 4 . — Unemployment

,

,

by marital status March 1951,1958 and 1959
Number (in
thousands)

Percent distribu­
tion

Rate of unem­
ployment

Marital status
1959
Total.

1958

1957

4,362 5,198

Male.
Married, wife present..
Married, wife absent ..
Widowed or divorced..
Single__________ _____ _
Female.

68.1

1,665 2,302 1,035
137
83
107
159
194
117
1,039 1,108
715

659
150
239
343

839
164
173
279

1958

1957

1959

1958

6.4

7.7

4.3

6.5
14.2
13.0
15.0

2.9
9.3
7.4
9.7

100.0 100.0 100.0

2,971 3,743 1,950

1,391 1,456

Married, husband present.
Married, husband absent
Widowed or divorced_____
Single_________—_________

1959

72.0

67.7

6.5

38.2
2.5
3.6
23.8

44.3

35.9
2.9
4.1
24.8

4.7
11.7

3.7
21.3

932

31. £

28.0

32.3

6.2

492
72
128
240

15.1
3.4
5.5
7.9

16.1
3.2
3.3
5.4

17.1
2.5
4.4
8.3

5.4

2.6

10.2

13.6

1957

4.3
4.2
6.3
3.8
4.5

7.1
13.9
4.9
5.2

11.0
6.5
6.6

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Em ­
ployment Statistics, Apr. 10, 1959.
T a b l e 5 . — Unemployment

by color and sex, March 1957,1958, and 1959

Number (in thousands)

Percent distribution

Rate of unemployment

Color and sex
1959

1958

1957

1959

1958

1957

4,362

5,198

2, 882

100.0

100.0

100.0

6.4

7.7

4.3

2, 971
1,391

3, 743
1,456

1,950
932

68.1
31.9

72.0
28.0

67.7
32.3

6.5
6.2

8.2
6.6

4.3
4.3

3, 428

4,163

2, 328

78.6

80.1

80.8

5.6

6.9

3.9

2,362
1,066

3,056
1,106

1, 576
752

54.1
24.4

58.8
21.3

54.7
26.1

5.7
5.5

7.4
5.8

3.9
4.0

Non white__________________

933

1,035

554

21.4

19.9

19.2

12.7

14.4

7.3

Male___________________
Female________________

609
325

686
349

374
180

14.0
7.4

13.2
6.7

13.0
6.2

13.6
11.4

15.5
12.6

8.4
6.7

Total______________________
Male__________________
Female._________ ______
White_____________________
Male___________________
Female_______________

1959

1958

1957

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10,1959.
T a b l e 6 . — Unemployment

by weeks of duration, March 1957, 1958, and 1959
Number (in thousands)

Percent distribution

Weeks of duration
1959
Total.

- __ - - - - -

Less than 5
_______ - __ _______ 5 to 14______________ ____________________
15 or m o re __ . -- __
27 or more _
_____ _______ ________

1958

1957

1959

1958

1957

4,362

5,198

2,882

100.0

100.0

100.0

1,365
1,452
], 544
777

1,753
1,998
1,446
401

1,167
1,052
663
253

31.3
33.3
35.4
17.8

33.7
38.4
27.8
7.7

40.5
36.5
23.0
8.8

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10, 1959.




483

EMPLOYMENT, GROWTH, AND PRICE LEVELS
T a b l e 7. —Persons

unemployed 15 weeks or more by industry, March 1957, 1958,
and 1959
Number (in thousands)

Percent distribution

Percent of unemployed

Industry
1959

1958

Total i_______________

1, 544

1,446

Farm______________________
Nonfarm___________________
Wage and salary----------Mining------------------Construction—
Manufacturing------Durable_______
Nondurable____
Transportation------Trade--------------------Service............... .......
Public administra­
tion______________

70
1,381
1,343
40
279
472
323
149
89
211
217

62
1,312
1,267
31
242
486
343
143
87
209
173

35

43

1959

1958

1957

663

100.0

100.0

100.0

35.4

27.8

23.0

30
575
554
25
135
195
100
96
24
90
71

4.5
89.4
87.0
2.6
18.1
30.6
20.9
9.7
5.8
13.7
14.1

4.3
90.7
87.6
2.1
16.7
33.6
23.7
9.9
6.0
14.5
12.0

4.5
86.7
83.6
3.8
20.4
29.4
15.1
14.5
3.6
13.6
10.7

34.3
35.9
36.0
50.0
37.1
39.4
43.5
32.6
40.1
29.8
32.1

22.2
28.0
27.9
37.8
32.6
27.3
28.8
24.4
23.8
25.9
26.3

24.4
22.8
22.9
50.0
30.3
25.3
24.4
26.5
14.6
16.8
17.9

12

2.3

3.0

1.8

42.2

42.2

28.6

1957

1959

1958

1957

i Includes forestry and fisheries, self-employed, and unpaid family workers, and persons without work
experience, not shown separately.
Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10, 1959.
T a b l e 8.—

Persons unemployed 15 weeks or more by major occupation group,
March 1958 and 1959
Number (in
thousands)

Percent
distribution

1959

1958

1959

1958

1,544

1,446

100.0

100.0

35.4

27.8

49
1
40
115
56
231
431
30
160
57
276

26
3
45
87
28
242
452
31
151
56
271

3.2
.1
2.6
7.4
3.6
15.0
27.9
1.9
10.4
3.7
17.9

1.8
.2
3.1
6.0
1.9
16.7
31.3
2.1
10.4
3.9
18.7

41.5
5.9
42.6
29.7
26.3
35.1
40.0
22.9
31.9
35.6
39.7

17.6
15.8
31.7
19.9
15.6
28.7
27.1
21.5
32.1
23.6
34.0

Occupation

Total i____________________________ ___________
Professional, technical, and kindred workers_________
Farmers and farm managers_________________________
Managers, officials, and proprietors, except farm. .
Clerical and kindred workers. _ _____________________
Sales workers______________________ ________________
Craftsmen, foremen, and kindred workers- _________
Operatives and kindred w orkers....... .......... .......... .......
Private household workers________ _____ ____________
Service workers, except private household-----------------Farm laborers and foremen__________ __________ ____
Laborers, except farm and mine______________________

Percent of
unemployed
1959

1958

1Includes persons without work experience, not shown separately.
Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Em­
ployment Statistics, Apr. 10, 1959.




484

EMPLOYMENT, GROWTH, AND PRICE LEVELS

T a b le

9.—Persons unemployed 15 weeks or more by age and sew, March 1951,
1958, and 1959
Number (in thousands)

Percent distribution

Age and sex

Both sexes: 14 and over------Male:
14 and over____________
14 to 24________________
14 to 19______ ______
20 to 24_ _______________
25 and over------------------25 to 44________________
45 to 64________________
65 and over.............. .......
Female:
14 and over ....................
14 to 24________________
14 to 19________________
20 to 24________________
25 and over____________
25 to 44________________
45 to 64________________
65 and over____________

1959

1958

1957

1959

1958

1957

Percent of unemployed
1959

1958

1957

1,544

1,446

663

100.0

100.0

100.0

35.4

27.8

23.0

1,136
279

1,103
287

76.3
17.6
8.4
9.2
58.7
22.9
28.5
7.2

38.2
33.0
30.5
35.2
40.3
38.1
43.1
41.7

29.5
28.1
26.5
29.3
30.0
25.5
34.7
45.7

25.9

175
816
395
358
63

73.6
18.1
7.3
10.3
55.5
28.4
23.6
3.4

76.3
19.8
7.7

159
857
439
365
53

506
117
, 56
61
389
152
189
48

406
115
47

343
69
28
41
274
170
91
13

155
28
13
15
130
75
51
4

26.3
7.4
3.0
4.4
18.8

23.4
4.2

29.2
25.5

2.3
19.6
11.3
7.7

28.5
31.0
28.4
34.5
35.5

23.6
17.3
15.6
18.8
25.9
25.1
25.6
50.0

120

68

291
155
125

11

112

10.0
8.1
.7

12.1

56.4
27.3
24.8
4.4
23.7
4.8
1.9

2.8

18.9

11.8
6.3
.9

2.0

.6

22.2

20.0

16.9
23.9
28.5

22.0

33.0
49.0
16.6
9.3
7.9
10.9

20.6
20.3
21.9
13.8

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ­
ment Statistics, Apr. 10, 1959.
T a b le

10.—Persons unemployed 15 weeks or more by color and sex, March 1951,
1958t and 1959
Number (in thousands)

Percent distribution

Percent of unemployed

Color and sex
1959

1958

1957

663

100.0

100.0

100.0

35.4

27.8

23.0

506
156

73.6
26.3

76.2
23.7

76.3
23.5

38.3
29.2

29.4
23.6

25.9
16.7

76.0

74.6

80.1

34.2

25.9

22.8

56.5
19.5

58.2
16.3

62.7
17.8

36.9
28.2

27.6
21.3

26.4
15.7

1959

1958

Total_________________ _____

1,544

1,446

Male___________________
Female. _______________

1,137
406

1,102

White_____________________

1,173

1,078

531

Male____________ ___
Female________ _____

872
301

842
236

416
118

343

1957

1959

1958

1957

Non white---------------------------

370

366

130

24.0

25.3

19.6

39.7

.35.4

23.5

Male_______________
Female_____ __________

265
105

260
106

91
39

17.2

18.0
7.3

13.7
5.9

43.5
32.3

37.9
30.4

21.7

6.8

24.3

Source: U.S. Bureau of the Census.
Prepared by U.S. Department of Labor, Bureau of Labor Statistics, Division of Manpower and Employ
ment Statistics, Apr. 10, 1959.




EMPLOYMENT, GROWTH, AND PRICE LEVELS




Ch art 1

485

486

EMPLOYMENT, GROWTH, AND PRICE LEVELS

C habt 2

E m p l o y m e n t in G o o d s P r o d u c i n g I n d u s t r i e s
C o m p a r e d W i t h E m p l o y m e n t in S e r v i c e I n d u s t r i e s
AN N U A L A V E R A G E S, 1 9 1 9 -5 8*

1919

1925 1930 1935 1940 1945 1950 1955 1960




. MONr'AhU WACE A NO SALARY EMPLOYMENT FROM THE
U.S BUHT.AU o f l a b o r S TA TIS TIC S , AGRICU LTU RAL EMHLOfJuem INCLUOINO PRO PRIETO RS, FAMILY W ORKERS,
AND MIHEO WORKERS FROM THE U.S. DEPARTMENT O f
AGRICULTURE. A G RICU LTU R AL M A R K E TIN G S E R V IC E .

Ch art 3

G r o w in g P r o p o r t i o n s

of

W h ite C o l l a r W o r k e r s in M a j o r I n d u s t r i e s , 1 9 4 7 a n d 1 9 5 7

NO NPRODU CTION OR S U P E R V IS O R Y W O R K E R S A S A P E R C E N T OF T O T A L E M P L O Y E D
Percent

_

__________________ __________ _________________ __________________________________________ Percent

25

20

20

15

10

AND

10

GROWTH,

15

EM PLO YM EN T,

25

P1UCE

1947
1957
Mining!/

BUREAU OF LABOR S T A T I 5 T I C S




1947
1957
T rad eU

J 0
1947
1957
Const ruction H

_Ly Nonproduction workers
U Supervisory ond related workers

487

UNITED ST A T E S DEPARTM EN T OF LA BOR

1947
1957
Public Utilities ZJ
(except communications)

LEVELS

1947
1957
Manufacturing U




Ch a r t 3b

P

r o d u c t io n

and

N o n p r o d u c t io n W o r k e r s in M a n u f a c t u r i n g
SE A S O N A L L Y A D J U S T E D
Jonuory 1940 to Dote

LATEST DATA'-

MARCH 1959

C hart 4

N o n a g r ic u l t u r a l E m p l o y m e n t
SEASONALLY ADJUSTED
January 1948 to Date
Millions

EMPLOYMENT,

Millions

GROWTH, AND
PRICE
LEVELS

BUREAU o r LABOR STATISTICS




LATEST DATA: MARCH 1959

489

UN ITED S TA TE S DEPARTMENT OF LABOR

490

E m p l o y m e n t in T h r e e P o s t - W a r R e c e s s i o n s
SELECTED INDUSTRIES
SEASONALLY ADJUSTED

NONAGRICULTURAL INDUSTRIES

MILLIONS

EMPLOYMENT,

MANUFACTURING

GROWTH,
AND
PRICE
LEVELS




Chart 5

LATEST DATA!

MARCH lt» »

C hart 6

U n e m p l o y m e n t a s a P e r c e n t o f t h e C i v i l i a n l a b o r Fo r c e
SEASO N A LLY ADJUSTED

EMPLOYMENT, GROWTH, AND PRICE LEVELS

U N IT E D S T A T E S D E P A R T M E N T O F L A B O R
bureau

of




L A B O R S T A T ^ - p fc S ______________

_

S o u rc e :

U .S . B u re a u of th e Census

CD

L ong -T e r m U n e m p l o y m e n t

7

in

492

C h art

T h r e e R e c e s s io n s

PERSONS UNEMPLOYED 15 WEEKS OR MORE

EMPLOYMENT,
GROWTH,
AND
PRICE
LEVELS

LATEST OATA: MARCH 1959

UNITED S TA TES DEPARTMENT OF LABOR
BUREAU OF IABO* STATISTICS




Source: U.S. Bureau of the Census

EMPLOYMENT,
GROWTH,
AND
PRICE
LEVELS

493




C hart 8

494

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Mr. C l a g u e . Thank you.
I would like to summarize it briefly. I have some charts to present.
I f it will be helpful to you, Mr. Chairman, I will indicate the pages
as I go through presenting the statement.
My paper will be presented in three major parts: No. 1 will deal
with statistics, their meaning and definition; No. 2 will deal with
some of the facts and figures, which are the trends I would like to
present in the charts; and in the third section I would like to present
some interpretation.
First o f all, then, the statistics that we will have before us come
from three major sources: the household interviews of the Bureau of
the Census; the payroll reports from employers, in the Bureau of
Labor Statistics; and the administrative records of unemployment
insurance systems, which come from the Bureau of Employment
Security.
The employed total from the household survey includes all wage
and salary workers and self-employed persons who worked at all
during the survey week or who had jobs or businesses from which
they were temporarily absent because of illness, vacation, industrial
dispute, bad weather, or various other reasons, regardless of whether
pay was received. It also includes unpaid workers in family-operated
enterprises who worked 15 hours or more during the survey week.
Employed persons are classified as working in agriculture or nonagricultural industries; those holding more than one job are counted
only once, and are classified according to the job at which they
worked the greatest number of hours during the survey week.
The unemployed total from the household survey includes all per­
sons who did not work at all during the survey week and were looking
for work, regardless of whether or not they were eligible for unem­
ployment insurance. Also included as unemployed are those jobless
persons who—
(a) Were waiting to be called back to a job from which they
had been laid o ff; or
(b) Were wraiting to report to a new wage or salary job within
30 days— and were not in school during the survey week; or
(o) Would have been looking for work except that they were
temporarily ill or believed no work was available in their line of
work or in the community.
Prior to 1937 persons on layoff for definite periods of less than 30
days were classified as employed rather than unemployed, as were all
persons waiting to start new jobs within 30 days. The shift in defini­
tion o f these two groups from the employed to the unemployed
categories— amounting to about a quarter million persons—was in­
stituted following recommendation by the Eeview o f Concepts Sub­
committee o f the Budget Bureau’s Technical Committee on Labor
Force, Employment, and Unemployment.
The C h a i r m a n . I want to congratulate the appropriate persons for
including categories (a) and (6 ). I have contended for over 30
years that these people should be included as unemployed.
I can remember that in the days o f the Hoover administration, Mr.
Hoover insisted on excluding from the unemployed those who, though
out o f work, had a theoretical job to which they might return, so he
said, in the future.



EMPLOYMENT, GROWTH, AND PRICE LEVELS

495

I want to congratulate the appropriate authorities for getting a
much more realistic definition.
Mr. C l a g u e . The next series comes from employers5 payroll rec­
ords and is obtained by the Bureau of Labor Statistics with the coop­
eration of the Bureau of Employment Security and State agencies.
It includes wage and salary employment, hours, earnings, and labor
turnover, both for the Nation and for States and areas. There are
detailed statistics for more than 150 industries. For production work­
ers, we get average weekly hours, average hourly earnings, and average
weekly earnings.
The figures are based on payroll reports from a sample of 180,000
employers covering about 25 million workers. The employee figures
include all workers— full time or part time—who received pay during
the payroll period ending nearest the 15th o f the month.
The C h a i r m a n . That is about 43 percent of the employed workers
in the country ?
Mr. C l a g u e . It is nearly 50 percent. About 50 to 52 million is the
total number of employees.
The C h a i r m a n . Fifty-two million is your figure o f the employed
workers ? I thought it was 56 million.
Mr. C l a g u e . Excluding agriculture and excluding domestics.
These are employer payrolls and government.
The C h a i r m a n . F ifty percent of the nonfarm employees ?
Mr. C l a g u e . That is more accurate; yes.
Persons on paid sick leave, paid holiday, or paid vacation, are
included, but not those on leave without pay for the entire payroll
period. Persons on the payroll of more than one establishment dur­
ing the period are counted each time reported. Proprietors, the selfemployed, unpaid family workers, and workers in private households
are excluded. Because of these exclusions, the number of employees on
payrolls of nonagricultural establishments is, on the average, about
7 million smaller than total nonagricultural employment based on
Census household interviews.
Data from administrative records of unemployment insurance
systems: Data on insured unemployment published by the Bureau
of Employment Security are obtained as a byproduct o f the operations
o f the State employment security programs. Weekly reports, for the
Nation and by State, are issued on the volume and rate of insured
unemployment and the number of initial claims under State pro­
grams, including the programs of unemployment compensation for
Federal employees. Figures are also issued by State on the volume
o f unemployment compensation for veterans and nationally for the
Railroad Retirement Board program.
Insured unemployment represents the number of workers covered by
State programs who have been unemployed for at least 1 week and
are claiming benefits. It includes some persons who are only par­
tially unemployed but excludes persons who have exhausted their
benefit rights, new workers who have not earned rights to unemploy­
ment insurance, and persons losing jobs not covered by unemployment
insurance systems—agriculture, State and local government, domestic
service, self-employment, unpaid family work, nonprofit organiza­
tions, firms below a minimum size. As a result, insured unemploy­
ment includes only about two-thirds o f total unemployment as meas­
3 8 5 6 3 — 5 9 — pt. 3---------3




496

EMPLOYMENT, GROWTH, AND PRICE LEVELS

ured by the household interviews. As a matter of fact, that two-thirds
can vary quite highly. It sometimes can be as high as three-quarters
and sometimes less than one-half.
An important move is being made in the transfer of the “ Monthly
Report on the Labor Force” from the Census Bureau to the Bureau
of Labor Statistics.
Assuming approval by the Congress, the Bureau of Labor Statistics
will have the responsibility for the content and analysis of data from
the “ Monthly Report on the Labor Force” beginning next fiscal year.
The Bureau o f the Census will continue collecting and tabulating
the data.
The transfer of the M RLF analysis function to the Bureau of
Labor Statistics means that the Labor Department will have the pri­
mary responsibility for the Federal Government’s analysis of all
data relating to labor force, employment, and unemployment. This
move represents a significant forward step in the Department’s pro­
gram o f providing statistical data relating to the welfare of workers.
It wrill now be possible for one agency to make the most efficient use
of the analysts working in the field and to provide integrated analyses
o f all data from household enumeration, from employer reports and
from unemployment insurance data.
Public understanding of the statistical reports will also be con­
siderably enhanced by regular press conferences. We have used these
in Consumer Price Index work, and we have found it helpful in in­
terpreting the information to the public,
The transfer of the analysis function from the Bureau o f the Cen­
sus to the Bureau of Labor Statistics is proceeding smoothly with the
excellent cooperation of the Census staff. W e have met with several
groups, both outside and inside Government, to get their advice on
how the materials should be published, and what kinds of additional
information they would like to have in the future. Among the
groups consulted have been both the Business and Labor Research
Advisory Councils to the Bureau of Labor Statistics, and the Federal
Statistical Users’ Conference. The conference with this latter group
was attended by Mr. James Knowles of your committee staff.
Arrangements have been made to transfer key personnel from the
analytical staff o f the Census Bureau. Since last month, Bureau
of Labor Statistics and Census staff members have functioned as a
team so that Bureau o f Labor Statistics personnel can become familiar
with the flow of data from the field through editing and tabulating
into the final printed analytical report. We are now at the point
of turning our attention to a number o f housekeeping items and
technical details connected with the transfer. Athough, the whole
transfer operation is working out very well, and in July we hope to be
able to publish an integrated report without any difficulty.
The existing statistical programs also need and are receiving at­
tention directed to improving their accuracy and increasing their use­
fulness. A ll too often, I would guess, you have wanted precise in­
formation about some critical 'segments of economic activity and
found that no figures were available. Or you may have wondered
how significant a movement in one of the published series might be
and have been told that no conclusion could be drawn because the
figures were not precise-enough.



EMPLOYMENT, GROWTH, AND PRICE LEVELS

497

I think we have been making major strides in bridging these gaps
of ignorance. For example, the statistics we derive from establish­
ment reports have been continually refined over the past few years
and their usefulness to the public increased. W ith the cooperation
of State agencies we have increased the coverage o f our payroll em­
ployment sample during 1957 from about 160,000 establishments to
180,000. These establishments have about half of the Nation’s non­
farm wage and salary jobs.
We have been engaged in a continuing program of controlling the
quality of these payroll statistics. This program has involved per­
sonal surveys of many of our employer reporters and detailed analy­
sis of their response to our regular payroll inquiries. The objective
o f this has been more than the pursuit of statistical perfection. It
enabled us to make our employment, hours, and earnings statistics
more accurate and meaningful; it has given us a better idea of the
types of information that are available; it has permitted us to frame
our inquiries in terms which employers can readily respond to from
the records they keep. For the time being, operations under our
quality control program have been reduced, but we hope to be able to
resume them on a larger scale when our resources permit.
Our program for labor turnover statistics has also been expanded
so that we can now publish hiring, layoff, and other turnover data for
a number of individual States as well as for the Nation as a whole.
We hope eventually to be able to extend this program to cover all
States and also to be able to provide data in greater industrial detail
than is now possible. We are still some 8 or 10 States short.
The C h a i r m a n . H o w is your collection of labor statistics coordi­
nated with the various State collections? Are they identical ?
Mr. C l a g u e . Yes. We use the same information. They use the
form to collect the data from the employer, and then they send the
information into us and we use it here. It is two uses of a single form.
The C h a i r m a n . They make a copy ?
Mr. C lagtje . Well, in the employment reports, we have what we
call a shuttle schedule. It is the same form for the employer for 12
months. It is our form. It is made use of by the State. The State
sends it to the employer. He sends his report for January back to
the State. They take off the information for their State and local
use; in some cases they put this information on punch cards and send
it to us, or they send the form in to us. W e take these figures off for
national use and we get the forms back to the State to send to the
employer for February.
So these forms shuttle back and forth from us to the State to the
employer and back to the State, to us, around 12 times. Then next
year we have a new form. So it is a single report that serves these
purposes.
Another step we are taking is the new standard industrial classifi­
cation system. The census is changing the industry classifications of
their firms and other agencies are also doing so. The Bureau o f Em­
ployment Security has arranged for that in the States. We, in the
Bureau of Labor Statistics, this next year will be bringing our classi­
fication in line wTith that.
We are also trying to provide statistics by sizes o f individual firms
in order that we may single out the large firms from the small firms.




498

EMPLOYMENT, GROWTH, AND PRICE LEVELS

The C h a i r m a n . That deals with a point that I think deserves ex ­
amination.
I would imagine that your sample is more representative of the
larger firms than it is o f the smaller ones; is that not true ?
Mr. C l a g u e . That is correct.
The C h a i r m a n . Do you think that this produces a bias insofar as
average earnings are concerned, or so far as employment is concerned ?
Mr. C l a g u e . We don’t believe it produces any significant bias so far
as employment is concerned. It does with respect to average earnings.
What we need to do is to get more small firms in the sample and to give
them an appropriate larger weight, so that they will have an influence.
The C h a i r m a n . Do you think that your figure of average earnings
somewhat overstates the general average for the country as a whole ?
The earnings in the smaller firms tend to be lower, do they not ?
Mr. C l a g u e . That is right, generally speaking. For the country
as a whole, I think the difference would be relatively small, but for
some industries it is quite significant. It might move it several cents
per hour.
The C h a i r m a n . Do you think that this is accurate with regard to
employment ?

Mr. C l a g u e . Employment ? Let me ask Mr. Goldstein.
Do you think there is any significant difference in employment ?
Mr. G o l d ste in . Our studies have shown that in employment there
is very little error accumulated as a result of biases of this sort. When
we make a benchmark adjustment every year, we have to adjust it up­
ward or downward only by a very small amount.
The C h a i r m a n . Do you mean you adjust it every year ?
Mr. G o l d st e in . That is right.
The C h a i r m a n . Then you simply use this as variations within the
span o f the year ?
Mr. G o l d st e in . That is right, just to bring the data up to date.
Mr. C l a g u e . I forgot to bring out, Mr. Chairman, that we use the
unemployment insurance reports of the States, who collect all the in­
formation in some States down to employers of one or more workers.
In most cases the States make a full count, and for the remainder we
use other records, such as social security reports. Then once a year we
change our system to fit the full count.
W e also hope to get hours of work on all nonfarm wage and salary
workers. That has not been completed yet. This will require more
resources. We think we ought to have a program of measuring hours
o f work in the whole economy.
The household survey has also been extended and improved over
the years in the Bureau of the Census. The sample has been enlarged
to provide additional detail on the characteristics of workers and to
improve the quality of the statistics. Ever since the survey was estab­
lis h e d there has been a continuing program of increasing its effi­
ciency. Questions have been sharpened to prevent ambiguous re­
sponses, industrial and geographical representation has been improved,
and increasingly high standards of performance have been applied
to all o f the survey operations. One of the most dramatic examples of
increased efficiency has been the shift from the use o f mechanical tab­
ulating to electronic equipment.




EM PLOYMENT,

GROWTH, AND PRICE LEVELS

499

I wish to assure you that the drive to constantly improve the
monthly report on the labor force survey will continue. No major
changes are planned for the next fiscal year but we hope to publish
a few additional details from the statistics already available. It is
planned, for example, to resume publication of data on the move­
ment of workers from one labor force category to another—for exam­
ple, how many who are unemployed one month get jobs the next, and
vice versa. Another way in which we hope to improve the usefulness
of these statistics is to make them available in forms which will be
equally informative to technicians and laymen alike. Those of you
who have seen the chartbook we recently published on “Who Are the
Unemployed ?” will know what I have in mind.
Potentially the MRLF survey can provide answers to some of the
questions you have raised about the relationship of labor mobility and
unemployment to certain factors such as seniority, pensions, and sup­
plementary unemployment benefits.
Representative P a t m a n . Suppose a person works a half day, a week,
or a month now and then. Is he listed as employed or unemployed?
Mr. C l a g u e . In the survey week, if he worked half a day, he would
be listed as employed.
Representative P a t m a n . Suppose he worked an hour ?

Mr. C l a g u e . I will have to ask Mr. Pearl. What is your defini­
tion of minimum employment ?
Mr. P e a r l . Well, for a paid worker, a self-employed person or a
wage and salary worker, any amount of work during the week.
Representative P a t m a n . F if teen minutes ?
Mr. P e a r l . One hour; thirty minutes or more.
Representative P a t m a n . Thirty minutes ?
Mr. P e a r l . Yes.
Representative P a t m a n . Well, 15 would be all right?
Mr. P e a r l . No, I think we would round it down to zero.
Mr. C l a g u e . Mention the case of the unpaid family worker, Mr.
Pearl, please.
Mr. P e a r l . For unpaid family workers it is necessary to work at
least 15 hours during the week. That is mainly to exclude the normal
amount of chores that a member of a farm family Avould additionally
put in.
Mr. C l a g u e . I think I might add, Mr. Patman, mostly people don’t
come to work for about an hour or so. They usually get a day’s work
if they have any work at all. It might be a half day, I suppose.
The C h a i r m a n . The Congressman is laying the basis for the very
important question; namely, the degree of unemployment which can
exist within employment.
Mr. C l a g u e . I see.
With respect to collecting this kind of information, we have the
problem that you cannot overburden the respondent and thus jeop­
ardize the answers.
Availability of space on the questionnaire is another important con­
sideration, since space for supplementary questions is in great demand
and is normally scheduled many months in advance. Cost is another
factor, because additional questions mean printing costs, training of
enumerators, programing for machines, analytical time, et cetera. For
these reasons, asking additional questions or any changes in the survey



500

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

must be carefully considered and must necessraily be introduced

slowly.
Further work is being done on seasonal adjustment of the unem­
ployment and other labor force data. As you know, there is a high
degree of seasonality in unemployment. In the winter months the
total number of jobless increases as outdoor work is curtailed, then
declines until early summer when larger numbers of students enter
the work force to seek postgraduation or temporary summer jobs.
By October, unemployment is usually down again to the year’s low
point.
In order to clarify the basic economic changes, the Census Bureau
has# developed seasonal adjustment factors which attempt to allow
for these recurring swings. On the basis of these factors the Census
Bureau publishes both the actual and the seasonally adjusted rates
of unemployment each month. We don’t consider that these adjust­
ment factors are wholly satisfactory. We are trying to do work to
improve them.
In the third set of data, the Bureau of Employment Security is
working with the State agencies on a series of studies to assist in meas­
uring and making adjustments for administrative factors which tend
to distort interstate comparisons. Beginning with the unemployment
insurance claims information to be submitted in July of this year,
the State agencies will adjust these data, when necessary, to eliminate
the effects of rescheduling of claimants on the insured unemployment
figures. The basic objective is to assign the weeks claimed by resched­
uled claimants to the week in which they would have filed if the usual
routine had been followed.
Because the volume of exhaustions can seriously affect the level and
trend of insured unemployment statistics, the Bureau of Employment
Security instituted weekly reporting of exhaustions by the eight larg­
est States in the spring of 1954. These eight States together usually
account for about 50 percent of the national total. All States report
exhaustions on a monthly basis.
We have to know something about those after they have exhausted,
so that bureau has arranged for special studies in the States on the
postexhaustion of claimants, which means getting in touch with
them in their homes.
Mr. Chairman, that covers what I think is my first section on the
nature of the statistics.
In my second section, I would like to run quickly through the charts
I have here.
Labor trends: You will see on this first chart, on the top section of
it, a projection in the red line that the Bureau of Labor Statistics made
in 1952, starting in 1950 and carrying forward to 1955. You will
notice that the actual average labor force rose rapidly in 1951, was still
above the trend in 1952, crossed below trend in 1954, and then in 1955
caught up again.
We made another projection from 1955 to 1960; and again in 1956
it was ahead, in 1957 it was about even, and 1958 it is behind the trend.
We are still behind in 1959. If it catches up by 1960, we will pick up
2^4 million more workers from the average of 1958. That, is due to the
effect of the recession, of course. The labor force declines when a
recession takes place.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

501

The C h a i r m a n . It used to be contended tlmt the number seeking
work would increase during a recession on the ground that the dimin­
ished income of the head of the family would force more members of
the family to seek employment. What you are saying is that this is
not so?
Mr. C l a u g e . I think, Mr. Chairman, we- wrote a good deal on that
subject in the 1930’s, and I am not sure we were w^rong.
The C h a i r m a n . My specific knowledge does not extend beyond that
date.
Mr. C l a g u e . I f I may conjecture, I think that it was true when
we had a deep depression. Apparently there are a good many young
people in school, and housewives who work in prosperous times, ^ho
drop out without too much difficulty in a recession period, but who
reenter later.
My next chart concerns a change in the industry strmtttrd of emi& the United St^tegl We have her$ tw<5>lines;, starting with
191$ anrf. continuing up to data. In one' line we have employment in
g'oocfe f)fodtictioii ;* thait is the employment in agriculture, mining,
manufacturing, and construction. These are the industries that
produce goods. The other line, the black line, shows the service in­
dustries. That includes Government, trade, laundries, hotels, all
kinds of other employment in the country except simply the selfemployed and domestics.
You will notice that in 1919 after World War I, two-thirds of our
total employment was in goods and one-third in services. In 1958,
the goods employment is still only 26 million, or the same as it was in
1919. In other words, over a period of 40 years we have no more
people at work now producing goods than we had in 1919, although, of
course, we are producing vastly more goods.
On the other hand, you will notice that the service employment has
steadily climbed. It passed gdods employment in 1954 and now it
is 5 million ahead. So what has happened is that the employees re­
leased from goods production have gone into services.
The C h a i r m a n . In other words, what Mr. Colin Clark calls tertiary
employment is now appreciably greater than the sum of primary and
secondary employment.
Mr. C l a g u e . That is right.
This shows up in another way, Mr. Chairman, in manufacturing.
In this chart we show from 1947 to 1959 the two kinds of employment
in manufacturing. One line is for production workers, who are the
plant workers, and one is for nonproduction workers, who are the
officeworkers, researchers, engineers, supervisors, and so forth.
We had 13 million production workers in 1947, and about 2y2 million
so-called nonproduction workers. You will notice that the production
workers fluctuate with each recession. Note 1949, 1954, and 1958.
The nonproduction workers hardly fluctuate at all. They level off in
recession periods They have been gaining steadily and now in 1959
when the production workers are about 12 million, about a million
less than they were 12 years ago, these others are approaching 4 mil­
lion. So there is a constant increase in that type of employment.
The next chart shows the nonfarm employment. That is our total
picture of some 52 or 53 million.




502

EM PLOYMENT, GROWTH, AND PRICE LEVELS

Going back to 1947, you can just see the fluctuations—the downturn
in 1948-49, the downturn in the 1953-54, and lastly the downturn
and then the upturn in the last 11 months. This indicates the steady
growth, as shown in that chart, and also the cycle.
Next we show the employment in three postwar recessions. This
depicts the three downturns. We show it two ways: One is to take
the nonfarm total. That is around the 52 million. This shows that
there were three recessions. Note that the months on the chart are
dated to begin with the period of the previous business peak. You
will see that there is a gradual increase in employment over the years;
that is, there is an upward trend which shows very clearly; and each
succeeding low period has been higher than the bottom of the previ­
ous one. The pattern of the three downturns is shown: 1957-59 looks
a little bit sharper than the others on the downturn. It also looks a
little bit shorter.
In manufacturing, which is about one-third of the total nonfarm
employment, you will notice a difference. At the peak in 1957 we
didn’t have as many employed in manufacturing as we had at the
peak in July of 1953. And we are still below our 1957 peak, even in
March 1959.
However, you still have the same general pattern of downturn in
the recession.
The next chart shows unemployment in the three recessions as per­
centages of total civilian labor force. These are the census figures.
The red line is 1948-49. Moving from the prosperity period of
1948 into 1949, employment rose to a peak in the fall of that year,
and then gradually declined.
The period 1953-54 showed a lowrer rate of unemployment, while
1958-59, which is the black line, has in general been higher.
The C h a i r m a n . What do you take as your denominator in figur­
ing the percentage of unemployment in the civilian labor force?
What is the civilian labor force ?
Mr. C l a g u e . That includes the total of the employed and unem­
ployed ; and includes all farmers and farmworkers.
The C h a i r m a n . What about self-employed ?
Mr. C l a g u e . The self-employed are included.
The C h a i r m a n . H o w can a self-employed person be unemployed ?
Do you think a self-employed person should be included ?
Mr. C l a g u e . Well, there are some farmworkers unemployed, and
self-employment can evaporate. A farmer can seldom, I suppose, be
unemployed as long as he stays on the farm.
The C h a i r m a n . Would it not be more realistic to take the labor
force minus the self-employed ?
Mr. C l a g u e . This could be done.
May I ask Mr. Pearl this question: Did you ever attempt that kind
of relationship by eliminating certain groups from the calculation?
Mr. P e a r l . That would raise the rates about 10 percent or 0.5 per­
centage points. It can be done. The statistics are published. It
is possible for anyone to compute such a relationship.
The C h a i r m a n . I know. I have computed it. I think it is a much
more realistic figure than the figure of the total labor force. I f you
use the total labor force results, they artificially lower the percentage
of unemployment and, therefore, minimize the gravity of the
situation.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

503

Mr. C l a g u e . May I have the next chart ?
The C h a i r m a n . Incidentally, why don’t you exclude farm la b o r
and get a figure for urban unemployment ?
Mr. C l a g u e , The answer is that surely we could make that type of
tabulation also. Of course, farm labor can have a high degree of
unemployment, as you know. But the answer is “ Yes.” We could
relate these rates in any groups and subgroups. These are some of
the things we could consider doing in the future as we work on this.
Mr. Chairman, here is another chart which I want to highlight a
little bit, because I would like to move over to my section 3, which shows
some interpretation and analysis of the unemployment situation.
Here is long-term unemployment in the three recessions. This
shows persons unemployed 15 weeks or more. There you see in the
black line, 1948-50, where the peak was reached in early 1950; next the
green line, 1953-55; and then 1957-59. The last stands out quite
clearly. The significant factor here has been the great increase in the
current recession in the number of long-term unemployed.
By the way, in March 1959 the long-term unemployed shown on the
chart were out of work 15 weeks or more; but half of them had been
unemployed 27 weeks or more. So this is the outstanding charac­
teristic of the present unemployment.
For my final section, I would like to discuss briefly four factors that
I think have an important bearing in interpreting this situation; that
is, upon the nature of present unemployment.
The first one is the longer workweek. Here we show on this chart
total manufacturing employment, which is the top line, including the
recovery in 1958-59; and then we show" below th average weekly hours
of production workers in manufacturing. You will see that from the
bottom of the recession in 1958 there has been a much sharper increase
in working hours. In other words, employers have tended to work
their men longer hours rather than to hire more workers.
The second factor I would like to call attention to is the extent to
which the number of unemployed is influenced by the labor force
expansion or contraction.
Here I might remind the committee of what I said a moment ago.
Young people, girls or boys, and women, will enter the labor force as
the economy expands. In 1955 and 1956 there w^ere over 2y2 million
workers added to the labor force. So in any labor force expansion
there is, in a certain sense, a competition for jobs between those who
are currently unemployed and the new workers who come into the
labor force. This may occur in 1959-60.
My third factor is immobility and unemployment. We have asked
ourselves the question: Why are unemployed workers “ stuck” in dis­
tressed areas? Why don’t the unemployed shift to an expanding
industry or move to other areas where there are jobs?
First, why don’t they move to a new industry? This I attempted
to answer in my prepared statement. Briefly, the new jobs may be in
trade and service; autoworkers and steelworkers are not ordinarily
qualified for those jobs. The employer may be reluctant to hire a
worker who has been in manufacturing and mining, particularly if
the worker has reached middle age.
In distressed areas there aren’t many jobs even of those kinds for
which they qualify to which they could move.



504

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

Then there is a wage problem. Generally the workers in the durable
goods industry are high-wage employees and would have to take a
reduction.
The second half of the question is : Why don’t they leave the com­
munity and migrate ?
Here again we find that this is a very difficult problem. A worker
has built up seniority and pension rights, vacations, and sick benefits.
The holding power of this investment in the job has been shown in
a long-run decline of the quit rate. We published an article on that
in .our publication, Employment and Earnings, in December 1956.
We have had a long run decline in the quit rate, and part of it is
due to the workers’ attachment to the job where he is.
In addition to his investment in his job, he has an investment in a
home. Owning a home is perhaps the most formidable barrier to
moving out of a labor surplus area. Most homes are purchased in
times when prices are good and wages high. But selling is often
difficult when jobs are down, and the sale could mean a loss of several
thousand dollars. The worker might be moving to a prosperous com­
munity where house prices would be higher. This would add to the
potential loss of the ordinary cost of moving.
It is easy to see that a move out of the community could not be
undertaken casually. It was hard enough in wartime to move people
in one area to another. A person in a distressed area with a home
and a family does not move easily.
Then, of course, the family side comes in. He has his children in
school. The children have a lot of ties, friends in school, and so on.
Last of all, the older people, who are in the worst position in this
situation, have the poorest prospects in the new community.
So when an unemployed worker faces the prospect of losing his hardearned rights and his home,-what he does is hang on in the hopes that
something will happen in the community.
The C h a i r m a n . Without meaning to do so, you are making a very
eloquent argument for the Douglas distressed areas bill, which passed
the Senate and now is before the House. We are very glad to have
two distinguished members from the other body here to listen to your
statement.
You don’t have to comment 011 that matter, since you are a civil
servant.
Mr. C l a g u e . I had no intention of speaking 011 legislation.
We have made a number of studies, including several done in the
Labor Department. We found the unemployed always tend to -be
optimistic about recovery in their areas and they are hard to move
to another community.
The fourth point is mobility and unemployment. That begins on
page 40 of my statement.
The dynamic labor force and short-term unemployment: We have
frequent changes in industry. Some workers can change, and indus­
tries can change. We find that in a free and growing economy some
unemployment is unavoidable and there are millions of workers on the
move. These tend to be 011 the most part young workers and adult
women. The adult women move in and out of industry rather easily.
Young workers are the ones who can move out of a community, and
will do so.




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

505

In 1957, a total of 33 million people, or 1 out of 5 in the population,
changed their places of residence; many of them also changed their
employment.
In the same year, more than 2 million persons voluntarily left
their jobs in manufacturing industries alone.
In an average month, 3 or 4 million persons enter the labor force and
nearly the same number leave.
There is a heavy turnover among the unemployed* too. For instance,
from February to March there was 2 million that dropped out of
unemployment. One and four-tenths million found employment, and
600,000 left the labor force. But in the meantime, we picked up 1,600,000 new unemployed, 900,000 from jobs lost, and 700,00 who stepped
in from outside the labor force.
The whole question of the turnover of the unemployed is very cru­
cial. As a result of all of this shifting and moving, which appears
to be unique to the United States, there are always some workers tem­
porarily between j obs who are counted as unemployed.
In some of these cases, their problems are not so serious. The real
problems are the regular workers unemployed for long terms.
Finally, just as a last point, I would like to call attention to some
long-term changes in the labor force. We have mentioned women.
Women have been increasing in the labor force for a long period of
time. One might ask why this is happening, when per capita income
is higher than it wras 30 or 40 years ago. There seem to be two answers:
The rapidly expanding trade and service industries have created a need
for more women workers. They are specially numerous in that type of
employment.
Secondly, the technology of the home has made it possible for house­
wives to move out of the home. The time saved in labor-saving devices
has given women opportunity to take outside jobs. The increase in
women workers has been the most significant change in the compo­
sition of the labor force in the last 40 years, but particularly since
World War II.
In 1920, 24 percent, or about 1 in 4 of all women over 14 years of
age were in the labor force. Today the proportion is 1 in 3.
The C h a i r m a n . Despite the fact that the percentage of child labor
has decreasedv
Mr. C la g u e . That is right.
The C h a i r m a n . Y o u could take the category of women over the
age of 18 or women over the age of 20, and the increase would be still
more mild.
Mr. C la g ite . That is right. As a matter of fact, between the age
of 20 and 35, when they are homemakers and child bearers, the ratio
U not perceptibly increasing. The increase is over 35 years of age.
That
where! the great expansion is occurring. Those women are
entering the labor force and staying in the labor force. They are
also quite flexible in their attachment. They will come in and out
during a recession period, but th6 long-term trend is upward.
Finally, a word about the young people [n the years immediately
afi&icl we can expect to find
beojjlfc cdfttWbuting the greatest
ntimber to this &tpansioii of tHfel laiboi^ f 6^be BJH196® thdre will be 40
percent more workers under 20 in the labor force than there are tod^y.
At the ^iifl^ tiihy, tfie Saild'fclffobs thkt can be filled by inexperienced
;, :'
‘ *.
I !. ' » > » '



506

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

and untrained workers are diminishing, relative to those calling for
a higher degree of training. It is the conflict of these two forces which
give us concern about the unemployment situation in 1960’s.
Thank you very much, Mr. Chairman.
The C h a i r m a n . Congressman Coffin, have you any questions?
Representative C o f f i n . Not at this moment, Mr. Chairman.
The C h a i r m a n . Mr. Widnall.
Representative W i d n a l l . Mr. Clague, how many times have the
methods of computing the unemployed been revised ?
Mr. C l a g u e . I think I might ask Mr. Pearl to talk to that, because
he is the man who directs that work in the Census.
Mr. P e a r l . Basic concepts have been changed only very slightly
since this monthly survey was instituted in 1940.
Mr. Clague made reference to that change in his statement, a small
change involving about one-quarter of a million workers 2 or 3 years
ago. That was the only change in concepts, in definitions, of unem­
ployment which have been used.
However, over the years, the methods of collecting these data have
been altered several times in the interest of improvement. The sample
used to collect this information has been expanded two or three times
during the last 20 years. The questionnaire forms have been im­
proved, we believe.
Representative W i d n a l l . Has that made a noticable difference in
the results ?
Mr. P e a r l . Not in the level of the results, so much, but in the
reliability of the results, the consistency of the figures from month
to month and year to year. The improvements have been largely in
the direction of reducing the sampling error and the response varia­
bility. That is, erratic fluctuations.
Representative W i d n a l l . It is certainly very wholesome if we can
get it that way. The point I am trying to make is this, though: When
last revised 2 or 3 years ago, and changing the number by about a
quarter of a million, 250,000, that then means when we take the figures
today and compare them with' figures of 4 years ago, you should have
added about 250,000 to the figures of 4 years ago, for a true comparison.
Mr. P e a r l . Well, for certain purposes the back series has been
revised, specially for overall figures. Some figures have been issued
which make it possible to study these on a comparable basis. It has
not been possible to revise all of the details of the series, since the
necessary information was not available. But an allowance for this
change can fairly easily be made. I think in the comparisons which
have been made in our own reports and in other statements given to
the press, allowance has been made for this difference.
Mr. C l a g u e . Particularly, Mr. Widnall, for the total figures. It
is easier to make the adjustment for the total figures than it is for some
of the details.
Representative W i d n a l l . Is there any chart which now shows what
the figures were in 1940,1941, and so on, to today’s date, all computed
on the same basis you use today ?
Mr. P e a r l . Not since 1940. But during the postwar period, yes.
Since 1947 I think many of the charts presented here do make such an
allowance.
Representative W i d n a l l . So it would be a fairly true comparison ?
Mr. C l a g u e . Since the war; yes.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

507

Representative W i d n a l l . Wliat additional can you tell us about
the composition of the unemployed? How many are unskilled
workers or new entrants in the labor force ?
Mr. C l a g u e . I think in table 2 of my statement you will see that
information. Table 2 is March 1958 to March 1959. There we have
the unemployed classified by professional workers, farmers, mana­
gers, clerical, sales, and so forth, farm laborers and industry laborers,
reading down to the left. You will see the breakdown there.
Representative W i d n a l l . H o w does the average wage of these peo­
ple compare with the average wage of all workers? I am talking
now about the unskilled workers and the new entrants into the labor
force. Have you any comparison for that ?
Mr. C l a g u e . For the average wage?
Representative W i d n a l l . Yes.
Mr. C l a g u e . We do. I don’t happen to have it here. But I would
say this to you: Of course, the laborers, the unskilled workers—
well, I think I will answer that this way:
The 1955-57 expansion in industry was a durable goods expansion.
The heavy volume of unemployment in 1958-59 is in durable goods
industries. In those industries, even the common laborers are not
low-wage workers. The minimum wage in steel is about $1.75. The
minimum wage in autos would be pretty nearly that high.
So some of these unskilled workers are fairly high salaried. That
is why I made mention of the fact that if they shift to service em­
ployment, like laundries or service shops of some sort, such as filling
stations—I don’t recall how the wages are there—they might find
they had to take a wage reduction. But, of course, some kinds of
unskilled labor are, of course, low wage, too. I don’t want to lend
the impression that unskilled all have high wages. But we have to
think in terms of where these unemployed workers come from, what
kind of wages they commanded when they were working.
Representative W i d n a l l . At the risk of being misunderstood in
asking this question, because somebody will say I am heartless to say
this. Doesn’t the present unemployment insurance law tend to freeze
unemployment in some areas? By that I mean the worker who
has been working as an unskilled worker in steel at, you say, $1.75 an
hour, who could find employment in another area where there are
employment opportunities available, but under the present unemploy­
ment law he can be looking in the category that he was in before. Is
that not so ?
Mr. C l a g u e . I think I will ask Mr. Levine to talk about that. He
knows the unemployment insurance system. It would not neces­
sarily mean that the unemployed worker couldn’t move. He could
draw his unemployment benefits.
Mr. L e v i n e . Under unemployment insurance provisions of the
State law, there are provisions for interstate benefit payments, so
an individual can go to another State and file a claim and that
State will act as an agent and forward the claim back to the State
from which he originated. So he can be searching for work. The
evidence that these people are actually searching for work is found
not only in the fact that some of them go through this whole period
of benefit payments, having registered in a local office and made them­
selves available for job opportunities that can be offered to them, but




508

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

even after exhaustion, we find that a high proportion of them are still
searching for work.
So there is an honest search for work going on.
Representative W i d n a l l . I am sure of that. I am not trying to
discredit the unemployed in their efforts to obtain jobs. But do they
not confine themselves pretty much to-the area that they have worked
in before ?
Mr. L e v i n e . The same factors that Mr. Clague referred to apply
to these workers as well in the sense of their tie to the establishment
and the industry in which they have a great investment, both in terms
of previous tenure, seniority, pension rights, health provisions of
various kinds, and tie in the community, including homeownersliip,
audsoon.
So the preponderance of the effort is made to search at home in the
first instance.
We feel, too, that it is improper to compel an involuntarily unem­
ployed person, accustomed to a certain skilled level, having acquired
over the years a certain level of skill, experience, and earnings, to be
asked to take a very sharp break without some evidence that there
are really no possibilities of recall or return to that kind of level.
All of the American work experience is striving to reach higher
skilled levels and improve our capacities and abilities. We would
hesitate very much to ask workers in an initial period of unemployment
to make a major break with that experience and accept a quite low
wage or an unskilled category as against a skilled kind of occupation.
Representative W i d n a l l . I think I understand the purpose. Cer­
tainly, the right motive is in back of it. The point I was trying to make
is that in a number of areas you see job opportunities being offered
all the time and no takers for the job opportunities. At the same time,
we have a lot of people unemployed.
Mr. L e v i n e . Mr. Congressman, this point has been one that we
have studied for many, many years, in highl levels of economic ac­
tivity as well as in periods of recession. When we make an analysis
of the characteristics of the displaced workers, these unemployed
workers claiming benefits, and the characteristics or the specifications
for the job openings that exist in the area, we frequently find there
is a wide disparity between the two. The disparity may be in occu­
pations, it may be in sex, it may be in age restrictions. There are a
wide variety of specifications. So you can have in the same labor
market, job opportunities that are not being filled, and at the same
time have claimants who will not meet the specifications that the
employers are holding out.
Representative W i d n a l l . Do you have any figures that show how
many families have more than one wage earner ?
Mr. L e v i n e . Under most of the unemployment insurance laws, w^e
are not required to look into the question of the number of dependents.
Their rights to benefits do not turn on whether they are married,
single, or whether they have dependents. So we do not have that
kind of information.
There are a limited number of States, 11, which have dependents’
allowances, a dependent benefit tied to the claim for benefit. In those
inst ances, we do know.
But, normally, we do not look to marital status or number of de­
pendents as having a limitation in any way on benefit rights.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

509

Representative W i d n a l l . Y o u would not have anything to show,
at this time, the number of repossessions of automobiles or the number
of foreclosures of homes within the last few years, something that to
me has been quite noticeable, at least up in the area where I am, and
where there has been some marked unemployment; that is, how few
people seem to have lost automobiles and how few people seem to be
involved in the foreclosure of a home.
If conditions are as bad within those homes as some would have you
believe, it seems to me that they would be losing their homes, losing
their automobiles, because most of them are on time payments.
Mr. L e v i n e . Mr. Congressman, this situation varies widely over the
country with the spotty character of unemployment and the duration
of the unemployment. It has been noticed and a great deal 6f public
attention has been directed to the fact th^t uneihplo^merii insurance in
the 1958-59 recession has; made a $raj6r coiiMtmtion in the iMinteriance of purchasing poWer'
is in f^rt aiirexplinati6!n ^Thy fore­
closures and repossessions have ti&£ Be&i
pface vft the’
degree.
However, in areas of persistent, long-term unemployment, With
high ratios of exhaustions of benefits such as we have, for example, in
some of the Michigan areas where even with temporary extension of
benefits exhaustion has occurred again, so you have a second series of
exhaustions, in those instances there has been evidence that depart­
ment store sales, credit arrangements and so on, have undergone con­
siderable change.
I might say also that merchants change their position with respect
to repossessions and so on, in that kind of a climate of economic
activity. So it is not a hardhearted kind of repossession.
Representative W i d n a l l . If we were to go into a depressed areas
program, such as suggested by Senator Douglas, and in some of these
chronically depressed areas you endeavor to bring in new industry and
new development, you would not necessarily have the same type of
employment there as these people had before, if they were automobile
workers, and you would have exactly the same problem with respect
to the payment of wages, I should think.
Mr. L e v i n e . I should like not to comment to the legislative pro­
posal that is before the Congress. But talking to the economics of
the distressed or areas of long and persistent unemployment, in many
of these areas we have people with considerable skill and a long work
history, and the contributions to the economic change in those areas
might be a shift of industry or a shift of market or something of that
kind. The kinds of industries that might be attracted to those areas
would, in part, turn on the skilled characteristics of the work force
and the manpower resources that are available in the area, and in some
part no doubt would require some retraining, some kind of redirection
of their abilities.
The C h a i r m a n . This is also a feature of the Douglas depressed
areas b ill; namely, retraining.

Mr. L e v i n e . I would say that we find quite often when industries
are talking about relocation, that among the elements that they take
into account—and they, of course, take into account market, resources,
transportation costs, and so on—that manpower resource is an im­
portant consideration,




510

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Mr. C l a g u e . I would like to add a point on that because I thought
this was rather dramatic in the case of Massachusetts. Massachu­
setts was a textile industry area and it was going downhill, because
textiles were going downhill; but electronics moved in. Massachu­
setts became some years ago the leading State in electronics manu­
facture.
I think part of the reason for that was that some of those skilled
textile machinists and other workers available there gave them the
opportunity to build new industry. This is slow work. It means
the distressed area has to attract industry to move in and to take
account of the labor that is, let us say, stuck there, if we may use that
word.
Representative W i d n a l l . What are the latest figures on dual job
holdings ? Do you have those ?
Mr. C la g u e . Mr. Pearl will remember those.
Mr. P e a r l . A survey made last summer, just about to be released,
showed about Sy2 million, I believe. Well, it dropped during the
recession. It had been about Sy2 million people who held two or
more jobs at the same time, in the same week. The number dropped
to about 3 million last July. We believe because of the recession.
Representative W i d n a l l . I saw something happen in my own area
when the Ford Motor Co. plant wTent out of operation for a number
of weeks. They have the largest assembly plant in the world at
Mahwah, N.J. A great many of those people worked on Saturday
and Sunday in some other type of employment. Some of them when
they had been out for a while ended up the effort to go back to Ford
and started full time in the operation they were engaged in on week­
ends. It was a rather interesting development for me to see firsthand. I found at least in that particular area that theie did not seem
to be too many major repercussions because of the layoffs over a period
of time. Of course, they are back in production and have a pretty
full labor force employed at the plant.
Mr. C l a g u e . I might say, Congressman, o f course, that this em­
phasizes the point that in certain sections of this country the unem­
ployment rate is rather low, jobs are rather plentiful, and these
people will find jobs in their own communities.
It is the concentration of unemployment where the opportunities
do not exist which produces the long-term unemployed.
Representative W i d n a l l . What is the incidence of unemployment
in firms employing from one to four workers ? Have you figures on
that ?
Mr. L e v i n e . We don’t have figures on that. We do have some
figures on employment, and this is what was referred to earlier, em­
ployment by size of firm, so that you can look at employment varia­
tions. But in terms of unemployment, we have not really gotten
any figures on that. It would be hard to trace back the individual
to the particular establishment and then the size of the establishment,
except as it showed up for us in the employment office, and where the
State does not cover an individual under its unemployment insurance
law because he is in a firm that has less than four. The Federal statute
requires four or more. In that instance, we would not have any means
of knowing that.
Representative W i d n a l l . That is all.




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

511

The C h a i r m a n . We are very glad to have two other witnesses. I
will call Mr. Peter Henle, assistant director of research, for the
AFL-CIO.
STATEMENT OF PETER HENLE, ASSISTANT DIRECTOR OF
RESEARCH, AFL-CIO

Mr. H e n l e . Thank you, Mr. Chairman.
I would like, Mr. Chairman, to cover some of the same ground that
Mr. Clague did. I will try to avoid any duplication.
First I will give a brief discussion of the available statistics and
our views on them; and secondly, a few comments on the implications
of today’s unemployment and economic policy.
With regard to the first question, my judgment is that recent years
have seen considerable progress in improving the statistical reports
on the employment status of the population. There has been an ex­
pansion of the sample of households from which the basic data are
obtained. There have been refinements of the interviewing process,
and there has been considerable clarification of previously ambiguous
conceptual problems. All of these haye helped to make today’s re­
port more accurate and more meaningful than the comparable re­
port as recent as 5 years ago. In particular, the able job performed by
the so-called Review of Concepts Committee of Government Ex­
perts has been valuable in pointing the way toward these improve­
ments. I think that the advice of both labor and business economists
given to this committee also proved helpful.
This is not to say that today’s reports provide the final answer to
the quest for statistical information about unemployment. While
there have been improvements in the method of obtaining the basic
data, important gaps in statistics still remain. The task ahead is to
identify these more precisely and then to adapt today’s methods
to fill these gaps.
The next few months constitute a particularly appropriate time to
review these statistics. Arrangements are now being made for the
forthcoming transfer of the supervision of the Monthly Report on
the Labor Force from the Bureau of the Census to the Bureau of
Labor Statistics. While organized labor, needless to say, w^as hardly
instrumental in arranging this transfer, it is one that we heartily
applaud.
The consolidation of responsibility for all employment and unem­
ployment statistics in one agency should provide a more uniform
method of collecting, analyzing, and presenting data, the responsi­
bility for which up to now has been divided between two agencies.
The occasion of such a transfer provides a particularly appropriate
time to review the procedures for these reports.
Because this hearing is primarily concerned with unemployment,
it is to these figures that I wish to direct my attention, excluding
data relating solely to employment, labor turnover, et cetera.
The following are the specific questions that I feel are worthy of
special attention in the continuing attempt to develop more meaning­
ful statistics on unemployment.
1. Provide a better basis for judging hidden unemployment.
3856,3— 50— pt. 3—— 4




512

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

At the present time, the monthly report provides a reasonably
accurate figure of the number of individuals totally unemployed;
that is, those who during the survey week of each month have not
been employed on any job and who have been actively seeking work
in that week or in the recent past. This is the basic figure on unem­
ployment which captures the headlines. However, by itself this
figure does not indicate the full extent to w^hich individuals have
been made idle by economic conditions. There are two other aspects
of the problem which are not adequately covered by statistical re­
ports at the present time.
Part-time workers: Any individual who has been employed for
even as much as one hour per week is counted as employed under
the present definitions. Under the circumstances, this definition may
be as reasonable as any other since otherwise it might be very diffi­
cult to decide exactly how many hours of work constitutes
“ employment.”
However, for many the effects of a recession are reflected in cutbacks
to part-time work, rather than complete losi of employment. This
makes it imperative that full information be available indicating the
extent to which individuals have been forced to accept part-time work
when they cannot find full-time jobs. To meet this need, the Census
Bureau has beefi providing during the last few years more regular re­
ports on these part-time workers, dividing them into those who prefer
to work part time, and those who prefer full-time work but who are
working part time for economic reasons. Such figures show, for ex­
ample, that in March 1959, 2.4 million workers were working part time
because they could not find full-time jobs At the present time, how­
ever, the Census Bureau merely provides a breakdown .of this 2.4 mil­
lion according to the number of hours worked during the survey week.
It does not take the logical step of calculating and then publishing
figures indicating the full-time equivalent of the time lost by these parttime workers. Such figures can be readily obtained from data now
available. In fact, they have been published, for example, in an ap­
pendix to the 1955 report of this committee on the President’s Economic
Report. It is our view that such a figure should be published on a regu­
lar monthly basis, thus making possible a more realistic assessment of
the impact of economic conditions on employment.
The C h a i r m a n . For the sake of the record, I would like to point
out that a definition of the methods of deriving estimates of full-time
and permanent unemployment were submitted by Mr. Ensley in 1955,
published as an appendix to the Economic Report in that year. It
appeared on pages 95 to 97.
In the hearings of last year on the Economic Report to the Presi­
dent, at my request, Mr. Knowles submitted a memorandum on the
computation of full-time and equivalent unemployment, bringing fig­
ures down to January 1958. This appears on pages 163-165 of that
report.
We have been computing monthly estimates of what the full-time
equivalent of unemployment would be of involuntary part-time work­
ers. The legitimacy of these figures has never been recognized. So
they are off on the wing, so to speak, and have never been officially
admitted.




EMPLOYMENT,

GROWTH, AND PRICE, LEVELS

513

I think this is a very important issue. I can say that the figure
for March is an estimate of approximately 1.1 million of the 2.4 .million
involuntary part-time workers. They came to the equivalent of about
1.1 million equivalent full-time unemployed workers. This, therefore,
raised the percentage figure of unemployment, even if you took the 66
million as a basis. It would raise it by at least 1% percent.
I f you introduced the further refinements which I believe should be
introduced and subtracted from the total working force, the number of
self-employed, of course, the percentage increase would be still more.
I am glad you touched upon this point. I think full consideration
should be given to it. I am glad that you also feel that they should
be admitted to the family of unemployment statistics.
Mr. H e n l e . I say this, Mr. Chairman, that regardless of a person’s
attitude regarding these figures, whether they fed that unemployment
is slight or heavy, this is a very critical index, the extent to which peo­
ple aye forced to take part-time work. In some respects it is an im­
partial figure, because once you have a series of these figures, you can
draw conclusions either way from them. But it provides what could
be a very critical indicator, for example, of a possible forthcoming
recession because the start of a downturn would be more reflected in
cutbacks than in layoffs.
The C h a ir m a n . There is one final point I would like to mention,
and that is that our very State unemployment insurance laws en­
courage part-time unemployment rather than full-time unemployment,
because generally a worker is not eligible for benefits until his earn­
ings are less than half of what they would normally be. The con­
tributions or assessments which the employer pays to the State
unemployment insurance funds generally is a rather close ratio to the
total amount of benefits paid out to his specific workers. Therefore,
he could reduce his contributions by spreading the unemployment more
evenly and working a large number of people part time rather than
concentrating the lost time upon a smaller number who would other­
wise be completely unemployed and, hence, eligible for benefits. I
think this is a hidden factor which, as you say, should be revealed.
The facts, I have always believed, are neutral.
Mr. H e n l e . That is right.
Mr. Chairman, the second part of this problem deals with the ques­
tion Mr. Clague has already touched On, the question of the changing
growth in the labor force. You will remember his first chart depicted
very clearly how the growth in the labor force is not a slow, steady
growth, but rather erratic, and that it falls behind in times of reces­
sion and goes above or tends to go above the projected or normal
line in times of prosperity.
As Mr. Clague explained, there are various reasons for this. The
young people perhaps go to school another year rather than look for
jobs in a recession job market, and so forth.
While it would be difficult to obtain exact statistics on the number
of individuals who have refrained from job hunting because of eco­
nomic conditions, it would be possible to estimate this figure by com­
paring the labor force for any period with the labor force that had
previously been projected as normal for that period. Projections of
labor force growth are published and revised every few years by the
governmental experts. Differences between actual and projected size




514

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

of the labor force can be a valuable analytical tool in economic analysis,
as Mr. Clague demonstrated before your committee in January.
Because changes in labor force growth can be erratic from month
to month, it would probably not be advisable to publish monthly fig­
ures showing the divergence of the actual labor force from the longterm trend. However, it would seem possible for such figures to be
published quarterly or semiannually. This would provide one addi­
tional tool to view the effects of a recession—or a more prosperous
period—on the labor market. In other words, I think, as Mr. Clague
himself has at times indicated, the trend is the difference between
today’s labor force and what the projected trend would have been.
I f we could have those figures on a regular basis, not necessarily
monthly or quarterly, but semiannually, it would help.
II. OBTAIN INFORMATION ON THE CHARACTERISTICS OF THE UNEMPLOYED

Governmental agencies are already devoting increasing attention
to this aspect of the problem. They recognize that it is not enough
to provide a single figure for the unemployed. Monthly information
is now being provided giving age, sex, marital status, and color
breakdowns for the unemployed.
Additional information should be made available in this area. In­
formation on unemployment by industry and occupation, published
at irregular intervals, should be furnished each month. Greater at­
tention should be given to the characteristics of the long-term un­
employed. This has become a particularly critical question in the
past few months, and while the governmental reports reflect increas­
ing concern with this problem, they do not yet include such informa­
tion as a regular part of the data.
III. EXAMINE IN MORE DETAIL WORKERS WITH ONLY MARGINAL ATTACH­
MENT TO THE LABOR FORCE

It is clear that the labor force status of many individuals is con­
stantly shifting. For the average male adult there is little choice.
His job as family breadwinner, and his attachment to the labor force
is very specific. For the teenager, the older workers, and particularly
for the women who now comprise a larger proportion of the labor
force, the attachment to the labor force may vary with the time of
the year, with job opportunities, or with their personal inclination.
Additional work needs to be done to find out the conditions under
which these people enter and leave the labor market.
IV. CONTINUE WORK TO IMPROVE THE SEASONAL ADJUSTMENT FOR
UNEMPLOYMENT

The seasonal adjustment becomes a particularly critical factor at
the time of any recession. During 1958 this factor came in for a
certain amount of criticism which we believe was largely unjustified.
Nevertheless, it is particularly important for the Government to re­
view the process by which this seasonal adjustment factor is obtained
to determine whether any improvements can be made. Some stu­
dents of the problem have suggested that the behavior of unemploy­
ment between any 2 months of the year may vary depending on the




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

515

stage of the business cycle through which the economy is moving.
Others have suggested that some seasonal changes may be best de­
scribed in terms of absolute rather than relative changes in unem­
ployment. These and other suggestions should be carefully examined
and tested.
I am particularly concerned about point V of my paper, and I would
like to go into that briefly. We think it important to review the
unemployment insurance claims.
V. IMPROVE THE. REPORT ON UNEMPLOYMENT INSURANCE CLAIMS

In addition to the Monthly Report on the Labor Force, information
on unemployment is obtained and published as a byproduct of the
operation of the unemployment insurance system. This report can
be most useful since its weekly figures provide more up-to-date infor­
mation than the monthly survey of households. However, the figures
that are now published are of limited value because they reflect so
many administrative factors operating in the 48 different State unem­
ployment insurance systems. The number of workers filing claims in
any week, for example, is affected not only by changes in unemploy­
ment, but also by numerous provisions in State laws which, for exam­
ple, set particular dates after which new claims can be filed. Changes
in State law, such as those broadening coverage of the system, also
affect number of workers filing claims. Moreover, the usefulness of
the data is impaired by the fact that no count can be made of unem­
ployed workers who have exhausted the benefits to which they have
been entitled.
It is possible, however, to make statistical allowance for most of
these factors, and a correction can be applied to the data that is now
published. In fact, the Bureau of Employment Security has worked
out certain seasonal factors which take most of these points into ac­
count. However, the present weekly report does not include any such
adjustment, making it very difficult to interpret. One of the most
important improvements in unemployment data that can now be made
would be to make possible more meaningful analysis of the weekly
unemployment insurance claims report. We are very gratified to
learn this morning that some steps are being taken. I think in addi­
tion it should be possible to make two improvements more promptly:
First. To utilr j the seasonal index, which is already available, so that
weekly data o ; at most monthly data could be readily interpreted in
the published report. In other words, to include the seasonal adjust­
ment.
Secondly, with regard to the exhaustion of claims, it is true that
figures are now available from eight industrial States. However, it
is my understanding that those figures are not published weekly, al­
though they are gathered weekly, and there is no reason in the world
why this information should not be published.
Now, Mr. Chairman, I would like to turn my attention to interpret­
ing today’s unemployment figures.

The general pattern revealed by these figures has been discussed by
Mr. Clague, and I do not propose to go into it further. It does seem
important to me to ask this question: To what extent is the lag in
unemployment today a normal unavoidable pattern, typical of the




516

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

American economy in times of recovery, and to what extent is it a
more serious problem calling for remedial measures?
It is our view that there are two important factors that distinguish
today’s unemployment from conditions after the two previous postwar
recessions. One of them is the fact that the lag today, after the 1958
re&esgidn!, has remained far more pronounced than after the 1949 or the
1954 recession. I think that was demonstrated by Mr. Clague’s charts
showing the unemployment rates for the three periods.
Secondly, I would like to call your attention to the problem of jobs.
In other words, riot only is the rate of unemployment high, but the
extent to which jobs have picked up, sort of the converse of the picture,
brings this lag out very clearly. The figures indicate a sharp drop
in employment between the previous peak to the troughs of each of
the postwar recessions. The figures also reveal that 11 months after
the 1949 and 1954 recessions, employment had expanded to the point
where it had surpassed the previous peak. However, in the 1958 re­
cession we are still more than 1 million workers, seasonally adjusted,
away from the peak from which the recession drop began.
The C h a i r m a n . By about 1,450,000 in the 1949-50 recession and by
about 400,000 in the 1953-54 recession. In 1957-58, the total employ­
ment was 1.1 million less.
Mr. H e n l e . That is right.
Representative W i d n a l l . Regarding the September 1950 figures,
what is the impact of the Korean war there ?
^ Mr. H e n l e . That might be difficult to say. There may be some
impact, but that was before the United States had gotten—no, we got
in in June.,, Well, I am sorry. It began in June. In November was
the intervention by the Communists from the mainland which turned
it into a larger scale affair. There is some expansion here. That
may account for part, of the large increase over the previous peak.
, Representative W i d n a l l . It is just typical of the factors that can
move into, a certain particular series of months that can make it not a
true comparison' when you are talking about one year as against
another.
Mr. H e n l e . On the other hand, the differences are quite consider­
able between increases* pf 400,000 dr so, or more, versus a drop of 1.1
million.
Now I discuss the problexn which Congressman Widnall has been
asking about. I.think, perhaps, it,is enough to summarize here./ :

There have been, questions abQut how serious this unemployment is
and how much hardship is involved to the people concerned. Efforts
have been made to point out, for example, .that of the unemployed
there are so many that, are , working wives?!and so many are young
people who are living with their parents, .and so many are in families
with two income earners, anpl so ¥orth. The point I would like to
make is this: Of course, m good t$rt$s>6lr bad, a certain proportion of
the unemployed workers are te^iiy^r^ttikrried women, and so forth.
The figures ^how^ however, and xxniiffi^Ir. Clague has emphasized
this, too, that the 1958 recession hitjfilt^Snlarly hard at married men
with families, and that although tnSfe'Hks been some improvement in
this regard, the proportion of tlie uriMi'ployed represented by married
men with families is Higher! todaly than it was 2 years ago.




EMPLOYMENT,

GROWTH, AND PRICE* LEVELS

517

The C h a ir m a n . Mr. Henle, is that because tlie present recession hit
the durable goods industries harder and the percentage of men in
durable goods is, of course, higher than in soft goods ?
Mr. H e n l e . I think that is true. I would add also that in many of
these industries unemployment hit so hard, the cutbacks were so
sharp, that it affected older workers with 10, 12, or 15 years senior­
ity—obviously married men who had settled down at this job for their
lives.
Moreover, the proportion among the unemployed of women who
have added responsibilities because they are widowed or divorced or
because their husbands are absent is higher today than it was 2 years
ago.
Many of the people who discuss these figures tend to leave out the
fact that there are many places and many types of situations where
the women’s earnings represent not only her income but the income
of other people dependent on her.
Representative C o f f i n . Perhaps you covered this question earlier,
but if the birth rate has gone up, particularly since World War II, do
we have any figures showing the average number of dependents of
the wage earner? Has that gone up? Would that have any bearing
on comparing unemployment figures of today with unemployment
figures of 5,10, or 15 years ago ? In other words, does an unemployed
person today have an average number of dependents greater than he
did at an earlier period ?
Mr. C la g u e . I think I will ask Mr. Pearl to talk to that. This
comes from the Census.
Mr. P e a r l , Unfortunately, I do not have any basic statistics on
this with me. It is true that families are getting somewhat larger be­
cause of the increased birth rate. At the same time, there has been
a sharp uptrend, as show^n earlier, in the extent to which married
women are working and other members of the family are contributing.
How this balances out, I am not quite sure. I would suspect that this
percentage has not gone up, if you take into account both of those
factors. But we would have to check into the figures to be sure.
Representative C o f f i n . I s it possible to get that, to evaluate those
two counterforces ?
Mr. P e a r l . I would have to look into it. These are not satisfies
which we have on a monthly or such frequent basis. But it is possible,
I think, to work through our figures and see if we can’t develop some­
thing. We will submit a statement to the committee if we can develop
anything on it.
The C h a ir m a n . I f that would not be too much trouble, we would
appreciate it, if it could be done, We will have this printed as other
material is printed, and submit it as a part of today’s testimony.
(The material referred to follows:)
U.S. D e p a r t m e n t

of

B ureau

,

Com m erce,
th e Ce n s u s ,

of

Washington D.G
I n c r e a s in g F a m i l y S iz e

and

.,

M ay 11, 1959.

F a m il y I ncomes

In the course of testimony given before the Joint Economic Committee during
hearings on unemployment— measurement and characteristics, members of the
committee expressed some concern that the growth in the size of the American
family over the postwar period may have placed heavier burdens on family




518

EM PLOYMENT, GROWTH, AND PRICE LEVELS

income. The committee requested that some measurement of the possible extent
of this burden be placed into the record of the hearings insofar as this was
possible from the available statistics.
The Census Bureau estimates that the average size for all families has not
changed significantly over the postwar period. (See table A.) However, for
younger families, where the head of the family is under 45 years of age, the
increase in size of family has been appreciable. All of this change can be ex­
plained in terms of larger numbers of children. In all, the increase from an
average of 1.59 children under 18 to 2.05 for husband-wife families where the
head was less than 45 years old, meant somewhat over 10 million more younger
persons in our population in 1958 than would have been expected had the family
size remained stable.
T a b l e A.— Average family size and average number of children under 18, by
family type, for the United States, 1941-58

Type of family

Average
family size

Average
number of
children
under 18
years of
age 1

Type of family

1947 1958

1947 1958

All families________________________ 3.67 3.65 All husband-wife families______________ 1.19
Family head under 45 years of age___ 3.76 4.13 Husband-wife families with head under
45____________ ______________________ 1.59

1.4b
2. 05

i Comparable data not available for all families; husband-wife families constitute about 87 percent of the
total of all types of families.
Source: Bureau of the Census.

These figures show that family responsibilities have increased significantly
among those groups where the wife is relatively young. The postwar uptrend
toward increased labor force participation of wives has occurred mostly among
middle-aged women who are less likely to have young children in the home.
Comparison of the growth in per capita income during the postwar period for
all persons against that of persons in families whose head was under 45, shows
that the income of the younger families generally has grown less than the na­
tional average (table B ). At the same time, the growth of per capita income
for fam ilies with children under 18 years of age has fallen short of the national
average by an even wider margin, amounting to a gain of some 35 percent as
against somewhat better than 50 percent for all groups on the average. There
is thus some evidence that these younger families may not have shared to the
same extent as other groups in the population in the Nation’s increasing economic
well-being.
T a b l e B.— Levels and percent changes in per capita income from 1941 to 1951 (in
current dollars) for family persons and other individuals in the United States

Type of per capita income

Levels
1947

1957

For all families and unrelated individuals
___________ ______________ _ $1,053 $1,607
For persons in families with head under 45 years of age 1_____ _____ ________
968 1,383
For persons in families with children under 18 years of age 1______________ ____
940 1,270
Disposable personal income for total population___________ _____________
1,180 1,782

Per­
cent
change
+53
+43
+35
+51

1 Before personal income taxes and other payroll deductions.
Source: Bureau of the Census and Office of Business Economics, Department of Commerce.

Total income rather than earnings has been compared here in order better
to measure the total available means for the fam ily’s support. It should be
noted that on the average the children of today’s families are still presumably



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

519

better off economically than 10 years ago, since the rise in per capita income of
fam ilies with children has been greater than the increase in the cost of living.1
Caution should be exercised in interpreting these figures because they are
subject to sampling and response variability and other possible errors of estima­
tion. Moreover, per capita income before taxes—the only form in which the
data are available for families by age of head and number of children—may
not be a fair yardstick against which to compare the well-being of families with
and without children. Since the tax structure provides for deductions for de­
pendents and other benefits for married persons and family heads, the differ­
ences in income growth among the various groups of fam ilies would have
narrowed if the computations could have been based on income after taxes.
The question might also be raised, in computing per capita income, as to whether
the weight assigned to young children should be reduced in line with the smaller
expenditure required for a child as compared with an adult. The evidence pre­
sented can be used to form only tentative judgments in an area that needs still
further study and more detailed types of information.
Representative W i d n a l l . I have always wondered, and I have never
gotten the answer to it, about this question: I f a man has received
about $4,000 of income from his job and he then becomes unemployed,
and receives $500 of unemployment insurance, is his yearly wage com­
puted at $4,500 in the figures for the United States, or only his actual
earnings and the other considered insurance and not part of his
earnings ?
Mr. P e a r l . We report all sources of income, including unemploy­
ment insurance, old-age pensions, and so on, in addition to earnings.
So his income would be computed as $4,500 in that instance.
Representative W i d n a l l . So your average yearly wage would in­
clude those figures ?
Mr. P e a r l . It is the average yearly income. It is not called wages.
Representative W i d n a l l . Thank y o u .
Representative C o f f i n . Mr. Pearl, in answering the question which
I asked, you would bear in mind Mr. Clague’s earlier statement about
the ages of the women coming into the force being over 35. It is
not just a question of balancing women against children, but in the
age group of unemployed.
Mr. P e a r l . Y o u are thinking of younger families, in other words.
We will attempt to make such a distinction, if we can.
Representative C o f f i n . Having four children and being in constant
danger of involuntary unemployment, I am very much interested in
that.
The C h a i r m a n . Would you proceed, Mr. Henle ?
Mr. H e n l e . Mr. Chairman, the second point that I particularly
wanted to emphasize as creating a unique aspect of today’s unem­
ployment picture I mention the fact that a large proportion of the
unemployed have been out of work for extended periods of time
and therefore face critical hardship problems far greater than any­
thing that has occurred in the postwar period.
Mr. Clague had a very effective chart in this regard showing how
the number of people in this long-term unemployed group was much
higher in the 1958 recession than in previous recessions, and is much
higher today than in other normal times.
Considering the general problem of the high unemployment figures
and the continuing economic recovery, what is likely to happen over
1 Consumer prices as measured by the BLS cost of living index increased about 25i percent
from 95,5 in 1947 to 120.2 in 19,57 (1947-49 = 100).




520

EM PLOYMENT, GROWTH, AND PRICE LEVELS

the next few months ? I would say with the continuing recovery in
economic conditions, some improvement can be expected. Yet, it is
important to remember that such a change for the better is likely to
be limited by two factors:
(1) A larger than normal increase in the labor force is ex­
pected during the coming months reversing the trend of the
past 2 years, and
(2) The sharp improvement in the economy’s productivity
which has been evident since last fall. That is generally typical
of a recovery period.
This productivity is a very desirable thing, and yet in terms of the
unemployment statistics obviously continued improvements in pro­
ductivity could well mean a continuing high level of unemployment.
In conclusion, I would like to raise three particular questions that
this committee may Wish to consider that I feel grow out of a leek
at the unemployment picture today:
1. Are we taking sufficient steps to assist workers currently stranded
in depressed communities without sufficient job opportunities ?
I have already mentioned the area redevelopment legislation which
is designed to attack this problem. However, the number of these
labor surplus localities has increased and the plight of their unem­
ployed has become more serious during the years when Congress has
been considering this legislation with the result that the new law,
when and if it is enacted, may not be sufficient to do the job.
Do wTe need, for example, to consider a broader program of indus­
trial training for these unemployed ? It seems very clear that because
of technological advances there are many workers in industries manu­
facturing durable goods, on the railroads, and in the mines, who for
many years to come probably cannot be reemployed in the jobs for
which they have been trained. The question arises whether there is
some way these workers can be trained for other jobs that might de­
velop in or near their communities. Have we given sufficient thought
to developing, if necessary with assistance from the Federal Govern­
ment, the proper program of training to help these workers obtain
other jobs? I have no precise blueprint for such a program, but this
may well become a major issue in the future for public and private
policy.
2. Assuming no additional Government programs to meet the un­
employment problem, is the present course of events leading to a
permanently higher level of Unemployment, even in more prosperous
periods ?

Each postwar recession seems to have left the economy with a higher
residue of unemployment. After the 1949 recession, unemployment
was as low or lower than 3 percent for many months, even after the
end of the Korean war. After the 1954 recession, unemployment
dropped but only to about 4 percent. Now, we seem to be facing
the danger that unemployment may not recede below the 5-percent
level.
The implications of such a deterioration in economic conditions for
the competitive struggle with the Soviet Union are obvious.
3. Are we doing enough to get ready for the 1960’s when substantial
changes will be taking place iii the labor f orcfc ?




EM PLOYMENT,

GROWTH, AND PRICE. LEVELS

521

Population projections point very clearly to the explosion sched­
uled to take place in the 1960’s. The number of young people reaching
the age of 18 will be rising 35 percent from the 1955-60 period to
1960-65. Has sufficient attention been given to the effects on the
economy of these youngsters reaching maturity ? On the one hand,
of course, the increasing number of marriages, of new households, and
families would provide a stimulating effect to consumer demand. On
the other hand, the entrance of these young people on the labor market
is bound to add to unemployment difficulties. Is there any way to
measure these two forces and determine the net effect on the economy ?
Perhaps this could become a fruitful source of inquiry for this com­
mittee to pursue.
These are a few issues that we see as critical in the months and
years ahead. They should be kept in mind as the committee moves
ahead in its investigations.
The C h a ir m a n . Thank you very much, Mr. Henle.
(The complete statement of Mr. Henle follows:)
S
P
H
, A
D
R
, AFL-CIO
I appreciate this opportunity to offer some comments regarding the current
unemployment picture.
My comments will fall in two parts: First, a brief discussion of the available
statistics and, second, a few comments on the implication of today’s unemploy­
ment for economic policy.
With regard to the first question, my judgment is that recent years have seen
considerable progress in improving the statistical reports on the employment
status of the population. There has been an expansion of the sample of house­
holds from which the basic data are obtained. There have been refinements
of the interviewing process, and there has been considerable clarification of
previously ambiguous conceptual problems. All of these have helped to make
today’s report more accurate and more meaningful than the comparable report
as recent as 5 years ago. In particular, the able job performed by the so-called
Review of Concepts Committee of Government experts has been valuable in
pointing the way toward these improvements. I think that the advice of both
labor and business economists given to this Committee also proved helpful.
This is not to say that today’s reports provide the final answer to the quest
for statistical information about unemployment. While there have been im­
provements in the method of obtaining the basic data, important gaps in
statistics still remain. The task ahead is to identify these more precisely and
then to adapt today’s methods to fill these gaps.
The next few months constitute a particularly appropriate time to review these
statistics. Arrangements are now being made for the forthcoming transfer of
the supervision of the Monthly Report on the Labor Force from the B u r e a u
of the Census to the Bureau of Labor Statistics. While organized labor, needless
to say, was hardly instrumental in arranging this transfer, it is one that we
heartily applaud. The consolidation of responsibility for all employment and
unemployment statistics in one agency should provide a more uniform method
of collecting, analyzing, and presenting data, the responsibility for which, up to
now, has been divided between two agencies. The occasion of such a transfer
provides a particularly appropriate time to review the procedures for these
reports.
Because this hearing is primarily concerned with unemployment, it is to these
figures that I wish to direct my attention, excluding data relating solely to
employment, labor turnover, etc.
The following are the specific questions that I feel are worthy of special atten­
tion in the continuing attempt to develop more meaningful statistics on unem­
ployment.
tatem ent

I.

of

eter

enle

s s is t a n t

ir e c t o r

of

esearch

p r o vide a b e t t e r b a s i s for j u d g in g h id d e n u n e m p l o y m e n t

At the present time, the monthly report provides a reasonably accurate figure
of the number of individuals totally unemployed; i.e., those who during the
survey week of each month have not been employed on any job, and who have



522

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

been actively seeking work in that week or in the recent past. This is the basic
figure on unemployment which captures the headlines. However, by itself this
figure does not indicate the full extent to which individuals have been made idle
by economic conditions. There are two other aspects of the problem which are
not adequately covered by statistical reports at the present time.
Part-time workers

Any individual who has been employed for even as much as 1 hour per week
is counted as employed under the present definitions. Under the circumstances,
this definition may be as reasonable as any other since otherwise it might be very
difficult to decide exactly how many hours of work constitutes “employment.”
However, for many the effects of a recession are reflected in cutbacks to parttime work, rather than complete loss of employment. This makes it imperative
that full information be available indicating the extent to which individuals
have been forced to accept part-time work when they cannot find full-time jobs.
To meet this need, the Census Bureau has been providing during the past few
years more regular reports on these part-time workers, dividing them into those
who prefer to work part-time, and those who prefer full-time work but who are
working part-time for economic reasons. Such figures show, for example, that in
March 1959, 2.4 million workers were working part-time because they could not
find full-time jobs. At the present time, however, the Census Bureau merely
provides a breakdown of this 2.4 million according to the number of hours worked
during the survey week. It does not take the logical step of calculating and then
publishing figures indicating the full-time equivalent of the time lost by these
part-time workers. Such figures can be readily obtained from data now avail­
able. In fact, they have been published, for example, in an appendix to the 1955
report of this committee on the President’s Economic Report. It is our view
that such a figure should be published on a regular monthly basis, thus making
possible a more realistic assessment of the impact of economic conditions on
employment.
Changes in labor force growth

One of the perplexing problems in interpreting data on employment and un­
employment involves the growth of the labor force. Examination of data for
the postwar period brings out how the growth in the labor force has been quite
erratic, generally rising far more rapidly in prosperous than in recession years.
Actually this pattern of accelerated growth in prosperity and limited growth
during recessions is quite logical. It is important to remember that an indi­
vidual is counted as unemployed only if he is actively seeking work during the
survey week or in the recent past. If because economic conditions become dis­
couraging, an individual is not actively seeking work, he will be counted neither
as employed nor unemployed, but not in the labor force.
Moreover, in times of recession many young people w ill often refrain from
job hunting because it becomes clear that little or no work is available. Young
people may decide to spend another year at school rather than look for work.
Housewives who are interested in working decide to await more favorable job
conditions. In these ways, a recession may leave its effect, not just in terms of
the totally unemployed, or the part-time unemployed, but in terms of a slower in­
crease in the labor force.
While it would be difficult to obtain exact statistics on the number of indi­
viduals who have refrained from job hunting because of economic conditions, it
should be possible to estimate this figure by comparing the labor force for any
period with the labor force that had previously been projected as normal for that
period. Projections of labor force growth are published and revised every few
years by the governmental experts. Differences between actual and projected
size of the labor force can be a valuable analytical tool in economic analysis, as
Mr. Claque demonstrated before your committee in January.
Because changes in labor force growth can be erratic form month to month,
it would probably not be advisable to publish monthly figures showing the diverg­
ence of the actual labor force from the long-term trend. However, it would seem
possible for such figures to be published quarterly or semiannually. This would
provide one additional tool to view the effects of a recession (or a more pros­
perous period) on the labor market.
II. OBTAIN ADDITIONAL INFORMATION ON THE CHARACTERISTICS OF THE UNEMPLOYED

Governmental agencies are already devoting increasing attention to this aspect
of the problem. They recognize that it is not enough to provide a single figure



EM PLOYMENT,

GROWTH, AND PRICE LEVELS

523

for the unemployed. Monthly information is now being provided giving age, sex,
m arital status, and color breakdowns for the unemployed.
Additional information should be made available in this area. Information
on unemployment by industry and occupation, published at irregular intervals,
should be furnished each month. Greater attention should be given to the
characteristics of the long-term unemployed. This has become a particularly
critical question in the past few months, and while the governmental reports re­
flect increasing concern with this problem, they do not yet include such informa­
tion as a regular part of the data.
III. EXAMINE IN MORE DETAIL WORKERS WITH ONLY MARGINAL ATTACHMENT TO THE
LABOR FORCE

It is clear that the labor force status of many individuals is constantly shift­
ing. For the average male adult there is little choice. His job as family bread­
winner, and his attachment to the labor force, is very specific. For the teen­
ager, the older workers, and particularly for the women who now comprise a
larger proportion of the labor force, the attachment to the labor force may vary
with the time of the year, with job opportunities, or with their personal inclina­
tions. Additional work needs to be done to find out the conditions under which
these people enter and leave the labor market.
IV. CONTINUE WORK TO IMPROVE THE SEASONAL ADJUSTMENT FOR UNEMPLOYMENT

The seasonal adjustment becomes a particularly critical factor at the time of
any recession. During 1958 this factor came in for a certain amount of criticism
which we believe was largely unjustified. Nevertheless, it is particularly im­
portant for the Government to review the process by which this seasonal adjust­
ment factor is obtained to determine whether any improvements can be made.
Some students of the problem have suggested that the behavior of unemployment
between any 2 months of the year may vary depending on the stage of the busi­
ness cycle through which the economy is moving. Others have suggested that
some seasonal changes may be best described in terms of absolute rather than
relative changes in unemployment. These and other suggestions should be care­
fully examined and tested.
V. IMPROVE THE REPORT ON UNEMPLOYMENT INSURANCE CLAIMS

In addition to the Monthly Report on the Labor Force, information on unem­
ployment is obtained and published as a byproduct of the operation of the un­
employment insurance system. This report can be most useful since its weekly
figures provide more up-to-date information than the monthly survey of house­
holds. However, the figures that are now published are of limited value be­
cause they reflect so many administrative factors operating in the 48 different
State unemployment insurance systems. The number of workers filing claims
in any week, for example, is affected not only by changes in unemployment, but
also by numerous provisions in State laws which, for example, set particular
dates after which new claims can be filed. Changes in State law such as those
broadening coverage of the system also affect number of workers filing claims.
Moreover, the usefulness of the data is impaired by the fact that no count can be
made of unemployed workers who have exhausted the benefits to which they
have been entitled.
It is possible, however, to make statistical allowance for most of these factors,
and a correction can be applied to the data that is now published. In fact, the
Bureau of Employment Security has worked out certain seasonal factors which
take most of these points into account. However, the present weekly report
does not include any such adjustment, making it very difficult to interpret. One
of the most important improvements in unemployment data that can now be
made would be to make possible more meaningful analysis of the weekly unem­
ployment insurance claims report.
I would like now to turn my attention to the interpretation of today’s unem­
ployment figures.
The general pattern revealed by these figures is clear enough. Eleven months
after hitting the bottom of the 1958 recession, the U.S. economy has made an
excellent recovery in terms of physical activity—production of basic industries,
volume of sales, extent of new construction—but at the same time the recovery
in terms of jobs is far from complete.



524

EMPLOYMENT,

GROWTH, AND PRICK LEVELS

The key question to ask in interpreting this picture i s : To what extent is
this a normal unavoidable pattern typical of the American economy in time of
recovery, and to what extent is this a more serious problem calling for remedial
measures? It is this question that I wish to explore briefly with the committee.
To begin with, it seems clear that in previous postwar recessions, there has
been some lag in employment behind the recovery in production. Nevertheless,
there are a number of factors in today’s conditions which I believe give real cause
for concern. In fact, today’s unemployment projected into the future could
easily become a major economic handicap for the United States in years ahead.
Let me mention two factors which I think distinguish today’s unemployment
from conditions after the two previous postwar recessions.
1. The lag in employment after the 1958 recession has remained far more pro­
nounced than after the 1949 or 1954 recessions.
In 1958 unemployment became more serious than during previous recessions,
and it remains more serious during the recovery period.
Seasonally
adjusted rate

Month

of unemployment

March 1959 (11 months after trough of 1958 recession)_____________________5. 8
July 1955 (11 months after trough of 1954 recession)_______________________ 4.1
September' 1950 (11 months after trough of 1949 recession)________________ 4. 6
Not only is the unemployment rate higher but jobs have not expanded in this
recovery period at the same rate as in previous recoveries.
Wage and salary jobs in nonagricultural establishments , seasonally adjusted
[In thousands]
Postwar recession

Previous peak

Trough

11 months after trough

1949_____________ 44,739 November 1948___ 42,455 October 1949_____ 45,899 September 1950.
1954_____________ 49,889 July 1953_________ 48,149 August 1954______ 50,295 July 1955.
1958_____________ 52,457 August 1957.___ 50,054 April 1958________ 51, 357 March 1959.
.

The figures indicate a sharp drop in employment between the previous peak to
the troughs of each of the postwar recessions. The figures also reveal that 11
months after the 1949 and 1954 recessions employment had expanded to the
point where it had surpassed the previous peak. However, in the 1958 recession
we are still more than 1 million workers, seasonally adjusted, away from the
peak from which the recession drop began.
Recently, efforts have been made to minimize the hardships of today’s unem­
ployment by saying that a certain proportion of the unemployed are youngsters,
a certain proportion are married women, and a certain proportion are men with
working wives, all of whom presumably can get along without a job. According
to this analysis, only a relatively small proportion of the unemployed present
any serious problems for the conscience of the American people.
It is easy enough to refute this line of reasoning. In the first place, it is
based on a number of obviously erroneous assumptions (that all unemployed
single persons have no dependents, that all unemployed women have no depend­
ents, that unemployment insurance benefits provide adequate income, etc.)
Second, it neglects basic statistical evidence. Of course, in good times or bad,
a certain proportion of unemployed workers are teenagers, married women, etc.
The figures show, however, that the 1958 recession hit particularly hard at mar­
ried men with families, and that although there has been some improvement in
this regard, the proportion of the unemployed represented by married men with
families is higher today than it was 2 years ago. Moreover, the proportion of
women among the unemployed who have added responsibilities because they are
widowed or divorced, or because their husbands are absent, is higher today than
it was 2 years ago.
Finally, it seems to me that an argument of this sort completely misses the
point. Let us assume, for example, that there are a sizable number of families in
which the husband is unemployed but the wife has been able to continue her job,
or to find a new one. Is this the type of family situation which the United States
is planning to perpetuate? Is it desirable for auto workers, railroad men, or coal
miners to sit idle in the home while the family tries to get along on the w ife’s
earnings as a waitress, secretary, or sewing-machine operator?



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

525

Congress ean, if it wants, legislate national policy that married men should
have job priority ahead of single individuals, and that wives should not work as
long as husbands are available. However, let us hope that the American econ­
omy has not become so poverty stricken that jobs have to be allocated on the basis
of need. A far more effective guide to economic policy is the assumption under­
lying the Employment Act of 1946; namely, that the American economy is suffi­
ciently vigorous that it can provide jobs for all those who are willing, able, and
seeking to work. This must continue to be the test of the American economic
system, not the number of destitute families.
2. A large proportion of the unemployed have been out of tvorjc for extended
periods of time, and therefore face critical hardship problems far greater than
anything that has occurred in the postwar period.

Long-term unemployment is becoming a more serious problem. Even during
the more prosperous years of 1956 and 1957, the number of workers idle for
longer periods of time was far higher than in earlier prosperous years.
The Census Bureau data classifies unemployed workers according to the length
of time that each individual has been without work. Those out of work for 15
weeks or longer are considered the long-term unemployed.
At the depth of the 1958 recession, close to 3 percent of the civilian labor force
was out of work for 15 weeks or longer. This was almost double the rates
reached in the 1954 and 1949 recessions.
In March 1959 the number of long-term unemployed (1,544,000) was 2% times
the comparable figure in March 1957 and larger even than in March 1958.
The following figures point up the increasing problem of the long-term un­
employed :
Month ^
March 1959_______ __ _ ________ ______ ____ - ______ _ __
March 1958_____ _____________ ____ _ _ _____ ____ _
March 1957
______ _ ______________ _____ ___

Total un­
employed (in
millions)
4.4
5.2
2.8

Percent unemployed
15 weeks
or more
35.4
27.8
23.0

27 weeks
or more
17.8
7.7
8.8

The rate of long-term unemployment is highest in durable goods, manufac­
tures, mining, and transportation. In terms of occupation, the group consists
largely of manual workers, particularly semiskilled (28 percent), and laborers
(18 percent). Relatively few of the long-term unemployed are professional,
managerial, clerical, or sales workers. Over 40 percent of the long-term
unemployed are married men supporting a family.
The persistence of this long-term joblessness creates very real problems for
the American economy and helps explain why today’s unemployment is still
a serious problem. Is this condition likely to improve in the near future?
With the continuing recovery in economic conditions, some improvement can
be expected. Yet, it is important to remember that such a change for the better
is likely to be limited by two factors : (1) A larger than normal increase in
the labor force is expected during the coming months reversing the trend of
the past 2 years, and (2) the sharp improvement in the economy’s productivity
which has been evident since last fall.
The increase in productivity has been in the making for some time as industry
has intensified its use of automation and other technological advances, The
effect of such improvements is quite startling in manufacturing where production
has already surpassed previous peaks but where employment is still 1 million
below March 1957 and 1.4 million below, March 1953.
Consequently, while prospects for the near future are not completely gloomy,
they do not seem to envisage a full employment economy. The projections of
the Joint Economic Committee staff, included in the committee report earlier this
year, also bear out this point of view. Even the seemingly optimistic fore­
casts by administration officials of 3 million unemployed by October quickly lose
their rosy glow when it is remembered that such a figure, seasonally adjusted,
would be equivalent to more than 3.8 million and about 5.4 to 5.5 percent of the
civilian labor force.
What types of policy questions flow from this analysis of the current unem­
ployment picture?



526

EM PLOYMENT, GROWTH, AND PRICE LEVELS

This committee is, I am sure, very familiar with the types of programs which
the AFLr-CIO has been supporting to help stimulate economic growth and re­
duce unemployment. These policies include first, measures to minimize the
hardship of unemployment by raising the level and duration of unemployment
insurance benefits paid to the unemployed. Here we feel that State action by
itself is not sufficient, but that the Federal Government must be willing to set
certain standards to which the States must adhere.
Second, we emphasize that the country must be willing to use the resources
of the Federal Government in behalf of needed programs in the fields of housing,
urban renewal, education, and community facilities. This does not mean a pro­
gram of spending by the Federal Government for the sake of spending. It does
mean that considerations of budget balancing should not stand in the way of
Federal programs that, of themselves, are necessary and desirable.
Third, there are certain specialized Government programs that could have a
more direct bearing on today’s unemployment problem. In particular, this is
true of the so-called area development bill to provide special programs to assist
those areas of the country where unemployment has been most heavily con­
centrated.
In conclusion, I would only like to raise three additional questions for this
committee to consider:
1. A re tve taking sufficient steps ot assist workers currently stranded in de­
pressed communities without sufficient job opportunities ? I have already men­
tioned the area redevelopment legislation which is designed to attack this prob­
lem. However, the number of these labor-surplus localities has increased and
the plight of their unemployed has become more serious during the years when
Congress has been considering this legislation with the result that the new law,
when and if it is enacted, may not be sufficient to do the job.
Do we need, for example, to consider a broader program of industrial training
for these unemployed? It seems very clear that because of technological ad­
vances there are many workers in industries manufacturing durable goods, on
the railroads, and in the mines, who for many years to come probably cannot
be reemployed in the jobs for which they have been trained. The question arises
whether there is some way these workers can be trained for other jobs that
might develop in or near their communities. Have we given sufficient thought
to developing, if necessary with assistance from the Federal Government, the
proper program of training to help these workers obtain other jobs? I have no
precise blueprint for such a program, but this may well become a major issue in
the future for public and private policy.
2. Assuming no additional Government programs to meet the unemployment
problem , is the present course of events leading to a permanently higher level of
of unemployment , even in more prosperous periods? Each postwar recession
seems to have left the economy with a higher residue of unemployment. After
the 1949 recession, unemployment was as low or lower than 3 percent for many
months, even after the end of the Korean war. After the 1954 recession, un­
employment dropped but only to about 4 percent. Now, we seem to be facing
the danger that unemployment may not recede below the 5 percent level.
The implications of such a deterioration in economic conditions for the com­
petitive struggle with the Soviet Union are obvious.
3. Are we doing enough to get ready for the 1960’s when substantial changes
will be taking place in the labor forcef Population projections point very clearly
to the explosion scheduled to take place in the 1960’s. The number of young
people reaching the age of 18 will be rising 35 percent from the 1955-60 period
to 1960-65. Has sufficient attention been given ot the effects on the economy
of these youngsters reaching maturity? On the one hand, of course, the increas­
ing number of marriages, of new households and fam ilies would provide a stimu­
lating effect to consumer demand. On the other hand, the entrance of these
young people on the labor market is bound to add to unemployment difficulties.
Is there any way to measure these two forces and determine the net effect on
the economy? Perhaps this could become a fruitful source of inquiry for this
committee to pursue.
These are a few issues that we see as critical in the months and years ahead.
They should be kept in mind as the committee moves ahead in its investigations.
The C h a ir m a n . Your last point touches on a point Mr. Clague

previously mentioned.




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

527

I would like to ask a factual question. Do I understand that your
estimate is that for the first half of the 1960’s that instead o f the
labor force growing by approximately 750,000 a year, it wdll grow
somewhere at the rate of 1 million to 1.1 million per year?
Mr. C la g u e . That is our estimate, Mr. Chairman, yes. And by
the way, we estimate that for the 5-year period, 1950 to 1965, the
young people will total about 3 million or about 600,000 a year
entering the labor force. So they make up more than half of that
total increase.
The C h a ir m a n . Mr. Silbert, we appreciate very much your coming
from Cincinnati to testify. We know that this is an added chore
that you take on in your desire to perform a public service, and your
willingness to help. I want to express our gratitude for your coming.
We are glad to have you here.
Will you proceed, please ?
STATEMENT OF MYRON S. SILBERT, VICE PRESIDENT OF FED­
ERATED DEPARTMENT STORES, CINCINNATI, OHIO (ALSO
CHAIRMAN, COMMITTEE ON MANPOWER AND EMPLOYMENT
STATISTICS, BUSINESS RESEARCH ADVISORY COUNSEL TO U.S.
BUREAU OF LABOR STATISTICS)

Mr. S ilb e r t . Mr. Chairman and members of the committee: your
committee has asked me to discuss the quality of this system of meas­
urements of labor conditions and any questions that may be raised
concerning the interpretation of the statistics. You have asked me
also to appraise the degree to which the agencies have carried out im­
provements suggested m the past, particularly by the Subcommittee
on Economic Statistics of your committee, and to suggest what fur­
ther improvements should be contemplated to make these statistics
serve the purpose of public and private officials responsible for policy
decisions.
I shall attempt to submit these appraisals and to offer humbly
some suggestions for improvement.
The statistics on employment and unemployment are among the
most important in our Government. Unemployment is a matter of
solemn concern to all of us. It is important that we have adequate
facts on unemployment and employment also.
Quality of the several reports considered together: These reports
are a good set of reports. They are reasonably dependable. There
are further improvements that can be made, but what we have are
sound figures.
The hearings of your Subcommittee on Economic Statistics and the
special studies it requested, helped to improve these figures.
A key contribution was the study and recommendations presented
by the “Review of Concepts Subcommittee” late in 1955. This was
a subcommittee of the Interagency Committee on Labor Supply,
Employment, and Unemployment Statistics, established by the Office
of Statistical Standards, Bureau of the Budget. Several of their
recommendations were put into effect, but many still remain un­
accomplished. Some of these unfinished will need appropriation,
others could perhaps be carried out, with minor expense. An esti­
38563— 59 — pt. 3-------5




528

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

mate might be that about 40 to 50 percent of the previous recom­
mendations were carried out, after weighing the various proposals by
importance, and 50 to 60 percent are not yet adopted.
Suggestion: That your Subcommittee on Economic Statistics urge
the reconvening of that capable “ Review of Concepts Subcommittee”
and ask them to check these unfinished projects and to suggest an
order of priority for the ones they continue to recommend.
The C h a ir m a n . That is a very constructive suggestion. I will
see that it is called to the attention of the chairman of that sub­
committee.
Mr. S i lb e r t . Consistency of the several reports on unemployment
and employment: These several reports are developed from different
sources and by different methods. They should not be expected to
come up with the same figures. The fact that the figures from differ­
ent sources vary is no condemnation of them. However, there is
room for more analysis and explanation to help the public and private
user of these figures to go from one set to the other and make the
necessary reconcilation between the figures or to know why they
cannot be reconciled.
For example, the user of the figures on total unemployment from
the household survey and of the figures on insured unemployment
should be aided in understanding the difference between these figures.
Another example: The user of figures on total nonagricultural
employment based on the household survey of the labor force should
be helped to reconcile it with the nonagricultural establishment report
of employment that is based on reports from 180,000 establishments
and covers a sample of 25 million jobs.
There should be aid in reconciling these figures by showing how
we can start with total nonagricultural employment and deduct
domestic and self-employed to get a figure for those working in non­
agricultural establishments. These are based on the household sur­
vey. Then in comparing this adjusted nonagricultural employment
figure with the parallel figure from the establishment or company
reports, further allowance should be made for those holding double
jobs in the establishment reports. The chairman himself went
through such a mental calculation this morning. The Congressman
asked the question about double employment.
The suggestion here is that we don’t do enough publicly of spelling
out these differences in an attempt to reconcile the gaps.
Suggestion: In the analyses to be prepared by the labor depart­
ment under their new assignment, substantial emphasis should be
put on comparing the several sets of figures and attempting to recon­
cile the differences. The explanation should use whatever other esti­
mates are available to account for the gaps between the separate sets
of figures. This effort to assist the user in creating a bridge from
one set of figures to the other will result in more confidence in both
sets of figures even if some gaps still remain.
Now let us look at some of the individual parts of this system of
reports.
Quality of “ The Monthly Report on the Labor Force”—based on
35,000 household interviews: I am impressed with the basic sound­
ness of the sample used in these reports collected by the Census
Bureau.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

529

I have confidence in the statement of the officials in charge of this
sample that there is a two out of three chance that the figure on total
unemployment—in March 1959 it was 4,362,000—is correct within
100.000, and there is a 20 to 1 chance that the figure is correct within

200.000.
This degree of approximation, I believe, is close enough for deter­
mination of policy on unemployment.
However, the more detailed questions on figures concerning unem­
ployment, such as distribution by age, sex, have a larger percentage
of error, but still assuming we understand they are to the subquestions,
they are still accurate enough for dependable use.
As a result of the Review of Concept Committee’s report, several
recommendations were carried out to improve the definition of who
should be listed as employed and unemployed. I believe the defini­
tions now are good ones. The chairman commented on the improve­
ment in that definition.
Suggestion: W e should put more emphasis on finding out about
who are the unemployed, who are the employed, and who are in the
labor force. Both previous speakers have made suggestions in that
same field.
There has been much good material already developed on charac­
teristics of the unemployed.
First, there should be more effort made at analyzing the data we
already have to bring out more where the most pressing problems are
in the unemployment picture.
Secondly, there is still some further information we should collect,
perhaps in the form of additional questions in the household survey
of the labor force.
W e should know more about the people who enter the labor force
and drop out— we should know more about their reasons.
W e should know more about the school graduates and how they
make their first attempts to enter labor force. It would help us aid
them in building their careers.
W e should know more about the varying type of hardship cases
among the unemployed as a guide to appropriate public action. As
Mr. Henle said, these figures are not for one side or another, but they
are to get facts.
W e should know more about the heavier impact of unemployment
on minority groups so that we can understand how to aid them in
securing equal opportunity.
The C h a ir m a n . That is a very interesting point. I have made a
number of visits to the unemployment and employment offices in Illi­
nois. I found that the unemployment amongst Negroes is many,
many times the unemployment amongst the whites. Even in the
down-State cities, such as Peoria, where the percentage of Negroes is
not great, nevertheless the incidence of unemployment amongst the
Negroes is much* higher than amongst whites.
Do you find the same thing in Cincinnati, Mr. Silbert?
Mr. S i l b e r t . Yes, sir, Mr. Chairman. W e have a single figure in
the surveys to show that the unemployment in the minority group is, I
would say, roughly double that of other groups. But we need more
information about it than just the single figure. W e have to know
how much is due to seniority and how much is due to the unskilled
nature of their jobs, and so forth.



530

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

The C h a ir m a n . Yes, I understand.
Mr. S i l b e r t . Sometimes this is a problem, I think, about which we
only whisper. It demands our more serious attention.
The C h a ir m a n . I quite agree. After inspecting the offices and
standing in line with the applicants for benefits, I find the predomi­
nance of Negroes is overwhelming.
Mr. S i l b e r t . I have had additional opportunity to see this problem
because I have served as an alternate on the President’s Committee on
Government Contracts, which deals with the employment of minority
groups on Government contracts. There, in the problems that came
up, the problems of layoffs and rehiring, is an added obstacle and
hurdle to the increasing of employment of minority groups and the
increasing of upgrading of them.
The C h a ir m a n . Of course, as you say, part of this is due to the
fact that the Negroes in the North are, in large part, recent migrants
and, hence, have not been able to obtain strong seniority rights; it is
also due to the fact that they tend to congregate, a much larger per­
centage of them, in the ranks of unskilled labor than semiskilled or
skilled. These are all factors, aside from discrimination on the
ground of race.
Mr. S i lb e r t . And it may raise the point in this retraining or train­
ing of unemployed. It may help us direct more fruitful efforts at this
group.
Quality of the reports on employment in nonagricultural establish­
ments colected by the U.S. Bureau of Labor Statistics in cooperation
with State agencies: These reports are also good reports. They cover
about 25 million jobs and are the source of important employment
information by State, by metropolitan areas, and by broad groups of
employment.
These reports are colected promptly. Mr. Clague, in answer to a
question, described how the States and the Federal Goverment work
on getting those together.
Suggestions on establishment reports: 1. This sample is a large
one but there should be applied more of the methods of probability
sampling, especially in the areas outside of manufacturing employ­
ment. In service employment and in trade employment, we would
increase the accuracy of this large reporting system by full utiliza­
tion of the scientific methods in sampling. Mr. Clague referred
to the fact that more work is being done on the size of companies. I
still would urge that in the restudy of this sample, it be put right
up against the more scientific methods of sampling that we use in the
35,000 household survey.
2.
These establishment reports now furnish weekly pay-and-hoursworked information only in manufacturing and a few other isolated
groups. It would be very helpful for the economy, if the weekly payand-hours,worked information could be expanded to all reporting
groups in the establishment reports. This would enable us to know
much about current payrolls by State and by metropolitan area. In
this weekly pay-and-hours information, we now have only half a loaf.
Half a loaf is better than none, but why should we have only half
a loaf in an important area? I am afraid the other half may cost
some money.




EMPLOYMENT,

GHOWTH, AND PRICE LEVELS

531

Quality of the seasonal adjustment methods. That has been men­
tioned by both of the other papers.
There have been developed seasonal adjustment factors which have
been applied to the raw figures on employment and unemployment.
The process of developing these seasonal adjustment factors is not
entirely a mechanical one. Some judgments are necessary in adjust­
ing for various types of trends.
Therefore, we may have some differences of opinion about the sea­
sonal adjustments now used in the published data on unemployment
rates, and on total establishment employment. My estimate is that
these seasonal factors are not far from the right answer. I would
look forward, however, to further analytical effort to be put on these
seasonal factors so that they may be a still more effective measure of
the month-by-month changes.
In these remarks I have directed by comments primarily to the
measures rather than to the economic interpretation of them.
I wish to thank the committee for the opportunity to take part in this
discussion.
The C h a ir m a n . Thank you very much.
Mr. Coffin, have you any questions of any of the members of the
panel?
Representative C o f f i n . I wondered if Commissioner Clague could
tell us whether or not in arriving at his statement of the young people
who will enter the labor force under age 20, whether he made any as­
sumptions about any changes in educational coverage.
Does this mean that there will be more people continuing with edu­
cation beyond high school ? What were your assumptions ?
Mr. C la g u e . Yes, Mr. Coffin, we did make allowance for that. There
has been a gradual decline over the years, a slow decline, in the pro­
portion of youngsters under 20 in the labor force. That is due, as
you indicate, to the increasing education.
We have assumed a continuing decline at what we estimate to be the
past trend rate. This could be altered, of course, by more scholar­
ships, and by a larger proportion going to college. But we have as­
sumed that this trend will continue up into the 1960’s.
Representative C o f f i n . T o be specific, in your figuring is the impact
of the National Defense Education Act enough to change the decline
rate ?
Mr. C la g u e . D o you mean to speed it up ?
Representative C o f f i n . T o speed up the decline; yes.
Mr. C la g u e . I think I would like to call on Mr. Goldstein for that.
He is the man who gets these figures up.
Mr. G o ld s t e in . In these estimates, we have taken into account the
expansion in the proportion of the young people going to college,
which has been projected by the U.S. Office of Education, but have not
yet taken into account any specific effect of the National Defense
Education Act, because it was a little too early to do so.
Representative C o f f i n . Thank you.
Occasionally I will get a letter from a constituent who complains
about unemployment compensation, saying that workers sometimes
malinger and just deliberately stay out of the job hunting field. Is
there data on that ? Do we have information ? I know this would be
a difficult and somewhat subjective inquiry, but I wondered if there



532

EM PLOYM ENT, GEOW TH, AND PRICE LEVELS

was information as to the extent to which serious diligent effort is
made.
Mr. L e v i n e . Mr. Congressman, the procedure that applies in the
filing of a claim for benefits requires in the first instance that the
applicant register for a job at a public employment office, and that in
the course of filing the claim he signs a statement knowing full well
that this can involve a matter of fraud and court actions, as to the
conditions involving the separation from the job.
And, further, that he is available and would accept suitable
employment.
The claims examiner inquires into the conditions surrounding the
loss of employment and attempts to determine from that whether he is
eligible, although the benefit rights are determined from his earnings
and employment experience, as specified under the State law.
He is required to report back at weekly intervals. He is also re­
quired to accept a referral to a job from a public employment office.
In a good many States, there are requirements that he evidence efforts
to seek employment in a variety of other ways in addition to the regis­
tration at the public employment office.
In the studies which we have made of these claimants we find that
there is very little evidence that they are not truly unemployed and
eager to accept employment. The benefit amount and the duration of
benefits are not sufficiently attractive as an alternative to full-time
employment and earnings. The typical worker, the one who has the
normal attachment to the work force, I think will stand up well with
any of our citizens in terms of the probity and honesty with which
they approach this.
Representative C o f f i n . Thank you. I think that is an excellent
answer.
Mr. Clague, do you have any judgment on what— this is perhaps an
unfair question to ask you— might happen under this circumstance:
Assuming conditions of reasonable growth in this country, is there any
percentage figure of unemployed that you think would be a practically
irreducible minimum ?
The C h a ir m a n . I would warn the witness that he answers this at
his own peril.
Mr. C l a g u e . In the early postwar period we did seem to get down
around 3 percent, and I would think in a full blooming economy under
peacetime conditions it is pretty hard to get less than that.
The C h a i r m a n . Less than what ?
Mr. C l a g u e . Three percent.
The C h a i r m a n . That does not include the full-time equivalent of
involuntary part-time unemployment ?
Mr. C l a g u e . That is correct.
The C h a i r m a n . There would probably be another 1 percent there,
or close to another 1 percent.
Mr. C l a g u e . Yes.
Representative C o f f i n . But in terms of figures we have now, it
would be about 3 percent ?
Mr. C l a g u e . W ell, what I really wanted to say was that under our
best experiences, it does look as though we can get down to that low
level, under peacetime conditions. W e are in a dynamic economy, as
I tried to bring out in my paper, and there are a lot of changes occur-




EMPLOYMENT, GROW TH, AND PRICE LEVELS

533

ring in business firms. Many firms go bankrupt from time to time.
There are new distressed areas appearing. Not all the distressed areas
of 1958 have been distressed areas before. And some of the areas that
used to be considered distressed areas have recovered. In the kind of
economy we have, I would say 3 percent was certainly a very excellent
performance.
The key point I would like to make is that as long as the unemploy­
ment duration is such that the bulk of the unemployed are covered by
unemployment insurance, we are doing all right. Maybe the system is
not as good as it should be. Maybe there are improvements that could
be made. But when we are tiding over our people, tiding over the
great bulk of the unemployed by means of unemployment insurance,
we are achieving exactly what we intended by putting that system into
effect. When long-term unemployment begins to appear, when there
are people out more than 26 weeks, or up to 30 weeks or 40 weeks, then
we are in a situation in which the unemployment really ought to be
considered closely. So it is not the rate, I think, that is so important,
as the appearance of long duration. That is the factor on which I think
our attention should be concentrated.
Representative C o f f i n . D o I understand that you do ngt have fig­
ures on exhaustion ?

Mr. L e v i n e . Yes; we do have figures on exhaustion.
The C h a i r m a n . Y o u do not have figures on the reemployment of
those who have exhausted their claims to benefits; is that true ?
Mr. L e v i n e . Except under special studies, Mr. Chairman. W e have
made special studies in a number of States, and have found— and this
depends on the level of economic activity, making these studies in the
past 5 years and under different conditions— as many as 40 percent of
the exhaustees continuing unemployed, although many became dis­
couraged and withdraw from the labor market as well. But when I
say continued unemployment, actively in the labor force and seeking
employment.
W ith respect to exhaustions, Mr. Congresman, last month we had
193,000 exhaustions of unemployment benefits. In the last calendar
year, 1958, there were 2.6 million exhaustions. The rate of exhaustions
has been much higher in this 1957-58 recession. Even under the pro­
gram for temporary extension of unemployment benefits, we have had
a considerable rate of exhaustion.
So it further attests to that long duration unemployment that was
evidenced on the charts.
Mr. H e n l e . Could I break in here ? I think the Congressman might
have misinterpreted a point I made. It was not my point that we do
not have exhaustion figures, but that the Labor Department does not
publish them sufficiently up to date. In the weekly report, for
example, they should carry the current exhaustion figure for the eight
reporting States and this is what they do not do, as I understand, at
the present time.
Representative W i d n a l l . Mr. Clague, if you were to take the March
1959 figures, then, with this 3 percent factor of what you might call
transitional employment, for some reason or another always being
on the move in and out of the labor force, your problem group, then,*
amounts to about 2.3 million people?




534

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

Mr. C la g u e . Yes, Mr. Congressman. I am even willing to put my
neck out a little further. Three percent is pretty ideal. We may
come a little nearer four. I would say around 2y2 to 3 million is about
what I would assume is as much as we will come down to under normal
peacetime conditions.
Again, as I said a little earlier, this assumes that there is real turn­
over, and that very few of the unemployed are out more than 26 weeks.
Eepresentative W i d n a l l . Based on your statement, at the moment,
using March 1959 figures, the real problem group would be 1.3 million
to 1.8 million?
Mr. C la g u e . Well, those out over 15 weeks, I believe, are about a
million and a half. Those are the ones I showed on my chart. Those
out for 27 weeks or more, that is, more than 26 weeks, numbered about
half of that, or about 800,000. So our real problem is the million
and a half out over 15 weeks, or the 800,000 that are out more than
26 weeks.
Representative W i d n a l l . D o we have any comparison in numbers,
then, for the three 11-month periods shown in Mr. Henle’s statement?
He says seasonally adjusted rate of unemployment, March 1959, after
11 months, 5.8; in July 1958, after 11 months, 4; and September 1950,
11 months after the 1949 recession, 4.6.
About what would that amount to by way of comparison in millions
of people? The labor force changed.
Mr. C la g u e . That is right. And he is taking out the labor force
change by using those percentages.
Representative W i d n a l l . Would it be possible to work that out
and furnish it for the record, what the figure would be ?
Mr. C la g u e . What the amounts would be ?
Representative W i d n a l l . I f you were to take not an irreducible
minimum but something that might be expected as a minimum in a
healthy employment economy, and then take those who are the problem
people, because they have run out of unemployment benefits and are
actually the ones we have the deep concern for, the real problem with,
could we get that in millions by way of comparison?
Mr. C la g u e . Yes, you certainly can. I mentioned that.
Representative W i d n a l l . I think it would be a little more under­
standable, at least to me, rather than 4.6 as against 5.8. It might
be helpful.
(The material referred to follows:)

,

Total and long-term unemployment 11 months after trough in 3 postwar recessions

Total unernployment
Month

Actual

Seasonally
adjusted

Persons
unem­
ployed
15 weeks
or more

Number R ate1 Number Rate
March 1959 ___ _____________________________ __________
July 1955_________________________ ______
September 1950 _________________________ __________ ____
1 Percent of civilian labor force.
Source: U.S. Bureau of the Census.




Thousand
Thousand
Thousand
4,362 6.4
1, 544
4,028 5.8
2,659 4.1
2,781 4.1
586
2,812 4.5
2,539 4.0
571

EM PLOYMENT, GROWTH, AND PRICE LEVELS

535

Representative W i d n a l l . Are people on strike included in the
unemployment figures?
Mr. L e v in e . No, sir.
Mr. P e a r l . Not unless looking for other work.
Representative W i d n a l l . When a group such as the Kohler em­
ployees are out for many, many months, do they become unemployed
figures ?
Mr. L e v in e . When they file claims for benefits or otherwise evidence
that they are looking for work. There are two States that provide
that after a certain period of time following a strike the unemploy­
ment may be considered no longer attributable to the strike, and in
that instance, they may file a claim for benefits.
In all but two States there can be no filing of claims so long as strikes
are on. However, when the individual seeks employment and indi­
cates that he is removing himself from that establishment, that he is
not any longer involved with that establishment, then he may get a job
and file a claim in terms of this new employment.
Representative W i d n a l l . So if you had, conceivably, a strike with
10,000 people going out against X company, those 10,000 people, or
any part of the 10,000, would not become figures in the unemployment
survey until they, themselves, went to look for a job and said they
were through as far as that particular job was concerned ?
Mr. L e v in e . Yes, sir; that is right.
Representative W i d n a l l . I have another question for Mr. Henle.
In your statement, you say the rate of long-term unemployment is
highest in durable goods, manufactures, mining, and transportation.
In the mining and transportation field we are going through quite
a revolution at the present time, so that the factors of unemployment
there are completely different than they are in some of the other fields
of our economy. In minig, I know we have zinc mines in my own dis­
trict that are closed down for the first time in 62 years. We have 500
unemployed in one place. There is no conceivable employment for
them in that field within the district, within many miles of their home,
in the type of industry that they have been employed in, unless we solve
the question of the price of zinc in some way here in the Congress.
There, of course, I do not think that the bill introduced by Senator
Douglas would be helpful in that particular situation, because the area
that they are involved in, the overall area, wouldn’t have the percentage
that would qualify for depressed area relief.
W e have a number of places like that in the United States where
people are unemployed and where some other type of solution certainly
has to be found.

Mr. H e n l e . I want to say, Congressman, that I think you have
raised a very critical problem. I think in each of these industries,
mining and transportation, and in durable goods, you can find special
situations of this sort. In coal mining, of course, a lot of mines have
given out. You have vastly improved technical equipment in mining.
The same thing is true on the railroads and in many of the manufac­
turing industries.
Your zinc plant may be one that has been affected in terms of foreign
markets and imports. There are such situations in various types of
manufacturing industries as well. That is why I raised the question
about, some of these critical situations.



536

em ploym ent,

grow th

,

and

p r ic e

levels

While we are very hopeful that Congress will act on the Douglas
bill, and wTe think it is a real start at meeting the problem in these
areas where, after all, unemployment is the most critical, nevertheless
perhaps we may have to talk about some other approach to training
those people who are not going to be able to get jobs in places and
in occupations for which they have previously had training.
Eepresentative C o f f i n . Would the gentleman yield for just one
question on this point ?
Representative W i d n a l l . Yes.
Representative C o f f i n . I wonder if it would be helpful or if it is
possible, when we get figures on the exhaustions, if you could identfy
where those longtime unemployed people are. I know the States re­
port that information, but could you break it down in terms of people
who are long-term unemployed who are in surplus labor areas or dis­
tressed areas and those who are in longtime unemployed because
of particular industries ?
In other words, this might pinpoint the acute problem, and pin­
point the extent to which depressed areas legislation would help. It
would show the balance of the extreme cases that would not be covered
and might indicate the need for action in those areas.
Mr. L e v in e . Mr. Coffin, with respect to the unemployment in the
so-called distressed areas or labor surplus areas, there the unemploy­
ment is so chronic and of such long duration, that exhaustion has
long since taken place, and a great many of the unemployed there
have no rights to unemployment benefits because they have had no
intervening employment following the exhaustion of benefits.
We included them in the total unemployment estimates, and we
know what we have in the insured.
Now, with respect to the exhaustions, you are putting your finger
on a phase of the problem about which we think we need to know a
great deal more. We are currently looking into the possibility, even
though it may mean some additional burden on the administrative
agences in the States, and they don’t relish that sort of reporting bur­
den—and it does involve some costs—of getting the characteristics of
the exhaustees, in terms of occupation and industry, sex, age—those
five or six basic characteristics that would give us a better under­
standing of what the composition of that exhautee group is.
Mr. C la g u e . May I add a word on that, Mr. Congressman ?
In my table 7, which you will find at the back of my statement,
I do have these 1% million long-term, 15 wTeeks or more, people clas­
sified by major industry groups. The trouble is that the Census fig­
ures, of course, are national; and as you know, from hearing us talk
about the sample, it is so small that ’we cannot put it down State by
State or in smaller areas.
Mr. Levine’s figures, which will be most germane to this, will be
his exhaustion figures, because those will indicate the duration of
those who have used up their unemployment insurance. But you
can see that the two sets of figures don’t fit exactly; so we have no
wav, really, or reconciling these two, since the system of unemploy­
ment insurance loses track of workers when they have exhausted their
benefit rights.
Mr. W i d n a l l . T o come back to transportation again , certainly,
as you can see, i f the railroads are g o in g to lose m ore and m ore pas­




EM PLOYMENT,

GROWTH, AND PRICE LEVELS

537

senger service we will have more and more railroad people unem­
ployed who cannot get railroad employment.
It will be spotty unemployment, which will not have a major impact
in one particular city because these people live all over.
There again we have part of the evolution going on within the
United States within our economy. That is a hard type of unemploy­
ment to figure out an answer for.
Again, opportunities for retraining would seem to be best, although
I note that a great many of the people who become unemployed that
way are in an age group which is very hard to retrain and take care
of them.
Mr. H e n l e . That is certainly true on the railroad.
Representative W i d n a l l . I know of a man in my area who has an
icemaking business. He can’t get anybody to go to work there be­
cause they think there is no future. He has employment oppor­
tunities and he pays a pretty good wage.
Mr. H e n l e . With regard to the railroads, our railroad union peo­
ple, of course, feel that the railroad managements have, in a fairly
arbitrary fashion, cut back pretty sharply on their maintenance
crews. This is adding to the problems on the railroad. Of course,
the management of the railroads feel they have problems, too. But
our people feel that they have taken it out far too sharply on their
work force and on their maintenance crews than they had to during
the 1958 recession.
Representative W i d n a l l . I think that is part of the reason that
they lost part of their passenger traffic, the obvious lack of mainfenance on some of their equipment.
Mr.

H e n le .

That is right.

Chairman D o u g la s . Mr. Coffin ?
Representative C o f f i n . I was wondering if Mr. Henle would com­
ment on this question: Do you imply in your statement to think that
we may need a different definition of the surplus labor area ?
Mr. H e n l e . N o ; I think the present definitions are quite adequate.
What I simply meant to convey is that consideration of the Douglas
bill has actually proceeded in something like three or four different
sessions of Congress, and during this process the problem has become
far more serious than it was when the legislation was first initiated.
The approach to the problem is quite useful, necessary, and desir­
able. But because the problem has become so much more critical, we
have been giving all of our attention to getting this legislation
through and when we get it through we have to turn our attention to
see whether it is really going to do the job, or is there something else.
The C h a ir m a n . It is certainly true that more emphasis should be
put on retraining. It is quite possible that a certain amount of
financed mobility should be encouraged.
I remember reading one passage in Adam Smith’s “Wealth of
Nations,” where he stated that man of all baggage is the most diffi­
cult to transport.
Mr. H e n l e . Mr. Chairman, I just want to say one further thing.
I particularly welcome the number of suggestions that Mr. Silbert
made in his testimony. Some of these are the types of things that
we have put stress on in the past, and for lack of space and time I




538

EM PLOYMENT, GROWTH, AND PRICE LEVELS

left out of my testimony. I think that all of them deserve serious
consideration.
The C h a i r m a n . I want to say that I think the constructive attitude
shown by Mr. Silbert and by you will be very helpful in this field.
Representative W i d n a l l . I believe the witnesses have been very
helprul this morning.
The C h a i r m a n . I want to thank them all. I think the intellectual
level has been high, and the honesty and integrity in the answers
have been very impressive. We want to thank you all.
Hearings will be continued next Monday, not in this room, but in
room 6226 of the New Senate Office Building, when Mr. Clarence
Long will testify on the “ Historical Changes of the Labor Force” ;
Mr. Lebergott will testify on “Long-Term Factors in Labor Mobility
and Unemployment.”
I thank you once again for coming.
(Whereupon, at 12:10 p.m., the Joint Committee recessed, to re­
convene at 10 a.m., Monday, April 27,1959.)




EMPLOYMENT, GROWTH, AND PRICE LEVELS

MONDAY, APRIL 27, 1959
C ongress of t h e U n it e d S t a t e s ,
J o in t E c o n o m ic C o m m it t e e ,

Washington^ D.O,
The committee met at 10 a.m., pursuant to recess, in room 6226, New
Senate Office Building, Hon. Paul H. Douglas (chairman) presiding.
Present: Senators Douglas, Sparkman, and Bush; Representative
Bolling.
Representative B o l l i n g . The committee will be in order.
The chairman has been slightly delayed and has asked that we get
underway.
Our first witness today is Mr. Clarence D. Long, professor of eco­
nomics at Johns Hopkins University.
Mr. Long, you may proceed if you wish.
STATEMENT OF CLARENCE D. LONG, PROFESSOR OF ECONOMICS,
THE JOHNS HOPKINS UNIVERSITY
Professor L o n g . Fluctuation is the normal characteristic of un­
employment. It has ranged between 1 and 25 percent of the labor
force during the past quarter century and between 2 and 8 percent
during the past 3 years. In addition, wide variations have occurred
in the kind of people who are out of work— classified by age, sex,
occupation, education, industry location, and other characteristics.
This turbulence may derive from two main sources: The first is the
demand for labor. Unemployment may increase because employ­
ment decreases, as firms go bankrupt, departments are shut down,
occupations are displaced by machines, industries lose their markets,
or whole towns and regions find themselves bypassed in the march of
technology.
The other potential source of change is the supply of labor. Un­
employment may change with the number and kind of people who are
willing and able to work— the labor force.
In the United States the labor force is currently defined as the sum
of all persons reported by the census to be employed or unemployed
during a certain specified week. The “employed” category covers
all persons 14 and older who have jobs or businesses for pay or profit,
including employers and the self-employed, unpaid family workers
in a store or on a farm who help produce a salable product or service,
and employees of nonprofit enterprises and Government agencies.
The unemployed category includes persons 14 and older who have
no job or business of the above-mentioned sort and are seeking such
employment during the survey week.




539

540

EMPLOYMENT,

GROWTH, AND PRICE LEVELS

The cutoff of 14 years instituted after the 1930 census revealed very
few persons under 14 in the labor force. I suspect there may now be
quite a substantial number under 14 who are actually working for
money, usually at part-time jobs, but are not counted as being in the
labor force because of their youth.
The Joint Economic Committee has asked me to discuss the way
the labor force has behaved under changing conditions, including
recession and depresssion, war and peace, economic expansion and
growth. It has also asked me to suggest improvements in the present
measures of unemployment and labor force. I turn first to labor
force behavior.

As the economy contracts and men and women lose their jobs, do
many of them retire from the labor force, thus reducing the unem­
ployment problems? Or is unemployment made worse by the addi­
tion of desperation work seekers from the ranks of dependents of
unemployed family heads ?
As the demand for labor recovers, does the labor force increase so
that jobs must be found not only for the disemployed but also for the
new labor force additions, thus compounding the difficulties of attain­
ing full employment ?

What, too, can we say of the labor force in the long-run growth and
expansion ? As automated industry produces more goods with fewer
workers, will the higher real incomes enable families to support
themselves with fewer people working, thus retiring many of the
workers whose labor has been saved ? Or will the labor force increase
even faster than population, making it necessary to create new de­
mands for workers and products in order to forestall technological
unemployment ?
These are obviously large questions which cannot be answered fully
in this brief discussion. Some of them have been debated for cen­
turies. A couple of decades ago Senator Douglas did pioneering
work on them in his great treatise on the “Theory of Wages.” 1 I,
myself, have devoted much of the last dozen years to a study of labor
force behavior for periods ranging up to a hundred years in five
countries—as reflected in the data of decennial censuses, of monthly
sample surveys of households, and of administrative records. I shall
summarize that behavior very briefly.
First, the labor force in severe depressions:

The overwhelming weight of statistical materials here and abroad
suggests that more persons have been forced out of the labor force by
the difficulty of finding jobs than have been forced into it by desper­
ate family circumstances created by the unemployment of family
heads.
I have a number of tables and charts, which I will submit for the
record. These tables and charts are all taken from my recent book
on “The Labor Force Under Changing Income and Employment.” 2

The tendency of labor force participation to decline in time of great
unemployment has extended also to rural areas, urban areas, large
cities, and the 48 States in 1940, compared to 1930 and 1950 which
were high employment dates—relatively so, anyway. It has not been
1 Paul H. Douglas, “The Theory of Wages,” Maemillan, 1934, ch. XI.
2 Clarence D. Long, “The Labor Force Under Changing Income and Employment”
(National Bureau of Economic Research, Princcton University Press, 1958).




EMPLOYMENT, GROWTH, AND PRICE LEVELS

541

confined to the overall labor force of both sexes but has characterized
most male and female age groups. There was no consistent tendency
for any age-sex group to have higher labor-force participation rates
in depression than in prosperity.
Second, the labor force in recessions and booms, including wartime
variations:
Large wartime fluctuations in labor force participation have oc­
curred since 1940 when the monthly record begins, creating a popular
impression that the labor force is very elastic with respect to peace­
time booms and recessions. I shall say something first about these
wartime changes.
In the 5 years of World War II up to April 1945, the American
labor force, excluding population growth, rose 8.5 millions, a rise of
8.2 percent of the population 14 and older, compared with 6.8 in
Canada and 4.7 percent in Great Britain.
Germany made the poorest record for wartime additions. Its labor
force lost native Germans, even if war deaths are not deducted from
labor force; if foreigners are counted in its labor force, the expansion
was still much less than that in the United States (table 3).
Most additions to the wartime labor force came when the enemy
was hitting hardest. In Britain, 6 in 10 of the labor force additions
were made before the U.S.S.R. entered the war; in this country, 2 in 3
of the additions came during the 2 years up to the Italian surrender
in mid-1943.
Aside from the increase due to population growth, the great bulk
of the war’s additions were temporary. The inflows to the labor
force in the various countries during World War II were dominated
by the military draft (chart 1). Until the Armed Forces were en­
larged, the labor force expanded negligibly. With the demobiliza­
tion of nine-tenths of the peak armed strength, the U.S. labor force
shrank eight-tenths of its excess over prewar (disregarding the pop­
ulation growth). In America the postwar labor force participation
did not go all the way back to its 1940 level, but that level had been
somewhat depressed, probably by the widespread unemployment.
In the Korean conflict, the labor force rose as the Armed Forces
expanded. However, its ratio to armed force recruitments was much
less than half that in 1941-43. And with the approaching end of the
Korean conflict the labor force proportion returned to near peacetime
proportions.
In none of the countries was direct compulsion a major factor dur­
ing wartime. The United States never required civilians to work.
Germany had universal conscription on paper but did not thoroughly
enforce it until after the Allied landing, when it was too late to use
the extra labor effectively. Half of Britain’s additions were made
before the National Service Act. Even after that, its policy was still
persuasion.
The wartime movements to the labor force may have been influenced
by four factors: The reserves of potential workers among students,
housewives, and the elderly; the burdens of housework preventing
girls and women from taking gainful work; the liberality of govern­
ment to dependents of fighting men; and the strength of enemy blows.
The United States had had more females outside its peacetime labor
force than the British or Germans, so that more women could go into



542

EM PLOYM ENT, GROWTH, .AND PRICE LEVELS

industry in wartime despite a higher burden of child cares among
American women. It was relatively less openhanded than Germany
or Canada in caring for dependents of fighting men, though by no
means niggardly. And it avoided the German and Canadian prac­
tice of reducing dependents’ allowances if they worked for pay.
Since 1946, the whole range of peacetime fluctuation in labor force
participation between quarterly data, seasonably adjusted, has been
less than 2y2 percent of the working-age population. The labor force
data are based on interviews conducted each month with a represen­
tative sample of the Nation’s households and a good part of the range
of fluctuation—perhaps all of it—could have been the result of errors
in sampling or interviewing (table 4). What information we have
on gross changes in the labor force (the sum of people who enter or
leave in any month) suggests that they have occurred at a regular
rate and have not been responsive to changes in income and employ­
ment. Neither the total labor force nor the major age-sex groups be­
haved in the recessions of 1948-50, 1953-54, or 1957-58 in a manner
to confirm any theory that unemployment drives a net number of
persons into or out of the labor force.
Third, the labor force over long-run periods of rising income:
The overall proportion of the working-age population in the labor
force has been rather impressively stable from one high-employment
census year to another: The stability has held for the United States as
a whole since 1890 and possibly since 1820, for Great Britain since
1911 and possible since 1841; for Canada since 1911; for New Zealand
during 1896 to 1951; and in a lesser degree for Germany during 1895
to 1939 (chart 2). In the United States during 1890-1950 the maxi­
mum fluctuation between successive high-employment census dates
was less than the normal seasonal variation from January to July in
any given year.
The stability of labor force participation in the United States has
been due to the overall labor force and to the native whites, for both
the colored and foreign born have reduced their labor force participa­
tion by impressive amounts; in the case of Negroes nearly all of the
reduction has occurred since 1930 (chart 3). However, the foreign
born, the native-born children of the foreign born, and the colored—
have all tended in recent decades to aline their labor force behavior
with that of native whites. That is, they seem to be declining toward
native white levels. In the case of the Negroes they have not settled to
those levels yet.
The overall labor force participation rate has remained rather
stable in spite of marked changes in the participation of major age
and sex groups. In all five countries every male age group has mani­
fested some decline in its labor force participation and most female
groups some rise (chart 4). The net change in the overall labor force
has generally been only a small percentage of the gross change. This
fact raises the question whether there has been some systematic tend­
ency for the changes in these component labor force groups to offset
eacn other.
It is our hypothesis that the women may have pushed and pulled
young and elderly males from the labor force and at the same time
have been drawn into the labor force by the vacuum left by the
exodus of males for other reasons.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

543

The source of the influx of females could be explained by the grow­
ing redundancy of females in the home—I am not sure redundancy is
the most happy word—as the result of the developing technology for
the home, the reduction in the number of children to be cared for, and
the increasing survival of women who formerly died from childbirth
and other diseases. The demand for the influx could be explained by
the expansion of the clerical occupations, occurring along with the
great increase in educational attainment of the average female which
enabled her to take advantage of the new job opportunities and in
a sense to create them. The timing of the influx could be explained by
the reduction in the normal workweek in industry which made it
further possible for many females to enter the labor force and still
have time after work to carry out the household responsibilities which
most of them must always have. Men seem to have a way of letting
their women work, without being overly anxious to take over any
of their regular duties of cooking, dishwashing, et cetera.
The decline in labor force participation of older men—45 to 64 and
65 and older—has been less easy to explain. No evidence could be
found that the decline has been immediately owing to increases in
real income, to extensions of pensions and social security, to physical
deterioration, to changes in the pace of industry, or in the level of
employment or self-employment. I do not mean that pensions and
social security have not had an effect. They certainly have. But
they have not had a major effect, and the exodus of older people from
the labor force began before pensions became a factor. Even if a
tightening of company practices against older workers has been pri­
marily responsible—there was no lack of such discrimination a half
century ago—it is doubtful that firms could have afforded to part
with this supply of labor had there not been a new and better source
to take its place—namely women.
It would seem plausible that the women displaced the elderly men
from the labor force because they were better trained for many
clerical, personal, and professional jobs in relation to their wages.
Financial aid from working daughter or wife—even their ability to
support themselves without help—doubtless enabled many elderly
men who became sick or unemployed to advance the date of their
retirement.
The fact that the overall labor force participation remained stable
may have been from no lack of increase of desire for leisure, but
rather from this leisure having been taken in the form of reduction
in the normal working hours for the average labor force member.
Reductions in the full-time workweek occurred in every one of the
four nations for which standard hours data could be compiled, and
between every census date, except in Hitler Germany between 1933
and 1939. The average per decade reductions in hours were rather
remarkably uniform among the four nations; but there were wide
variations from one decade to the next. And there seemed to be no
dependable association between hours reductions and income increases
in the short run. Nevertheless, there was sufficient possibility of in­
come increases having played a longrun role, in the sense of inducing or
enabling people to work less, to justify an inquiry into why reductions
in effort should have taken place in hours instead of overall labor
force participation.
38563— 59— pt. 3------ 6




544

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

The decline in the labor force participation of the foreign born
and Negroes in the United States raises the question of why it did
not happen for the native whites or all the classes. Incomes were
rising more rapidly for these minority gr.oups than for the population
as a whole, and the decline in their labor force participation may
have represented an attempt to bring their working habits into line
with those of the native white as their incomes coverged toward those
of the native whites. If so, as the remaining barriers to equal oppor­
tunity in the economic life of the Nation break down, the Negro will
aspire in an increasing degree to live and work like any American of
the same income group.
Our conclusions concerning the relative stability of labor force
participation refer to the percentage of the working-age population.
The absolute size of the w^orking-age population and therefore of the
labor force will increase at a more rapid rate in the next decade than
in the last because large numbers of persons born in the late 1940’s
will come into working age.
Our conclusions concerning the nature and causes of unemployment
and labor force behavior can be no better than our knowledge of that
behavior. Do our measures provide us with an accurate and useful
inventory of our human resources? The inventory is vastly more
complete than it was in the 1930’s and is better now than it was a
decade ago, but it still has far to go.
Our complete censuses, taken once a decade with vast numbers of
sketchily trained enumerators, have undoubtedly overlooked signifi­
cant numbers of population, labor force, and unemployed. This does
not mean the statistics are useless—only that they are uneven in
quality and to be used with great care. The monthly surveys have
been conducted with better personnel and better direction, but the
sample of households, while larger than formerly, is too small to give
accurate information on the labor force and unemployment rates of
industries, occupations, States, and small localities, where the unem­
ployment problem is often the most acute. These surveys are still
probably subject to discrepancies based on changes in intensity in
conducting the interview. The estimates are especially weak for
marginal groups and for workers in detailed occupational and in­
dustry groups. We have no satisfactory information on unemploy­
ment and labor force by locality. The reports on unemployment
insurance are based on complete counts and are available each
week but they vary for administrative reasons, are not published with
industry and occupational detail, do not cover the labor force, and
exclude the unemployment of large and important groups.
Even the concept of unemployment has left much to be desired.
Partly unemployed people are counted by the Census if they were
employed. Some persons who want and need jobs are not counted in
the labor force—many of them older workers, women, and rural
people remote from job opportunities. Others counted in the labor
force include the unemployables, persons pretending to be in the
labor force in order to collect unemployment benefits, those desiring
only part-time or incidental employment, or some about to leave the
labor force. The concept does not reach people in inferior employ­
ments, or the disguised unemployed; in the sense that many people
who are holding jobs far below their capacities are counted as just




EMPLOYMENT, GROWTH, AND PRICE, LEVELS

545

as much employed as if they were holding jobs fully commensurate
with their abilities.
The present techniques are not adequate to deal with these prob­
lems, even if the enumerators were superlative at their tasks. What
can be done to improve our statistics on labor and unemployment?
First, we need more information on labor force and unemployment
by locality, occupation, and industry. This would require a bigger
sample of households.
Second, we need more reliable fieldwork. The quality of the inter­
viewers and their methods is far from satisfactory. I say that, how­
ever, with perfect understanding of the difficulty the Census has in
conducting these interviews with the amounts of money at its dis­
posal. Improvements in this direction will require more money and
more research into interviewing techniques.
Third, we need improvements in the criteria used to establish will­
ingness and abilty to work. These are now too vague.
Fourth, the Labor Department ought to compute and publish cur­
rent measures of equivalent full-time employment, unemployment,
and labor force in addition to the present statistics which only count
heads.
Fifth, we need information on labor force participation rates by
family and on number of families without any earners, because of un­
employment, disability, temporary illness, old age.
Finally, we need more information on reasons for unemployment:
Why people lose their jobs, why they can’t find other jobs, and what
they are willing to do to find new jobs.
This information should be particularly valuable in finding solu­
tions for the problems of hard-core, frictional, and disguised unem­
ployment, all of which persist at excessively high levels in this coun­
try, even during periods of boom and inflation—and in fact, are con­
tributing causes of inflation.
The C h a ir m a n . Dr. Long, we want to thank you for your very able
paper. I have long admired your detailed and comprehensive stud­
ies in this field. You have broken a lot of new ground and put us all
in your debt. You also have a great ability to summarize studies
going back over a period of many years, covering a great deal of ma­
terial in a few pages.
I was very pleased with one specific recommendation which you
made, namely, your fourth recommendation on page 10 of your paper,
that the “Labor Department ought to compute and publish current
measures of equivalent full-time employment, unemployment, and
labor force.” I take it by this you mean there should be some mea­
surement of the loss of time from involuntary part-time unemploy­
ment.
Professor L o n g . Yes, sir.
The C h a ir m a n . I have been advocating that for many years and
have been computing a private index on this subject which from time
to time I get inserted under my own responsibility in the Congres­
sional Record or into the hearings of this committee. But I have
never been able to get it recognized as legitimate; either by the Coun­
cil on Economic Advisers or by this committee. And so I am very glad
to have you bring your testimony here on this point, that you think it
should be added to our measurement.



546

Em p l o y m e n t ,

grow th,

and

p r ic e

levels

Professor L o n g . I have campaigned for a while on this myself,
Senator. I published an article in 1942 in which I pointed out the
importance of also measuring the time dimension of unemployment,
rather than merely counting heads.3
The C h a ir m a n . I am going to ask the secretary of this committee,
the executive director of this committee, to mark this testimony and
send it to all three members of the Council of Economic Advisers,
with the compliments of the chairman.
Senator B u s h . I am glad to join with our distinguished chairman,
Mr. Long, in complimenting you on this very fine paper. I suppose
that we would not be sitting in these special hearings this year if it
were not for the unemployment situation being such a troublesome
thing in our national life today. It is one of the most serious things,
perhaps the most serious thing, that we have on the domestic scene.
And therefore, the more information we have about it, the better able
we may be to deal with it. And you have made quite a contribution
this morning, I think.
You say that the labor force will increase at a more rapid rate
in the next decade than in the last because large numbers of per­
sons born in the late 1940’s will come of a working age. This would
suggest, therefore, that in the next decade this may become an ever
more serious problem than it is today if something is not done about
it and we do not take a realistic approach to it, appraise what is
really the cause of this, and then, try to do something about it.
Professor L o n g . That is right, sir.
Senator B u s h . I think that some of your suggestions are good;
that we should take a bigger sample of households, as you say, and
do other things that get more information together, because I sus­
pect that our distinguished chairman may be right that the figures
do not tell us the whole story. But the story is a very important
one.
You say, on page 10, “ Finally, we need more information on rea­
sons for unemployment: Why people lose their jobs, why they can’t
find other jobs, and what they are willing to do to find new jobs.”
- Now, do you feel that we have today any adequate body of in­
formation that tells us why people do lose their jobs? And I am
pointing this up a little bit toward this question, ultimately. There
has been much said in the press and in debate on this subject that
we are pricing ourselves out of the market, both at home and abroad.
That has become almost a cliche these days. Unfortunately, there
may be some truth in it. I do not know. I do not think this com­
mittee is convinced yet. We have not really studied the thing. But
that is one of the objectives of this year’s work, to find out among
other things, to find out about this.
That is question A, and I would like to know if you have any
comment to make on this question of why people are losing their
jobs; why, with the gross national product at a new high and gross
national income at new high levels, we have this very discouraging,
unhappy element of unemployment, which is plaguing our political
and economic and social life today.
PClarence D. Long, “ The Concept of Unemployment,” tlie Quarterly Journal of Eco­
nomics, November 1942, pp. 1-35.




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

547

Professor L o n g . Well, I think as in crime detection, w e are em ­
barrassed by too many clues rather than not enough. There are many
reasons why we have unemployment, and our existing knowledge
merely tells us the story in a most general way and therefore leaves
an enormous amount of room for any person to throw in his own pet
prejudice. There is very little that the data enable us to say quan­
titatively about what part of the unemployment problem is caused by
people pricing themselves out of the labor market, by insufficient
demand, by declining industries, by depressed areas, by people
being to old, by people who are unemployable—not in the sense
that they will not or cannot take a job, but in the sense that if the
going gets a little tough they don’t look very hard—by some people
perhaps prefering to draw unemployment insurance—and by the
extent to which some people work when they see possibilities for
good employment, and other times prefer to stay home and take care
of their families. These are all possibilities, and with our existing
state of knowledge we just do not know how to assign quantita­
tively-----Senator B u s h . But might I interrupt you there to ask you this?
You have given some very good reasons right now as to what causes
unemployment. And in connection with the forthcoming census,
would it not provide a body of useful information if we asked those
very questions that you have laid on the record here, to see if we cannot
develop some information, some really authoritative information, as
to what is causing this unemployment ? Do you think that is a prac­
tical idea?
Professor L o n g . S o far as the 1960 U.S. census is concerned, this
is too late. The whole schedule has been made out. So you will have
to look to 1970, Senator, for that. The census itself is burdened with
so many jobs to do, for all sorts of people, advertising agencies and
others, who want information and the average interviewer of the
census is probably not well qualified to administer a complicated ques­
tionnaire. So I do not think the decennial census is perhaps the place
to get this precise type of information. That can be better done
through sample surveys and in other ways.
Senator B u s h . Where do you think we should look for this infor­
mation? How do we go about getting it?
Professor L o n g . I would look to the sample surveys—and I would
also like to see much more done by the Department of Labor, through
the State unemployment insurance system. There, after all, is the
place where the closest contact is with the unemployed person. And
I have never been happy with the amount of information that comes
to us from the State unemployment insurance systems in its close
contact with the unemployed.
Senator B u s h . D o you think the Department of Labor could direct
questions to the various States that would produce this information ?
Professor L o n g . I certainly think it could.
Senator B u s h . I think that is a very practical suggestion, Mr. Chair­
man, that Mr. Long has made here.
Professor L o n g . I am not sure about the legality. These are State
systems, of course, and I think you would have to obtain State consent.^ But I have no doubt that could be done if it were felt to be
sufficiently important and enough emphasis were put on it.




548

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

Senator B u s h . I would think it very practical. The problem is a
State problem more than a Federal problem, because that is where
the unemployment exists, and I should think they would be very anx­
ious to have the information themselves.
And, Mr. Chairman, I suggest that this committee consider whether
it is not advisable for us to ask the Department of Labor to try to
acquire information through these State agencies all along the lines
suggested by our good friend Mr. Long.
The C h a ir m a n . I think that is a very good suggestion. As you
know, we have a subcommittee on statistics of this committee headed
by Congressman Bolling, and that subcommittee has already made
a number of suggestions to the Department of Labor, which have
already resulted in improvement in their figures, and I am sure that
Congressman Bolling and his subcommittee will take this into con­
sideration, and in the conferences which they hold from time to time
with the Department of Labor and with the Council of Economic
Advisers give this idea due consideration.
Representative B o l l i n g . Certainly, Mr. Chairman.
Senator B u s h . May I make just one more comment ?
I think my time will be up in just a minute. We do not have very
much time to deal with this problem. This problem could get an
awful lot worse very rapidly if we were not, you might say, riding on
top of a very formidable wave of prosperity, in the rest of this social
and economic structure of ours. That is the reason I think it important
that we develop some factual information promptly, so that we can
consider whether there is anything that the Congress should do about
it.
The C h a ir m a n . Senator Sparkman ?
Senator S p a r k m a n . Mr. Long, I appreciate the paper. I think
you have given us a great deal to think about, although I must confess
that there are a lot of things in it that I would have to study before I
knew much about them. But I do believe you have made some very
good suggestions, and I certainly join with the recommendation made
by the chairman and backed up by Senator Bush regarding the recom­
mendation of need for our getting more accurate statistics on which
we can rely.
There were a couple of points that I was particularly interested in.
You say neither the total labor force nor the major age-sex groups
behaved in the three different recessions you mentioned in a manner
to confirm any theory that unemployment drives a net number of per­
sons into or out of the labor force.
^What about periods of high employment? Does that draw addi­
tional people into the labor force ?
Professor L o n g . That has not been my experince so far. I might
take one exception, and that would be 1955, when there seemed to be
something of a bulge, which I have not yet been able to fully explain.
We have had a number of other instances of high peacetime em­
ployment which have not had that effect. So that, while you get
occasional instances, the effect is not systematic. You cannot rely on it.




EMPLOYMENT,

GROWTH, AND PRICE LEVELS

549

Senator S p a rk m a n . Well, now, again, you make the statement:
In the United States during 1890-1950—

a period of 60 years—

the maximum fluctuation between successively high-employment census dates was
less than the normal seasonal variation from January to July in any given year.

I am not sure that I know just what you mean by your reference to
high-employment census dates. In other words, are you measuring
from peak to peak, variations between peaks ?
Professor L o n g . I am simply taking all those censuses that oc­
curred between 1890 and 1950, except the 1940 census. All the others
were conducted at times of moderately high employment. So we leave
out only the 1940 census in that comparison.

Senator S p a r k m a n . Y ou are referring to the regular decennial
censuses, then ?

Professor L o n g . The regular decennial censuses, yes, sir, leaving out
1940, which was still a time of great depression.
Senator S p a r k m a n . I do not recall that you had much to say here
about automation and its influence on change of employment. Will it
have much of an effect, and a lasting effect ?
Professor L o n g . I would be very surprised if automation had any
dramatic effect on the level of unemployment.
Senator S p a rk m a n . Even temporarily ?
Professor L o n g . Even temporarily; for this reason: That the
periods during which you are apt to get your greatest automation are
naturally periods of great investment. During such periods large
sums of money are spent for machinery and new equipment. That in
itself, of course, gives a good deal of employment at the same time that
it is displacing labor. So that I would not expect the first impact of
automation to result in great quantities of technological unemploy­
ment.
For the long run the decision to automate is not a technological
decision, primarily. Technology is a necessary condition, but the
decision to automate is almost always an economic decision, based on
the relative cost of machinery and labor, the availabilities of different
kinds of labor. I f it is true that automation will require a great deal
of highly skilled labor—because the essence of automation is the
displacement of semiskilled and the use of highly skilled workers for
planning the automated equipment, maintaining it, and so forth—then
the availability of highly skilled labor, which has been scarce all
along, will be a limiting factor in automation.
I
would not expect automation to explode, but rather to continue
forward in much the same tradition of technological development that
we have had in the past. There has never been any evidence in the
past of mass technological unemployment.
Automation is a new name, and to some extent it is new, since
electronics opened up many possibilities for automatic feedback that
could not be done before. But I think the great mass of industry will
not be economically or technically “ automatable,” if I can coin a new
word, for a long time to come.




550

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

Senator S p a r k m a n . Several who have testified before us have sug­
gested a figure, a percentage of the total labor force, that we might
consider as being the normal unemployment level. Do you have such
a figure in mind ?
The C h a i r m a n . I think I should warn the witness that to answer
this question would be done at his peril.
Senator S p a r k m a n . Well, I will frame the question a little dif­
ferently. In fact, I believe we had three or four who suggested ap­
proximately 3 percent for unemployment. I believe one said between
3 and 4; that we might always expect that as a normal level of
unemployment. Would you agree with some such level as that?
Professor L o n g . I have had long experience in being forewarned on
the peril, because I have served with the Council of Economic Advisers.
There is no normal unemployment, if normality carries with it the
notion that this is a desirable or undesirable level of unemployment.
Part of the theme of my paper was that if we can find out a great
deal more about unemployment and what causes it—arid this means
getting a grassroots intimacy with the problem, knowing much more
about the individual unemployed person and the area and occupation
in which he is unemployed, so that we are able to run our economy
much more efficiently—we can get our unemployment down to a much
lower level than many people now regard as normal. I would not
accept it as normal in the sense that it is desirable or unavoidable
at all.
Senator S p a r k m a n . May I say that I do not believe anyone intended
to convey that it was desirable, but perhaps that it was unavoidable.
Professor L o n g . I would point out that some countries have man­
aged their economies for quite a few years now with levels of unem­
ployment much lower than ours, some countries as low as 1 percent.
The reasons they had that lower level are in some ways explainable
in the nature of their economies, including the degree of mobility, as
Mr. Lebergott will discuss a little later. Just the same we ought to
look into the experiences of some of those countries and ask why.
Switzerland has had a very low level of unemployment for quite some
time, and a stable price level, too. So I do not see why we should not
assume these things can be done.
Senator S p a r k m a n . I f I may say one other thing, it seems to me
that the difference in the area of the country would probably make a
difference. And also it seems to me, too, that perhaps some of our
agricultural difficulties contribute to the unemployment in this coun­
try, that perhaps they do not have.
Professor L o n g . That is right.
Representative B o l l i n g . Y o u say:
First, we need more information on labor force and unemployment by locality,
occupation, and industry. This would require a bigger sample of households.

Refresh my memory as to what the sample is now.
Professor L o n g . It is 35,000 households. That is the total maximum
size. I think that is actually now the number of households inter­
viewed.
Representative B o l l i n g . What should it be, in your opinion ?
Professor L o n g . I would rather not answer that question.
Representative B olling, Give me some range, then.




EMPLOYMENT,

GROWTH,

AND PRICE LEVELS

551

Professor L o n g . Well, if you are going to start handling it on a
nationwide basis, to get real knowledge of the localities and occupa­
tions, it will have to be many times larger than this. But I think it
could be done without, let us say, running into a sample of hundreds
of thousands and millions, by taking localities and doing a good job
of sampling those.
You see, our present sample is nationwide, which means that the
areas, are chosen for sampling, for estimating the national total, and
serve almost no purpose for telling what goes on in any particular
locality. But if we took a sample in a city like Baltimore or Lowell,
Mass., and studied it over a period of years, we would choose a sample
adapted to that locality.
We need not do this for every locality but only for those areas
where we believe we could learn a lot, and where there is either a lot
of distress unemployment, or some other important problem. This
would enable you to get a lot of information without increasing the
size of the sample manyfold.
Representative B o l l i n g . Would this approach require a periodic
series ?
Professor L o n g . Oh, yes. A study does not do you any good at all
unless you keep it up. And I think Senator Douglas would agree with
that, because he spent many years working with the unemployment
problem before there were any decent data. I think he would agree
that you have to keep this up year after year.
Representative B o l l i n g . In other words, if I understand what
you are saying, these things blend together. What you need in effect
is a broader and more detailed conceptual approach of sampling.
Professor L o n g . Yes.
Representative B o l l i n g . With a more variegated set of samples ?
Professor L o n g . That is right; adapted to localities. After all,
unemployment is in a particular locality. A certain person, of a cer­
tain occupation, age, and other characteristics, living in a certain
town—he is unemployed. Nationwide or statistical unemployment
is not worth very much from the standpoint of the student who wants
to come to close grips with the problem of unemployment.
Representative B o l l i n g . And in effect very little of this sort of
thing is actually being done today ?
Professor L o n g . That is right.
Representative B o l l i n g . N o w the second item:
Second, we need more reliable fieldwork. The quality of the interviewers
and their methods is far from satisfactory. Improvements in this direction
will require more money and more research into interviewing techniques.

Have you any order of magnitude of the amount of money that
might be required to do a more effective job? Would it call for a
doubling, a tripling, or what ?
Professor L o n g . Well, I certainly think it would take at least a
doubling.
Representative B o l l i n g . N o w the fourth point involves the measure
of “ equivalent full time” of involuntary part-time unemployment.
You state that you think, as does Senator Douglas, that this calculation
is entirely practicable and technically possible.
Professor L o n g . Yes. I think with the present information, mea­
sures of equivalent full-time unemployment and labor force could be
developed at a relatively small cost.



552

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

Representative B o l l i n g . What are the arguments against it, if
any? You probably have heard some arguments against it, since you
have been an advocate of it.
Professor L o n g . I do not know of any good argument against it,
except that the Labor Department undoubtedly feels it has plenty
to do, with the funds it is given by Congress. The Labor Department
may also feel that other information is more valuable and be inclined
to give other things priority.
The C h a ir m a n . There is a practical political difficulty; namely,
that any administration that is in power tends to be opposed to this,
because it will raise the total figure of unemployment. And I had
such difficulties when the Democrats were in power on this same mat­
ter, just as I have difficulties now.
According to our private index, which Mr. Knowles has helped
us to compute, the full-time equivalent of the involuntary part-time
unemployed comes to about 1.1 million, and this is about iy 2 percent
lost time of the total labor force, even including the self-employed,
and if one were to exclude the self-employed and take as the denomi­
nator only those seeking wage or salaried labor, it would be 2 percent.
No administration wants to raise the figure of unemployment by
2 percent, because they know there will be someone in the opposition
camp who will take advantage of them and say, “This indicates an
increase in unemployment.”
Now, if you could effect this change during a period in which there
is a transition, or homogenized politics, it will be very beneficial.
Professor L o n g . I agree with you entirely. As a matter of fact,
I have used this reason for a good many years in my classes, but I
hesitated to bring it up in this particular forum.
Senator B u s h . May I comment ?
I think that this has been a very useful morning in connection with
this whole matter. I am glad Mr. Bolling, chairman of our statistics
committee, was here for this meeting. And I would like to say, as
one who supports this administration usually—and my friend on my
left will agree with that, I think—I think it is very much in our
interest, just as an administration, to know the facts about this thing.
And I hope that we have begun this morning on an effort that will be
continued until we get them.
Representative B o l l i n g . Mr. Long, what all of these recommenda­
tions amount to, if I understand it, is that we do not now have any­
thing like satisfactory information. Such information is obtainable,
but it will cost money and greater effort than we have been willing
to put forth to date.
Professor L o n g . That is right, Mr. Bolling. It would involve con­
siderably larger expenditures. But I might say, in relation to the
magnitudes involved, the expenditures involved would be chickenfeed.
I f you consider that there are now 4y2 million people unemployed,
and perhaps another million or 2 million part time or disguised unem­
ployment, and if you just multiply that by $4,000 a year or $3,000,
as the average potential earnings, you can see quickly that you are
running into billions and billions of dollars of lost income and lost
resources. This also has its impact on inflation, because we support
these people. We give them relief, unemployment insurance, and so
on. They spend the money and create the level for goods, but the



EMPLOYMENT,

GROWTH, AND PRICEi LEVELS

553

fact that they do not create the supply of goods which match their
expenditures definitely has an inflationary effect. So it affects all of
us, not just the unemployed people and the unemployed firms.
When I was with the Hoover Commission, the first Hoover Com­
mission, I had the job, with Professor Mills of Columbia University,
of studying the statistical agencies of the Federal Government. And
we found, to our astonishment that in 1948, an off-census year, the
total Federal Government expenditures in statistics came to only $48
million. Expenditures have gone up since then, but only because I
believe the price level has gone up, and not because the scale of sta­
tistical effort has enlarged.
This reminds me of a story my father told me about an employer
of his who had made millions of dollars, all the while keeping his
accounts on the back of his safe door. My father used to hear him as
he went through the factory, and his sons would ask him why he did
not take inventory.
He would say, “Why should I count it? It doesn’t make it any
more.”
Of course, businesses have changed the philosophy on this com­
pletely. They realize it often makes it more to “ count it,” and that
“counting it” may be the most valuable thing you do. But I am not
sure our Nation has found this out. You cannot run a $450 billion
economy by keeping your national accounts on the back of a safe
door.
Representative B o l l i n g . Mr. Long, I could not agree with you
more. For a number of years—this must be at least the fifth—I,
along with other members of our Subcommittee on Statistics, have
been trying without any notable success to do a series of things. One
is to encourage the administration to ask for more. And we have
been somewhat successful in this, although not entirely so. The
other is to encourage the Congress to vote for more. We have been
even less successful in this. We have been, in effect, a sort of builtin lobby for the point of view you have expressed. I would like
to use even harsher words than you have. I think our present level
of statistical effort at the Federal level is a little short of ridiculous
it is so little. I think it is absolutely folly for this country, with
the kind of economic problems that it has, not to spend more than
what is relatively “chickenfeed” to get essential information. I hope
some way, in one way or another, we will get to the point where
we do spend a few hundreds of millions of dollars, so that we can
have the facts upon which to base our plans and programs.
The C h a ir m a n . Thank you very much. I would like to make just
one final comment.
That is that when we discuss the causes of unemployment, I think
we should distinguish between the forces which affect the total
amount of unemployment, aside from seasonal and transitional diffi­
culties, and the forces which determine the particular persons who are
unemployed, namely, the incidence of unemployment. And it has
seemed to me that frequently the factors which determine which
particular persons are unlucky enough to be laid off are given greater
stress than is justified, and that even if all the personal causes for un­
employment were to be removed, the total volume of unemployment
would not be affected. And, as I have said, it seems to me that aside




554

EM PLOYMENT, GROWTH, AND PRICE LEVELS

from seasonal and transitional unemployment, the cause of unemploy­
ment in excess of this figure is a shortage of demand in comparison
with the prices charged for goods. And therefore we should not miss
seeing the forest because of our absorption in the trees.
Professor L o n g . I agree with you entirely, Senator. I did not
mean to say that I thought that unemployment was due in any way
only to the deficiencies of individuals. I am sure that in the present
situation, if everybody in our country were very efficient and pro­
ductive people, that given the demand situation, we would undoubt­
edly still have some unemployment. But what I was trying to get
over was the fact that not all people in our economy are of that high
order of ability and employability and there are many people who can
only be employed under boom and inflationary conditions, and many
others who will not even be able to get jobs, for one reason or another,
under those boom or inflationary conditions. We ought to do what­
ever we can to improve the employability of these people in their
localities, so that when we do solve the problem of providing a regu­
larly expanding level of demand, we will have both the necessary and
the sufficient conditions for creating full employment.
The C h a ir m a n . Thank you very much.
Senator B u s h . I think the question of part-time employment, which
Senator Douglas frequently refers to, is a very important question,
which in itself ought to be studied very carefully, because no doubt
there are those who were only working part time, who would like to
be working full time. There are also those working part time who
are unable and unwilling to work full time. And those should be
categorized and separated so that they do not get lumped into one
statistic that gives the wrong impression.
Professor L o n g . That is right, Senator. We do have some statis­
tics. The Monthly Report on the Labor Force does distinguish, in a
general way, among part-time employed, between those who call them­
selves regular full-time workers and are working only part time, for
economic reasons, and the much larger group of part-time workers
who want only part-time employment.
These statistics suggest there is a very substantial number of people,
ranging between 1 and 2 million, who are regular, full-time workers,
,who want full-time work, but are employed only part time for
economic reasons.
Senator B u s h . One of the suggestions made occasionally respecting
this problem of unemployment is that we ought to have a shorter
workweek, that we ought to go back to a 35-hour or 32-hour work­
week. Do you care to comment on that proposition at the present
time, or not ?
Professor L o n g . Well, I would be glad to.
In my view, a shorter workweek would not solve our problem. It
would often mean that people who are perfectly able to work and to
earn income would be arbitrarily cut down to a shorter workweek, and
their earnings would be reduced. Let us make no mistake about it.
I f a person works fewer hours, he is going to earn less money. And
therefore as you cut down the supply of labor, by forcing him to work
a 32-hour instead of a 40-hour workweek, you are also cutting down
his demand for goods and therefore cutting down the demand for
labor.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

555

So you do not solve the problem in that way, and you deny your­
self a very important supply of labor in the country, which we need.
I think our great problem in this country is not the fact that people
are working too hard. I do not believe they are. I think there is
nothing about a 40-hour workweek, except in some occupations, that
anybody can say is uncomfortable or injurious. The great problem in
our society is poverty. We have enormous numbers of people who
do not live according to what we like to think is the American living
standard. And the problem of getting them up to that level is very
expensive. And I think it is a shame that while we are trying to get
them up to that level we proceed to give large numbers of people
enforced holidays.
The C h a irm a n . Very honest testimony.
(The prepared paper of Clarence D. Long, professor of economics,
the Johns Hopkins University, is as follows:)
L a b o r F o rce , U n e m p l o y m e n t ,

and

E

c o n o m ic

Change

(B y Clarence D. Long, professor o f economics, the Johns Hopkins University)
Fluctuation is the normal characteristic of unemployment. It has ranged
between 1 and 25 percent of the labor force during the past quarter century and
between 2 and 8 percent during the past 3 years. In addition, wide varia­
tions have occurred in the kind of people who are out of work— classified by
age, sex, occupation, education, industry location, and other characteristics.
This turbulence may derive from two main sources. The first is the demand
for labor. Unemployment may increase because employment decreases, as firms
go bankrupt, departments are shut down, occupations are displaced by machines,
industries lose their markets, or whole towns and regions find themselves by­
passed in the march of technology.
The other potential source of change is the supply of labor. Unemployment
may change with the number and kind of people who are willing and able to w ork:
the labor force.
In the United States the labor force is currently defined as the sum of
all persons reported by the census to be employed or unemployed during a certain
specified week. The “employed” category covers all persons 14 and older who
have jobs or businesses for pay or profit, including employers and the selfemployed, unpaid fam ily workers in a store or on a farm who help produce a sal­
able product or service, and employees of nonprofit enterprises and Government
agencies. The “unemployed” category includes persons 14 and older who have no
job or business of the above-mentioned sort and are seeking such employment dur­
ing the survey week.
The Joint Economic Committee has askecl me to discuss the way the labor
force has behaved under changing conditions, including recession and depression,
war and peace, economic expansion and growth. It has also asked me to sug­
gest improvements in the present measures of unemployment and labor force.
I turn first to labor force behavior.
As the economy contracts and men and women lose their jobs, do many of
them retire from the labor force, thus reducing the unemployment problem?
Or is unemployment made worse by the addition of desperation work seekers
from the ranks of dependents of unemployed family heads?
As the demand for labor recovers, does the labor force increase so that jobs
must be found not only for the disemployed but also for the new labor force
additions, thus compounding the difficulties of attaining full employment?
W hat, too, can we say of the labor force in longrun growth and expansion?
As automated industry produces more goods with fewer workers, will the higher
real incomes enable families to support themselves with fewer people working,
thus retiring many of the workers whose labor has been saved? Or will the
labor force increase even faster than population, making it necessary to create
new demands for workers and products in order to forestall technological
unemployment?

There are obviously large questions which cannot be answered fully in this
brief diseusaion, Some of them have been debated for centuries. A couple of




556

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

decades ago Senator Douglas did pioneering work on them in his great treatise
on the “Theory of W ages.” I myself have devoted much o f the last dozen years
to a study of labor force behavior for periods ranging up to a hundred years
in five countries, as reflected in the data of decennial censuses and monthly
sample surveys of households, and administrative records. I shall summarize
that behavior very briefly.
First, the labor force in severe depressions:
The overwhelming, weight of statistical materials here and abroad suggests
that more persons have been forced out of the labor force by the difficulty of
finding jobs than have been forced into it by desperate fam ily circumstances
created by the unemployment of family heads. (Table 1. All tables and charts
are taken from “The Labor Force Under Changing Income and Employment.” ) 1

,

Number of persons by which the labor force of the depression years
1934-86 differed from that of the April 1930 and 1940 average in relation to
population and unemployment by sex and age group 4 States

T ab l e 1.—

,

,

Per 1,000 population of same
sex and age

Per 100 unemployed men 25-64

Massa­ Penn­ Michi­ Rhode Massa­ Penn­
chu­
gan, Island, chu­
syl­
syl­
setts,1 vania,
1936
setts,^ vania,
1935
1934
1934
1934
1934
Both sexes 15 and older................. .
Males 15 and older2___________ ___
15-24__ ________________ _____ _
25-44__________________ _______
45-64________________ _____
65 and older____ ____ __________
Females 15 and older 2.____________
15-24_________________________
25-44_________________________
45-64_________________________
65 and older___________________

-8
+1
-2 0
+4
+8
+19
-1 6
-1 0
-1 5
-3 6
+17

-5
-2 8
-1 3
-5 8
-1 8
+71
+16
+58
+2
-8
+36

-3
+1
-4 6
+4
+25
+40
-7
-2 4
-12
+8
+34

-1 0
+2
+5
-2 2
+16
+41
-2 0
-1 7
-9
-2 5
-41

-8
+1
-1 9
+4
+8
+18
-15
-10
-1 4
-35
+16

-8
-42
-20
-8 8
-2 7
+108
+24
+88
+3
-1 2
+55

Michi­ Rhode
gan, Island,
1935
1936

-5
+2
-8 1
+7
+44
+70
-1 2
-4 2
-21
+14
+60

-2 8
+6
+14
-61
+44
+114
—56
-4 7
-2 5
-6 9
-114

* 14 and older.

2 Standardized according to sex and age composition of the population of the United States in 1930.

Source: Appendix F, Censuses of the United States: “ 1930, Unemployment,” vol. I,
pp. 45i5, 499, 837, 881, and “ Population,” vol. I ll, pt. 1, pp. 1111, 1123, vol. IV, pp. 797,
800, 802, 819, 145-5 ; “ 1940 Population,” vol. I ll, “ The Labor Force,” pt. 3, pp. 453!, 588,
pt. 5, p. 14, vol. IV, pt. 3, pp. 191, 238-239, pt. 4, p. 338. “ 1934 Report on the Census of
Unemployment in Massachusetts,” Massachusetts Labor Bulletin No. 171, pp. 5-8. “ Census
of Employable Workers in Urban and Rural Nonfarm, Areas, Pennsylvania, 1934,” State
Emergency Relief Administration, Division of Research and Statistics, 1936, p. 1. “ Michi­
gan Census of Population and Unemployment,” 1st series, No. 1, 1935, pp. 3, 4, 9. “ Rhode
Island Decennial Population Census of 1936; Story of the 680, 7 1 2 /’ Rhode Island Depart­
ment of Labor, 1937, pp. 10, 2;3, 26.
1 Clarence D. Long, “ The Labor Force Under Changing Income and Employment” (Na­
tional Bureau o f Economic Research, Princeton University Press, 1958)i. “ The Labor
Force in Wartime America” (National Bureau of Economic Research Occasional Paper 14,
1944), “ The Labor Force in War and Transition: Four Countries” (National Bureau of
Economic Research Occasional Paper 36, 1952). “ Impact of Federal Income Tax on
Labor Force Participation,” papers submitted by panelists appearing before the Subcom­
mittee on Tax Policy, Joint Committee on the Economic Report, 84th Cong., 1st sess., Nov.
9, 1955, pp. 153-156. “ Impact of Effective Demand on the Labor Supply,” American Eco­
nomic Review, May 1953, pp. 408-467.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

557

The tendency of labor force participation to decline in time of great unem­
ployment has extended also to rural areas, urban areas, large cities, and the
48 States in 1940 compared to 1930 and 1950 (table 2 ).
T a b l e 2.— Number of persons by ivhich the labor force during the severe unem­

ployment of April 1940 differed from the average of the moderately highemployment census dates, April 1930 and 1950, in relation to population and
unemployment by sex and age group, United States and its urban and rural
areas

Per 1,000 population of same sex and Per 100 un­
age
employed
men 25-64
United
States 1
Both sexes 14 and older ____________________________
Males 14 and older____ _______ _______________
14-24____________________________________________
25-44____________________________________________
45-64____________________________________________
65 and older___ ------------------------------------------------Females 14 and older__________________ ______ __ . __
14-24____________________________________________
25-44____________________________________________
45-64_____________________ ______________________
65 and older________________________________ ____

—13
—22
-3 0
-2
-2 2
-85
-7
-5
+14
-3 5
-1 8

Urban
areas 2
-9
-1 8
-3 5
+3
-2 4
-101
+1
-4
+28
-3 4
-1 8

Rural
areas2
-2 3
-2 6
-3 5
-1 0
-1 9
-6 8
-1 9
-11
-11
-3 9
-105

United
States 1
-1 9
-3 2
-4 3
-3
-3 2
-123
-1 0
-7
+20
-5 1
-2 6

1 Labor force was standardized according to the rural-urban composition of population of the United
States in 1940; totals were standardized for age or age-sex.
2 Labor force was standardized for age or age-sex, according to the composition of population of the United
States in 1940.
Source: Apps. A , C, F, and supp. app. H . “ Censuses of the United States: 1930, Unemployment,”
vol. II, p. 250; “1940, Population/’ vol. IV, pt. I, pp. 90-93; “1950, Preliminary Reports,” PC-7, No. 2,
pp. 21-23.
It has not been confined to the overall labor force of both sexes but has
characterized most male and female age groups. There was no consistent
tendency for any age-sex group to have higher labor-force participation rates
in depression than in prosperity.
Second, the labor force in recessions and booms, including wartime variations:
Large wartime fluctuations in labor force participation have occurred since
1940 when the monthly record begins, creating a popular impression that the
labor force is very elastic with respect to peacetime booms and recessions. I
shall say something first about these wartime changes.
In the 5 years o f W orld W ar II up to April 1945, the American labor force,
excluding population growth, rose 8.5 millions, a rise of 8.2 percent of the popu­
lation 14 and older, compared with 6.8 in Canada and 4.7 percent in Great
Britain.




558

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

Germany made the poorest record for wartime 'additions. Its labor force
lost native Germans, even if war deaths are not deducted from labor force;
if foreigners are counted in its labor force, the expansion was still much less
than that in the United States (table 3 ).

T a b le

3.—Germany, including the Saar, Austria, and the Sudetenland—,
Population and labor force, by sex, 1989-44
POPULATION 14 A ND OLDER (M ILLIO NS)1
May

1939

Germans, including armed forces before losses:
Males ____ _____________________________ ____
Females _____ ___ ____ ______ _______________
Both sexes __ _ _____ _ _________ __________
Armed forces (assumed to be entirely males):
Before losses _________________________________
Losses _____ ______ ___________ . ____________
Active . _ . ____________ _____________________

1940

1941

1942

1943

1944

30.1
32.2
62.3

30.4
32.4
62.8

30.6
32.6
63.2

30.8
32.8
63.6

31.0
33.0
64.0

31.2
33.1
64. 3

1.4
0
1.4

5.7
.1
5.6

7.4
.2
7.2

9.4
.8
8.6

11.2
1. 7
9.5

12.4
3.3
9.1

26.4
14.2
40.6

26.3
14.4
40.7

26.7
14.8
41.5

26.6
14.8
41.4

2.6

3.5

4.8

3.0

4.2

6.3

1.5

1.7
7.1

LABOR FORCE (M ILLIONS) »
Germans, including armed forces before losses:
Males---------------------------------------------------------------Females________________________________________
Both sexes_____________________________________
Foreigners 2 and prisoners in labor force:
Males........... .......................................................................
Females.................................................................. ...........
Both sexes__________________________ __________

25.9
14.6
40.5

26.1
14.4
40.5

.2

.2
1.2

.1
.3

1.0

.4

.7

5.4

PE R C E N T OF POPULATION IN LABOR FORCE i
German labor force as percent of German population
of same sex, including armed forces before losses:
Males______________________________ ___________
Females- _ --------------------------------------------------Both sexes_____________________________________
German and foreign 2 labor force as percent of German
and foreign2 population of same sex, including ac­
tive armed forces:
Males__________________________________________
Females________________ ______ _____ _______ ___
Both sexes________________ ____ ____ _______ ___

85.9
45.3
64.9

86.0
44.4
64.5

86.2
43.5
64.2

85.4
44.1
64.1

86.1
44.9
64.9

85.1
44.7
64.3

86.0
45.4
65.1

86.4
44.7
65.1

87.3

86.6
45.2
65.9

87.4
47.3
67.2

86.0
47.4

44.1

65.7

66.3

1 Totals and percentages were computed before data on population and labor force were rounded.
2 Belgians, Dutch, Poles, and others in Germany on contract, compulsory, or semicompulsory labor
services.
Source: Data and discussion on labor force, ch. 3 and app. F. The population in 1939 by sex was derived
from the census of that year. Statistical Year Book of the League of Nations, 1941-42, Geneva, 1943,
table 3, p. 26. For 1940-44 the population represented the interpolation of data for 1940 and 1945, estimated
by Frank Notestein in Future Population of Europe and the Soviet Union, Geneva, League of Nations,
1944, pp. 256-257 and 264-265. The Notestein data, which excluded the Saar and the Sudetenland, were
not used directly but served as indexes for extrapolating the population reported by the 1939 census.
Most additions to the wartime labor force came when the enemy was hitting
hardest. In Britain, 6 in 10 of the labor force additions were made before the
U.S.S.R. entered the w a r ; in this country, 2 in 3 of the additions came during the
2 years up to the Italian surrender in mid-1943.
Aside from the increase due to population growth, the great bulk of the war’s
additions were temporary. The inflows to the labor force in the various coun­
tries during W orld W a r II were dominated by the military draft (chart 1 ).




EM PLOYMENT,

GROWTH, AND PRICE) LEVELS

559

Chart 1

Labor Force Compared with Armed Forces and the Unemployed, United States,
1940-1956

Labor Force per 1,000 in Same Population Group

38363— 59— p t 3-— -T




560

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

Until the Armed Forces were enlarged, the labor force expanded negligibly.
W ith the demobilization of nine-tenths of the peak armed strength, the U.S.
labor force shrank eight-tenths of its excess over prewar ( disregarding
the population growth). In America the postwar labor force participation did
not go all the way back to its 1940 level, but that level had been somewhat
depressed, probably by the widespread unemployment.
In the Korean conflict, the labor force rose as the Armed Forces expanded.
However, its ratio to armed force recruitments was much less than half that
in* 1941-^3. And with the approaching end of the conflict the labor force
proportion returned to near peacetime proportions.
In none of the countries was direct compulsion a major factor. The United
States never required civilians to work. Germany had universal conscription
on paper but did not thoroughly enforce it until after the Allied landing, when
it was too late to use the extra labor effectively. H alf of Britain’s additions
were made before the National Service Act. Even after that, its policy was still
persuasion.
The wartime movements to the labor force may have been influenced by four
fa cto rs: The reserves of potential workers among students, housewives, and the
elderly; the burdens of housework preventing girls and women from taking
gainful w ork; the liberality of Government to dependents of fighting m en ; and
the strength of enemy blows. The United States had more females outside
its peacetime labor force than the British or Germans, so that more women
could go into industry in wartime despite a higher burden of child cares among
American women. It was relatively less openhanded than Germany or Canada
in caring for dependents of fighting men, though by no means niggardly. And
it avoided the German and Canadian practice of reducing dependents’ allow­
ances if they worked for pay.
Since 1946, the whole range of peacetime fluctuation in participation between
quarterly data, seasonably adjusted, has* been 2,4 percent of the working-age
population. The labor force data are based on interviews conducted each month
with a representative sample of the Nation’s households and a good part of the
range of fluctuation— perhaps all of it— could have been the result of errors
in sampling or interviewing2 (table 4 ) .
T a b l e 4 .— Variation in the proportion of the labor force to population and the

corresponding range of error in the labor force sample estimates, United States
and Canada, 19^6-52

[Per 1,000 population of same sex and age]
Maximum range of labor
force variation
Range owing
to sampling
variability
Mid-1946- Mid-19462(2*)_
mid-1952
mid-1950
United States:
Labor force 14 and older. . __ __ _____ ___ _____ ____
Males 14 and older ___ _______________ _ __________ ___
Females 14 and older___________________________________
Young people, 14 to 24____ _____ ______________________
Men, 25 to 64________ ______________ _ ______ ________
Women, 25 to 64__ _ _______
_ __ ___ _______
Elderly people 65 and older ______ _ __ __ _ - _ __
Canada:
Labor force 14 and o ld e r .__ _____ _ ________ _________
Males 14 and o ld e r ..___ ___ _____ _•_______ ___
Fem ales 14 and older___________________________________
Young people, 14 to 24___ ______ ._________________
Men, 25 to 64. _______________________________________
Women, 25 to 64___<.__ _______________________________ _
Elderlv people 65 and older ______ _ _ _ ___ _____ _____

11
14
24
25
13
33
11
14
20
13
32
21
12
37

20
13
35
37
14
56
31
18
30
26
32
21
, 32
60

6
14
10
20
20
10
20
6
12
8
20
20
10
20

Source of estimates of sampling variability: Current Population Reports; Series P-57, No. 118, p. 12:
The Labor Force, November 1945-March 1952, Reference Paper No. 35, pp. 5-6. See also the author’s
comments in “Statistical Standards and the Census/’ in the American Statistician, February 1952, and
Supplamentary Appendix I.
2 The Labor Force Under Changing Income and Employment,” supp. app. I (on file at
the National Bureau of Economic Research, 2,61 Madison Ave., New York, N.Y.




EMPLOYMENT,

GROWTH, AND PRICE) LEVELS

561

What information we have on gross changes in the labor force (the sum of
people who enter or leave in any month) suggests that they have occurred at a
regular rate and have not been responsive to changes in income and employ­
ment. Neither the total labor force nor the major age-sex groups behaved in the
recessions of 1948-50, 1953-54, or 1957-58 in a manner to Confirm any theory
that unemployment drives a net number of persons into or out of the labor force.
Third, the labor force over longrun periods of rising income:
The overall proportion of the working age population in the labor force has
been rather impressively stable from one high employment census year to an­
other : The stability has held for the United States as a whole since 1890 and
possibly since 1820, for Great Britain since 1911 and possibly since 1841; for
Canada since 1911; for New Zealand during 1896-1951; and in a lesser degree
for Germany during 1895-1939 (chart 2).
In the United States during 1890-1950 the maximum fluctuation between suc­
cessive high employment census dates was less than the normal seasonal varia­
tion from January to July in any given year.
The stability of labor force participation in the United States has been due
to the overall labor force and to the native whites, for both the colored and
foreign born have reduced their labor force participation by impressive amounts;
in the case of Negroes nearly all of the reduction has occurred since 1930
(chart 3).
However, the foreign born, the native-born children of the foreign born, and
the colored, have all tended in recent decades to aline their labor force behavior
with that of native whites.
The overall labor force participation rate has remained rather stable in spite
of marked changes in the participation of major age and sex groups. In all
five countries every male age group has manifested some decline in its labor
force participation and most female groups some rise (chart 4 ).
The net change in the overall labor force has generally been only a small per­
centage of the gross change. This fact raises the question whether there has
been some systematic tendency for the changes in these component labor force
groups to offset each other.
It is our hypothesis that the women may have pushed and pulled young and
elderly males from the labor force and at the same time have been drawn into
the labor force by the vacuum left by the exodus of males for other reasons.
The source of the influx of females could be explained by the growing re ­
dundancy of females in the home, as the result of the developing technology for
the home, the reduction in the number of children to be cared for, and the
increasing survival of women who formerly died from childbirth and other
diseases. The demand for the influx could be explained by the expansion of
the clerical occupations, occurring along with the great increase in educa­
tional attainment of the average female which enabled her to take advantage of
the new job opportunities and in a sense to create them. The timing of the
influx could be explained by the reduction in the normal workweek in industry
which made it further possible for many females to enter the labor force and
still have time after work to carry out the household responsibilities which
most of them must always have.
The decline in labor force participation of older men— 45 to 64 and 65
and older—has been less easy to explain. No evidence could be found, that the
decline has been immediately owing to increases in real income, to extensions of
pensions and social security, to physical deterioration, to changes in the pace
of industry, or in the level of employment or self-employment. Even if a tight­
ening of company practices against older workers has been primarily responsible
(there was no lack of such discrimination a half century ago), it is doubtful
that firms could have afforded to part with this supply of labor had there not
been a new and better source to take its place, namely, women.
It would seem plausible that the women displaced the elderly men from the
labor force because they were better trained for many clerical, personal, and
professional jobs in relation to their relative wages. Financial aid from work­
ing daughter or wife— even their ability to support themselves without help—
doubtless also enabled many elderly men who became sick or unemployed to
advance the date of their retirement.




562

EM PLOYMENT,

GROWTH, AND PRICE LEVELS

Chart 2
Persons 14 and Older in the Labor Force per 1,000 in Same Population Group:
5 Countries, Various Years, 1890-1951
Standardized for age and sex, and for other differences at noted, on basis of United States
population in 1940.

United States0

United States6

600

400

200

8
<n

s
co

§r>
<
New Zealandc

Great Britain
800

600

'A
400

200

<J>

0k

<7t

O*

Canadad

O*

Germany*

eoo

600

400

200




oro
>
C»

9
a*

8
o»

(chart continues on next page)

563

fiM PLOlTMEM’, GROWTH, AN’D PRICB LEVELS
Chart 2

(c o n tin u e d )

Persons 14 and Older in the Labor Force per 1,000 in Same Population Group
Standardized for ag« and m

United States, Rural ___

600
400

___

United States, Urban_____
—

-

200

.

.

i

t\

_

_

.

!

—

-

_

* !

_

'

0

0

*CD

8
flj

?OJ

*^

*f t

M

ft

r

ft

WWW.

WW.W

'WWW

WWW.

WWW

WWW.

WAW
A

*

8
ft

ft

2

8
ft

8
ft

ft

5

8
ft

CO

• Standardized for rural-urban composition as well as for age and sex.
b Standardized for rural-urban composition, color, and native-foreign composition, as well as
for age and sex.
* Aged 15 and older.
«Partially standardized for rural-urban composition on the assumption that the effect of
migration to urban areas would be the same in Canada as in the United States (in addition
to standardization for age and sex).
•For 1895-1939, boundaries after World War I, without the Saar; 1939-1950, Federal
Republic of Germany, without Berlin.
Source: Appendix A.




564

EMPLOYMENT, GROWTH, AND PRICE LEVELS
Ch art 3

Labor Force of Native White, Foreign-Born White/ and Colored Persons:
United States, Census Dates, 1890-1950
Persons in the tabor force per 1,000 in same population group. Standardized for age and
sex (but not for rural-urban composition) on basis of United States population In 1940.

Native White

Foreign-Born White

Colored

10 and Older*

10 and Older®

10 and Older0

14 and Older®

14 and Older®

14 and Older®

700
600
500
40 0

300
200
100

0
700
600
500
400
300
200
100

0

o o
d
> <o7>
GO
3urcc: Appendix Table A-4.




O O
O
O
00
o>

8 8

o
o o
CM
ro
0> <
?> 2

o
to
oi

EMPLOYMENT, GROWTH, AND PRICE LEVELS

565

Chart 4

Association between Lafe*»v Force Participation Rates of Females and Males:
5 Countries, Various Years, 1890-1951
Number in labor fore* per 1,000 In same population group.
Standardized for ago on basis of United States population in 1940, except as noted.
United States0
1,000

200
800

| | Females 14 and older
H i Males 14 and older

400
600

400

200

0
—

01

oN
<
I

ot

o
iO

<y>

o
£
<y>

o
*>

United States6

0i

United States

1,000

1,000

200
800

800
40P
600

600

400

400

200

200

mull
_________________n

o

o
o
5h a
r
eoT
s>
i <
rt
joT>
C
<
7> <
United States, Rural

_____ United States, Urban_____

vooo

0 1,000

800

200 800

600

400

600

400

400

£00

200

I

i




200
400

566

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Chabt 4 (continued)
B Females
iM a le i

nm

New Zealand c

Great Britain

200

1,000

200

400

800

400

1.000

800
600
600
400
400

200
200

<
f>
CO
rr

O

(T>

<§

(7)

^
u>

S

O)

9

01

04

3*

n * ■IIIIIH
____________ Germany*____________

Canadian Citiesd

200

200

1,000

1.000

400

400

800

600

400

400

200

200

* Unstandardized.
b Standardized for rural-urban composition as well as age.
• 15 and older.
d 15 and older. Age standardization on basis of population of Chicago in 1930.
•For 1895-1939, boundaries after World War I, without the Saar; 1939-1950, Federal
Republic of Germany, without Berlin.
Source: Appendix A,




EMPLOYMENT, GROWTH, AND PRICE LEVELS

567

The C h a i r m a n . We are very glad to have as a witness now, Mr.
Lebergott.
I have been glancing over your paper and find it very scholarly and
witty. We want to print it in full. It is quite lengthy. I am
wondering if you would be willing to summarize it, with the under­
standing that the whole paper will be printed.
Mr. Lebergott is on leave from the Bureau of the Budget. He
wants to make it clear, though, that these are his own personal views,
and in no way represent the viaws of the Bureau.
STATEMENT OP STANLEY LEBERGOTT, BUREAU OF THE BUDGET
(ON LEAVE)

Mr. L ebergott . Thank you , Senator.
I had planned to summarize this. And although this may give
some difficulty to the recorder, I think we can pick out at least the
main points relevant to the immediate concern of the committee in
much shorter order than in the paper.
The introduction, which goes basically to the point that labor
mobility, as a phrase, has now achieved a preferred status. Some
years ago a humorous book on English history was published, and at
the end of almost every chapter a major event was labeled by the
authors as “ a good thing.” We are now talking about labor mobility
as “ a good thing,” whereas some years ago we were talking about
labor turnover as “a bad thing.”
I will not here attempt to draw the boundary line between the
two. I would like to note this change in emphasis, and to say that
this paper in its discussion of labor mobility simply defines it as the
movement of persons into and out of jobs. Commonly this involves
a movement from one employer to another, but it may also involve
merely movements into or exits from the labor force. As a single
simplified generalization from the historical record, I think we can
say essentially this: That the main currents of American economic
development over the last century and a half have all tended to re­
duce labor mobility. There are certain exceptions, which can go into
the footnotes.
Anyone who chooses to can make a very plausible case for a par­
ticular cause being the cause—seniority systems, social security, pen­
sion plans. But if you look to the total pattern of our national
growth, I think you will have to conclude that a great many causes
are all powerfully working to produce labor mobility. And, I would
like to review briefly a few of the main ones, and trust that we can
consider them neither as supporters nor as opponents of any of them,
including the first, which is the American home.
The C h a i r m a n . Nobody is opposed to the American home. Let
that be on the record.
Mr. L ebergott . At the beginning of this century, about 36 percent
of the people who live off the farms owned their homes. Today that
ratio is about half again as great. There are many causes for this—
higher real incomes, improved construction techniques, and a whole
set of actions by the Federal Government, both the Congress and the
Executive, running from the mortgage moratorium of the 1930’s to the
VA program in the late 1940’s, as well as the FHA insurance program.



568

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

The C h a i r m a n . We have the distinguished originator of many of
these programs sitting at my left here, the Senator from Alabama.
Mr. L ebergott . Well, that gives particular point to the comment.
I do not know whether he would agree with the following point I
would propose to make, and that is that converting a tenant to a home­
owner inevitably tends to make him less mobile as a worker. A man
who has sown his crop of crabgrass wants to stay around until next
year to see how it comes out. Homeowners develop neighborhood ties.
A second factor is that of motherhood. Women of childbearing age
today have about 37 percent more children than did the equivalent
group of women in 1941. But the migration rate for families with
children is about half of that for families in the same age group with­
out children.
A moment’s reflection indicates how links with the neighborhood,
with the PTA, and all of the factors that are associated with children
and living in a family, tend to reduce the willingness of the head of the
family to move.
A third force that has developed increasingly over the last century
is that of education. In 1850, about 55 percent of our children were
in schools. Today it runs about 85 percent. A basic additional factor
has been the rise in school guidance work. The young men and women
who enter today’s labor market do so better trained, with a better idea
of where they are going. I f so, does it not follow that these youngsters
are less likely to wander from unskilled job to unskilled job before
they find their way ? And more likely to begin closer to their occupa­
tional limit without as many preliminary jobs? As a result, mobility
has decreased among the very group that traditionally has shown the
highest mobility.
A fourth factor is the ending of large-scale immigration. In Presi­
dent Jefferson’s day about half our labor force was composed of immi­
grants. Today it stands at about 8 percent.
We know that when the typical immigrant landed, he would move
across the country, going from short-time job to short-time job. Some
of them built the C. & O. Canal here along the Potomac. Others cut
timber in the Wisconsin woods. Others worked on the national road.
Each of these were short-lived jobs and added to mobility. Hence
the decline of our labor force in this category has also tended to reduce
mobility.
A fifth factor is personnel work. Personnel men rather early in
their careers discovered the high cost to industry of hiring and firing
workers. There is a cost in hiring and there is a cost in training, and
there is a cost if workers either prove unsatisfactory or quit. Their
natural reaction was to attempt to reduce labor turnover and thereby
mobility. A related personnel practice, touching upon the point dis­
cussed by Professor Long, is the practice of spreading work. There
is nothing like absolutely firing a man to make him more likely to
move on.
In 1932, two-thirds of all our employed factory workers were on
part-time work, and anyone who watched the monthly census figures
during 1949 and 1953 could see how industry sought first to reduce
hours before it had to reach to outright firings.
The C h a i r m a n . I f I may interrupt, this would seem to be still
further argument for including the figure of the full-time equivalent
of involuntary part-time unemployment.



EMPLOYMENT, GROWTH, AND PRICE; LEVELS

569

Mr. L e b e r g o t t . Well, I would not like to associate myself with
that position, Senator, at least at this point.
The commonsense of holding onto a trained labor force and the
growing feeling for human values have both worked together to
reduce the outright firings that in an earlier day would have brought
high mobility.
The sixth factor is the family farm program. Our farm program
during the 19th century took the form of land sales at low prices.
Representative Allison told the House that one homestead bill was “A
seductive lure which is well calculated to induce many laborers and
mechanics, who are now doing well at their homes in the old States,
to leave them and engage in agriculture.’5
The Federal farm program in the 20th century has been designed
to achieve quite other purposes than getting men to move westward
and acquire farms. It seeks to assure prices, and thereby incomes, to
farmers. By doing so it makes it possible for farmers to remain on
the farms on which they are already located. And therefore it tends
to reduce mobility, just as our 19th century policies tended to increase
it.
A seventh factor is the defense program. As late as 1940, the Fed­
eral Government spending in the hard goods industries ran to about
a dollar for every $27 spent by consumers and businessmen. By 1953,
Federal spending in this area matched private spending, dollar for
dollar. This rise from less than $2 billion to more than $44 billion in
one sector of the economy, so timed and so concentrated, could hardly
fail to bid up the prices of land, labor, and capital.
The basic cause of labor quits, an important component in total
labor mobility, is the desire for higher wages. But with the tremen­
dous impact of the spending noted above, it is to be expected that those
who sell their labor, just as those who sell raw materials, components,
or entrepreneurial ability, could get higher rates in this sector with­
out moving on to other markets.
Economic theory has not yet, I believe, described the phenomenon
of the weak monopsonist. But both Congress and the executive have
long recognized it. And they realize that neither the Government,
nor the enterprises who operate as its relay men in the defense race,
drive the tightest of possible bargains in the swift procurement of
immense quantities of goods, particularly where these are new and
undeveloped. Such recognition has led to setting up procedures for
defense contract renegotiation. Should it surprise us, therefore, that
in the purchase of factor inputs, whether raw materials, finished
components, or labor that a similar flexibility should develop ? And
if it has, how should it not diminish the mobility of all factors, by
diminishing one of the key forces that make men and capital move
on in search of higher rewards ?
The last factor is an all-encompassing one, best termed “the search
for security.”

The C h a i r m a n . May I interrupt, Mr. Lebergott ?
In this last paragraph, I think you have made an extremely im­
portant suggestion. Would you not think it a good idea for this
committee, in its study of the causes of inflation, to go into the question
as to whether the volume of Government purchases and the technique
of Government purchases have not operated to drive up unduly the



570

EMPLOYMENT, GROWTH, AND PRICE LEVELS

prices of materials and of labor, and hence to produce an increase
m the general price level ?
Mr. L ebergott . I would think it an urgent and valuable matter for
investigation in terms of the concern of the committee with price
stability, unemployment, and growth. I have insufficient direct in­
formation about the procurement practices to know what possibilities
may lie in that area, but they are certainly worth investigating. I
might add, somewhat gratuitously, that I find it difficult to see how
you can spend such an enormous amount of money, even carefully,
without having an impact. Whether we do it as well as we can is cer­
tainly a subject well worth looking into.
Under the general heading of “ Search for Security,” almost any of
us can think of the major programs adopted by the Congress in the
last 10 or 15 years. And these are programs which have very wide
support among the population and in the Congress. They range from
the programs for farm parity, resale price maintenance, minimum
wages, unemployment insurance, deposit insurance on through to the
broad principle of stability adopted in the Employment Act of 1946.
We need take no position on the merits of these programs, to note
that one by one they have tended to slow down the mobility of labor.
Let me summarize the above in two sentences. First, big numbers
are not better than small ones, even those measuring labor mobility.
Second, the main currents of American economic development in the
last century, powerfully aided by an impressive number of Federal
programs, have worked to reduce labor mobility, because other goals,
such as economic stability and an educated labor force, more home­
owners, and so on, were felt worthy of national support.
For the record, I have added an estimate of the amount of labor
mobility in a recent year to indicate that while the trend has been
downward—and that is the subject which the committee has asked
me to discuss—we should nonetheless recognize that we have an enor­
mous volume of movements from job to job and in and out of the labor
force, a volume which from all appearances is considerably greater
than that of most of the countries in the world.
Senator B u s h . Despite the reduction in mobility, we still are much
more mobile than other countries ?
Dr. L ebergott . I would believe so, Senator. A recent report by the
leading Swedish economist, Bertil Ohlin, and a group of economists
from a number of European countries, who worked with him, re­
ported a while back on mobility in Europe. One certainly comes
away from that study with an impression of a vastly different labor
force mobility.
Turning to the long-term forces that affect unemployment, our first
one is seasonal employment. We should realize what a tremendous
improvement has been made in this area, Part of it is almost in­
voluntary. It reflects the fact that people are working to an increas­
ing extent indoors in factories and shops. When iron manufactur­
ing was becoming a major industry in the 1830’s, it was common for
the plants to shut down for 2 months because of frost and snow. I
find it hard to imagine any weather on the Great Lakes today which
would bring such a consequence.
In terms of magnitude, this may have brought a very substantial
reduction in a volume of unemployment, but is ordinarily discussed
very little.



EMPLOYMENT,

GROWTH, AND PRICE LEVELS

571

The second factor is technological unemployment, which is no
novelty in human history and no novelty in ours. When the reaper
came into prominence in President Buchanan’s day it did the work
of four to five men cutting grain with hand cradles. This is much
better, for example, than the two and one half fold advantage of­
fered by the mechanical corn picker in our own time. And pallet
loading of ships raises smaller problems than those brought by the
invention of the steamboat. For while broadhorn arks such as Lin­
coln navigated down river were picturesque they disappeared within
a few brief years given the competition of steamboats that could carry
10 times the load in a fifth of the time, with half the men.
These are the kinds of figures one hears of today in automation,
and they are the kind that appeared in the last century, as well.
But for every thousand men displaced by technical advances does
more and longer unemployment result today than in the 19th cen­
tury? We have very little basis for knowing. However, factors
that come in mind suggest the resultant unemployment may, in pro­
portion, have been shorter in the 19th century. For one thing a
continent is settled only once. The proportion of job opportunities
to disemployment then must have been quite high as millions of
migrants were drawn successfully further and further west. For
another, the proportion of the labor force at risk of technological
displacement was so much smaller. In 1800 about 10 percent of the
labor force were employees; in 1860, about 40 percent were; while
today about 90 percent work for others. Moreover, the proportion
employed in agriculture fell from 90 percent in Jefferson’s day to say
10 percent in our own.
There may be a further factor, although I say it with considerable
diffidence, in the fact that the proportion of skilled workers with
links to particular plants and industries may be greater today than
then.
When the window glass union dissolved in 1927 forever and when
carpet weavers, machinists and semi-skilled workers lost their jobs
during the 1930’s, they may well have found it more difficult to find
work of equal pay and status than the average displaced worker in
the past century. On these points, however, your hearings with in­
dustry and labor representatives will undoubtedly produce useful
and authoritative information.
I would like to summarize very briefly the third major area, and
that is cyclical swings, by suggesting some conclusions based on
a review of our historical experience. There are two attached tables,
which the committee may wish to examine later on.
The second table reports what was pretty well set out some years
ago in Paul Douglas’s landmark study on Real Wages in the United
States.
I would like to summarize them into three conclusions that I think
are relevant to the committee’s concern.
First, no decade has passed without severe unemployment—over 7
percent of the labor force—occurring at least once, and none, except
for that in the 1930’s, has passed without seeing at least one year
of what we may call minimum unemployment, 3 percent or less.
Secondly, more than 1 year in every 4, a rate of 3 percent or
less was achieved. A rate of 5 percent or less was achieved in onehalf the time in the 20th century. It is true that one executive, for



572

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

example, has asserted that full employment at high wages in a private
enterprise economically is undesirable and self-destroying. But I
think the outstanding American record shows that such full employ­
ment has not been at all self-destroying, except in the irrelevant sense
that all economic and human affairs change.
Senator S p a r k m a n . May I ask you something about that first sen­
tence ? More than 1 year in every 4, a rate of 3 percent or less was
achieved.
Now, was that true during the 1930’s? Or are you just lifting that
decade out all together ?
Mr. L e b e r g o t t . N o . Taking the entire span from 1900 to date, we
have averaged this low level of unemployment, more than 25 percent
of the time.
Senator S p a r k m a n . Oh, you do not mean one out of every consecu­
tive 4 years ?
Mr. L e b e r g o t t . No; just trying to get a broad picture of our total
experience. Actually, in any sequence of years we may have done
very well. For example, since 1942, we have had, by and large, a
much better record than this.
The third inference, and perhaps the most important one, suggests
a paradox. The proportion of the labor force that is exposed to un­
employment has risen notably since 1800, but the proportion actually
unemployed has shown no trend whatever. We know that little un­
employment occurs in farming and among the self-employed, partly
because there is disguised unemployment of the kind Professor Long
indicated. But it is these groups that have dwindled in numbers.
At the same time, the share of factory employment has risen, enorm­
ously, from less than about 2 percent of our labor force in 1800 to 26
percent today. That the Marxist conclusion did not follow is obvious,
perhaps even to those across the airspace.
Unemployment over the 19th century ran from a minimum of 1
percent to such peaks as a 4 percent figure, which I have surmised for
1819 and 1857, and the Yi^-percent figure estimated by the Commis­
sioner of Labor for 1886.
We may infer—we cannot conclude, but we may infer—a close
similarity between the average prevailing in the 19th century and
that prevailing in the 20th century—excepting the years of the great
depression. What produced this happy result? No higher law of
economic stability, we may be sure. The major factors are embedded
in the causes of our own economic growth that are associated with our
history.
Beyond the forces of growth, I would note two factors peculiar to
the labor markets. One is the increasing role of women in the labor
force. In 1830 about 1 in every 12 white women was gainfully oc­
cupied. The proportion doubled by 1890, and from 1900 to today
women’s share of our labor force rose from 18 percent to 33 percent.
The characteristic aspect of female employment in today’s market
is that it generally tends to supplement family income rather than
provide the very means of existence as it did in earlier decades.
Women’s lower seniority, often lower skills, makes them dispropor­
tionately present among those disemployed. But instead of entering
the ranks of the unemployed, they tend to move directly out of the
labor force, hardly affecting the unemployment totals. As an ex­




EMPLOYMENT, GROWTH, ANI) PRICE LEVELS

573

ample, our experience from December 1948 to 1949 may be mentioned.
Millions of people lost their jobs during that period. Half the men
became unemployed, but only 18 percent of the women did. This
distinction is a major element in explaining our experience after
World War II, when I think for the first time in our history a massive
decline in employment occurred without an equally massive rise in
unemployment.
A second force has been the increasing role of the Government’s
insuring stability of production and thereby employment. While
George Washington’s unprecedented policies on tariffs and land
bounties were steps in that direction, certainly something new and
potent was added in the 1930’s as in the Employment Act of 1946.
Where do we go from here? The long-term trend forces have
tended to reduce labor mobility. But of course we do not need labor
mobility. We desire it as a means to reach one or more of our conflict­
ing goals for technological advance, price stability, neighborhood
property values, and so on. The economist can say little on those
values. The time is overdue for a research on the amount of mobility
that may be expected under differing Government policies.
What about unemployment ? Even a thoroughgoing pessimist must
admit the enormity of the advance, within the lifetime of a man, from
almost total Government inaction to the immediate concern and swift
action in the 1948-49 and 1953-54 recessions. The Nation has
switched to what one may call athe visible hand” policy.
But in a dynamic economy the best is not good enough for long. We
will continue to spill men out of jobs in consequence. And, in
Schumpeter’s words, “technological unemployment * * * linking up
as it does with innovation, is cyclical by nature.” How much such
unemployment we will put up with turns on many conflicting goals—
for unemployment, real wages, price stability, income redistribution,
defense expenditure. Resolving these imponderables is one of the
jobs ahead for American citizens and their Government, and in par­
ticular this committee.
The C h a i r m a n . Thank you very much.
Senator Bush ha s to leave. I am going to call on him first.
Senator B u s h . Thank you very much.
I congratulate the gentleman on a very interesting paper indeed.
I just wanted to ask you one question. You have given three reasons
for unemployment, which you call seasonal unemployment, techno­
logical unemployment, and cyclical trends. Now, there seems to be
growing comment among the people studying this current unemploy­
ment situation that brings forth the same statement that I mentioned
in connection with Dr. Long’s testimony, to wit, that we are pricing
ourselves out of markets at home and abroad. This is a particularly
delicate subject and an interesting subject for many, many reasons.
One, of course, is in connection with our foreign economic policy, our
trade and tariff policy, and so forth. And certainly we are beginning
to feel, as we have not felt for a great many years, the impact of foreign
made manufactured goods into this country, as for instance in the
automobile market, where it is a very big factor in our whole economy.

Now, do you care to comment on that general subject in connection
with this unemployment problem that we are dealing with? Do you
think, for instance, that it is fair for people to say that we have been




574

EMPLOYMENT, GROWTH, AND PRICE LEVELS

pricing ourselves gradually out of our markets at home and abroad;
that constant increases in costs, including labor costs, have been too
much, have been separating us too much from the costs of other great
nations, whose competition we are beginning to feel both at home and
in world markets ? Do you care to comment on that specific issue %
Mr. L ebergott . I might make two comments, Senator Bush. One
is that as one looks back to our own economic development, there is
persistently this combination of rising prices, and in some areas rising
wage rates, but at the same time a development of efficiency, which is
perhaps unparalleled in the world. It certainly has enabled us to
produce at an unprecedented level and to compete internationally at
an unprecedented level.
The second comment is that the most surprising thing that I have
found in looking at our export data—and it is a point which has been
made by a number of people—is that if you look to our exports over
many years, they did not come from our low-wage industries but from
the industries that paid the highest wages in the country.
Senator B u s h . That is right.
Mr. L ebergott . The key, obviously, is that this labor was used very
efficiently.
Senator B u s h . The automobile industry would be an illustration of
that, would it not ?
Mr. L ebergott . Yes. It has been for many years. The industries
where we had great difficulty exporting tended to be our lower-wage
industries, and some people may have impressions about their effici­
ency, too. The broader question you asked is one that I trust the
committee will resolve, as a result of at least a year’s arduous effort in
your forthcoming study.
There is some point at which for a particular commodity or a par­
ticular item somebody is pricing themselves out of the market. What
that point is, is a very delicate one to decide, and I am frankly not in
a position to do so. It is very much like Micawber’s statement as to
what poverty is, “ 20 pounds, ought and six pence,” and so on.
Senator B u s h . Just get that one in the record, won’t you, about
happiness ? I ask that the correct quotation be put in the record.
The C h a i r m a n . That will be done.
Senator B u s h . That is one of my favorites.
(The quotation referred to is as follows:)
Annual income 20 pounds, annual expenditure nineteen s ix ; result, happiness.
Annual income 20 pounds, annual expenditure 20 pounds ought and s ix ; result,
misery.

The C h a i r m a n . I f I may introduce a sort of a flute obligato to the
questions of the Senator from Connecticut. I think we sometimes err
in believing that the price level of European countries has been stable.
It is true that I think the increases in Switzerland, West Germany,
and Holland have been less than ours, but on the other hand, in France,
Great Britain, and Italy, the increases have been appreciably greater
than ours.
Senator B u s h . That is right. I agree with the Senator. The
point I am thinking about all the time, in back of these questions, if I
may add a comment, is illustrated by the automobile industry. Now,
for many, many years, the American automobile industry supplied the
world with automobiles. I mean, you could go any place, and you




EMPLOYMENT, GROWTH, AND PRICEi LEVELS

575

would see American automobiles, but not others. Now that has all
changed, and it is changing still. And wherever you go abroad now,
you hardly find an American automobile, and when you do, they stand
out like sore thumbs. They are different from the other automobiles,
because they are big. They take up a lot of room, and so forth.
The automobile industry, among American industries, has been the
great advocate of freer trade. And I think that their position on
that has been a sound one. The thing I am afraid of is that the way
this situation is developing, they have been outwitted, or outmaneuvered, by the automobile industry of other countries, in one way or
another, including lower costs and lower priced cars, to the effect, to
the result, that we are now faced with a substantial amount of unem­
ployment in the automobile industry, which is our biggest industry,
at the very time when everything else is going with open throttle,
and we have a new high in gross national product and national income,
and so forth.
Now, that is the problem, or one of the major problems, that I think
we have got to think about. And that is why I asked you if you
had any comment to make about it.
I thank you for what you did say.
Mr. L ebergott . I would add a general comment of a kind that
really I imagine we would all make. And that is that generally, in
the free world, perhaps a growingly freer world, wTith a reasonable
volume of international trade, and people in other countries with
. whom we were either formally allied or with whom we have ties of
friendship and understanding, one would expect a volume of inter­
change so great that it would not be possible for any industry or any
country merely to stand still doing what it had been doing for many
centuries in a traditional way. It is not possible if it is also desired
to increase markets or increase real incomes. Perhaps our greatest
achievement over a century and a half since 1800 has been that we
have not stood still in very many industries. And if we continue
at that rate, wre stand a reasonable chance. But it is not because we
own a particular market. As long as the world is open for a volume
of trade, we have to continue to advance at the same rate, at least, as
we have in the past.
The C h a i r m a n . Is not part of the trouble with the automobile in­
dustry, if I may interject, due to the fact that after a period of time
their imagination and analysis of the market failed to keep pace
with realities, and they were led astray by the motivational research­
ers, who emphasized that what people wanted was status, and that
the way to get status was to have longer, bigger, more expensive,
gaudier, less useful cars, as examples of conspicuous consumption,
and that this turned out not to be the case. Then the small func­
tional West German and British car came upon the scene, and in turn
took a good part of the market and stimulated Studebaker and Ameri­
can Motors to come in, so that the Big Three have virtually suffered
from intellectual retardation and imaginative obsolescence?
Senator B u s h . Mr. Chairman, I think that I could subscribe to
that statement, if I only understood some of those words.
That is a good analysis, but there are also more things to consider
that are very important and pressing at the moment, to wit, that in
the last 10 years there has been a tremendous resurgence in industrial
38563— 59—pt. 3------ 8




576

EMPLOYMENT, GROWTH, AND PRICE LEVELS

activity among the free powers, and this is presenting us with a new
degree of competition that perhaps we never had before. And the
thing I am wondering about is just what the effect of this is going
to be on our markets, and particularly in big industries, like the auto­
mobile industry, who have suffered from the bad judgment, I believe,
that our distinguished chairman has just pointed out.
The C h a i r m a n . Mr. Long, did you have some comments?
Professor L o n g . Senator Bush’s point is, I think, very well taken,
that many countries hard hit by the war have been getting their indus­
tries in shape and are now giving us a run for our money. The point
I want to make in addition is that we make a mistake in projecting
trends of productivity of industry on the basis of developments in the
last couple of years. One of the most interesting things about pro­
ductivity, output per man-hour, is that it is subject to very great
fluctuations. These fluctuations occur in short cycles and in long
swings of around 18 to 20 years in length. There are periods in which
productivity may move ahead at a very great rate. And there are
other times when it moves ahead at a slower rate or actually declines.
In the last couple of years productivity has slowed down, but this
change of pace is intimately tied up with the business cycle and pro­
ductivity may come back with a rush during the recovery and early
boom periods.
I would hesitate forming judgments covering the efficiency of the
American economy on the basis of its productivity in the last couple
of years, relative to that of Europe in the last couple of years. Some­
times we move ahead more rapidly and at others less rapidly. A
longer period of time is required before the trend becomes clear.
All the evidence seems to be that the productivity of the American
economy is not slowing its rate of development. I f anything, it is
accelerating—in the sense that it has been rising at a more rapid com­
pound rate since, say, 1930, than it was before, and since World War II
compared with before World War II. My guess is that when the
returns are all in, we will find that we are actually in a very dynamic
period, although perhaps 1957 and 1958 will not show up so well.
Senator B u s h . I think that is a v e r y encouraging point o f view.
The C h a i r m a n . Congressman Bolling ?
Representative B o l l i n g . Mr. Lebergott, you talk about the phe­
nomenon about the weak monopsonist. How much actual work has
been done, that you know of, in trying to understand this phenomenon,
which is of recent vintage in this country ?
Mr. L e b e r g o t t . I am not myself acquainted with any substantial
job. There has been a great deal of study given to contracting pro­
cedures—to what a contract procedure might be, what the legalities
are, and what the implications are. There have been studies of ex­
penditure programs in particular areas. I am not acquainted with
one, but I might refer you to Professor Long, who is perhaps in a
better position, coming from the academic community, to comment
on that.
Professor L o n g . I did not quite catch the point.
Representative B o l l i n g . The question I had is in reference to his
comment on the phenomenon of the weak monopsonist and the enor­
mously larger share of hard goods that is bought by the Government
today, by the Federal Govern ment, as compared to a relatively few



EMPLOYMENT, GROWTH, AND PRICE LEVELS

577

years ago. And what I was inquiring was if there had been a study
made of this whole phenomenon, I am well aware of the many, many
studies that have been made of certain parts of the vast program; but
I wondered if the phenomenon had been studied at all. It seems to
me it is an enormously important point, and I wanted to get some
reading material.
Professor L ong. Not to my knowledge, Mr. Bolling.
Representative B o l l i n g . Thank you very much.
The C h a i r m a n . I have no more questions.
I want to thank both of you for taking the trouble to prepare these
very excellent papers, which I think are of an extraordinarily high
quality, and giving us the benefit of your long study of this subject.
(The prepared paper of Stanley Lebergott, Bureau of the Budget
on leave, is as follows:)
L o n g T e r m F a c t o r s i n L a b o r M o b i l i t y a n d U n e m p lo y m e n t

(By Stanley Lebergott*, Lexington, Mass.)
A few years ago a book on English history appeared in which the writers
rambled through the decades, labeling the events that were “a good thing” and
those that were not. It is clear that current discussions generally treat labor
mobility as “a good thing”—not to be confused with labor turnover, which is “a
bad thing.” Without attempting to draw the delicate boundary lines that sep­
arates those two, I shall simply define labor mobility as the movement of persons
into and out of jobs. Such changes commonly involve a shift from one em­
ployer to another, but they may only take the form of entrances into the lab^r
force or exits from it.1
What can we say about the American historical record? Essentially this—
that the main currents of American life have tended, with some vital exceptions,
to reduce labor mobility over the past century. Of course, we may single out
one of these forces and make a plausible case, say, for seniority systems, or pen­
sion plans, or social security being “the” major cause. But if we look to the
broad pattern of our natipnal growth we will find, I think a great many causes
powerfully working to reduce labor mobility. Let us review some of the main
ones, not as opponents or supporters of any of them, including even the first,
which i s :
1.
The American home: At the beginning of this century about 36 percent of
our nonfarm famUies owned their homes.3 Today the ratio is half again as
great.8 Higher real incomes and improved construction techniques have played
a part. And a significant factor was agreement by the Congress and the Execu­
tive in that long line of actions from the mortgage moratorium of the early
1930’s, the FHA insurance program of the late 1930’s, to the VA loan program
of the late 1940’s.
However, converting a tenant into a homeowner inevitably reduces his mobility.
A man who has sown his crop of crabgrass wants to be around next year to see
how it made out. Men who become homeowners develop neighborhood ties, other
commitments, that keep them from picking up as readily as a renter and heading
for areas where alternative opportunities may beckon.
♦The opinions expressed are purely personal and have no connection with the work of
any organization.
1 In recent years basic research has been done, almost for the first time, in labor mobility.
Among the ablest studies have been Gladys L. Palmer, “ Labor Mobility in Six Cities”
(19,54) ; Wight Bakke et al., “ Labor Mobility and Economic Opportunity” (1954) ; Charles
Myers and George Shultz, “ Dynamics of a Labor Market” (1951) ; Lloyd Reynolds and
Joseph Shister, “ Job Horizons” (1949). Two perceptive shorter works are an essay by
Myers in John Dunlop, “ The Theory of Wage Determination” (1957), and Arthur M. Ross,
“ Do We Have a New Industrial Feudalism,” American Economic Review (December 195&).
The latter looks to long-run factors in quit rates. The penumbra of union rules have been
covered in two outstanding studies, Sumner Slichter’s “ Union Policies and Industrial
Management” (1941), and John Dunlop’s “ Wage Determination Under Trade Unions”
2 “ Historical Statistics of the United States, 17,89-1945,” p. 174.
3 “ The 1957 Statistical Abstract,” p. 771, gives a rate of 53„41 for 1960, which we
extrapolate by the trend for dwelling units inside standard metropolitan areas (ibid., p.




578

EM PLOYM ENT, GROWTH, AND PRICE LEVELS

2. A second factor is motherhood. Women in the child-bearing years today
have borne 37 percent more children than women of the same age group in
1941.4 From data in the 1950 census we may make a crude estimate of migra­
tion rates among families with children, an estimate which indicates that the
rate for this group is less than half that for families in comparable age groups
without children.5 A moment’s reflection indicates how the links that children
and family develop with their school, neighbors, and even the PTA tend to
reduce geographic mobility. In turn this reduces the willingness of the head
o f the family to seek work in new areas when the pattern of labor opportunities
changes.
3. A third force is that of education. The proportion of our children (aged
5-14) attending public school a century ago was 55 percent.6 Today it is nearer
85 percent.7 No less important has been the rise in school guidance work—local
school systems providing counselors, and Department of Labor materials helping
to tell the counselors how the outlook for different occupations shapes up. What
do these factors imply for mobility? Well, they suggest that young men and
women enter today’s labor market better trained, with a better idea o f both
their own abilities and the prospects in different occupations than did their
grandparents. If so, does it not follow that these youngsters are less likely
to wander from unskilled job to unskilled job before they find their way?
And more likely to begin closer to their occupational limit without as many
preliminary jobs? As a result mobility has decreased among the very group
that traditionally has shown the highest mobility.
4. Ending of large scale immigration: In Jefferson’s day about half our labor
force was composed of immigrants.8 By President Harding’s time the ratio had
fallen to 20 percent and today it stands at about 8 percent.® Now the very name
we use for this group— immigrant— emphasizes its high mobility. When the
typical immigrant landed he would first find temporary work where the ship
docked—Philadelphia, New York, New Orleans, He would then move across
the land from job to job. Whether it was building the Chesapeake & Ohio Canal
here along the Potomac, cutting timber in the Wisconsin woods, or breaking stone
for the national road to the West, his jobs tended to be short-lived. Each move,
and each advance up the occupational ladder, added to mobility. Hence the
declining share of our labor force in this category in turn brought a reduction in
labor mobility.
5. Personnel w ork : Personnel men early discovered the high cost to industry of
hiring and training new workers, only to have them quit, or prove unsatisfactory.
What was more natural than for them to try to reduce labor turnover (and
thereby mobility) by entrance and exit interviews, by changes in working con­
ditions?
A now widespread personnel practice when employment has to be cut is to
spread the work. During the great depression a survey of many thousand manu­
facturing firms found that 64 percent of their employees were on part-time
work.*0 And anyone who watched the monthly census figures during the reces^
sions of 1949 and 1953 could discern how industry sought first to reduce hours,
to spread the work, rather than initially adjusting by outright firings. The com-

4

Bureau of the Census, Current Population Reports, Series P -2 0 , No. 84, “ Fertility of
the Population : March 1 9 5 7 /’ table A.
5 From the 1950 census report, “ Population Mobility, Characteristics of M igrants,” we
can estimate migration rates of 7 percent for the youngest children, and lower rates, down
to 4 percent for those aged 14 to 19. I f we compute the percentage for married males aged
2 0 -2 4 it runs to 13 percent with 10 percent for those aged 2 5 -2 9 , 7 percent for those
3 0 -3 4 , and 5 percent for age 3 5 -4 4 , From the census, Current Population Reports, Series
P -2 0 , No. 83, “ Social and Economic Characteristics of Households and Families, March
1 9 5 7 ,” table 4, we can estimate 2.5 children per fam ily in the 2 0 -4 4 age interval. Assum­
ing 2.5 children under 18 to families with children, attributing the migration rates for the
children to families with children, and subtracting them from the figures for all married
males, we derive figures for married males without children. The resultant migration rate
is enormously greater than that implied above for families with children. Because of the
lack of direct measures, however, the only conclusion drawn here is that the rate for those
w ithout children must be at least double that for those with children. It must be realized
that the above data are in no way standardized out for color, rural, urban, etc., differences,
and doing so would presumably affect the influence on mobility of children per se.
6 “ The Seventh Census of the United S ta tes: 1850” (1 9 5 4 ), p. lx, xlii-x liv .
7 1950 census, vol. 11, “ Characteristics of the Population,*' pt. 1, tables 38, 111.
*
The derivation of these estimates is described in the writer’s chapter, “ The Pattern of
Employment Since 1 8 00,” to appear in a forthcoming volume on American economic history,
edited by S. E. Harris.
8 Idem.
10 W illiam J. Barrett, “ Extent and Methods of Spreading W ork,” M onthly Labor Review,
September 1932, p. 490.




EMPLOYMENT, GROWTH, AND PRICE- LEVELS

579

monsense of holding on to a trained labor force, and the growing feeling for
human values, have tended to reduce the outright firings that in an earlier day
would have meant high mobility.
6. The family farm program: The Government’s farm program in the 19th
century took the form of land sales at low prices. Differences of opinion turned
on whether land should be given away or should merely be sold at low prices.
Its entire purpose led to the encouragement of labor mobility. Representative
Allison of Pennsylvania called one homestead bill “ a seductive lure which is
well calculated to induce many laborers and mechanics, who are now doing well
at their home in the old States, to leave them and engage in agriculture.” 11
The Federal farm program in the 20th century has been designed to achieve
quite other purposes than getting men to move westward and acquire farms. It
seeks to assure prices, and thereby incomes, to farmers. By doing so it makes
it possible for farmers to remain on the farms on which they are already
located. So far as it affects mobility, therefore, ,it tends to reduce it—just as
our 19th century policies tended to encourage it.
7. The defense program: Although the Congressional Record in the days of
President Adams and Jackson was filled with bitter debate on the amount of
Government spending, the total amount spent could hardly have had a sizable
impact on the economy. Even as late as 1940 the Federal Government’s spending
in the hard goods industries only ran to $1 for every $27 spent by consumers
and businessmen.12 By 1953, however, Federal spending matched private spend­
ing in this area dollar for dollar, the ratio declining mildly since then. We
are not looking here to total Federal spending—but to the rise of Federal spending
from less than $2 billion to more than $44 billion in one sector of the economy.
A rise of this magnitude, timing, and local concentration could hardly fail to
bid up prices of land, labor, and capital in that sector. In a free market economy
this in turn meant pressures transmitted to the other sectors o f the economy,
which likewise require the use of these factors.
Now the basic cause of labor quits, an important component of total labor
mobility, is the desire for higher wages.13 But with the tremendous impact of
the spending noted above it was to be expected that those who sell their labor
just as those who sell raw materials, components, or entrepreneurial ability,
could get higher rates in this sector without moving to other markets.
Economic theory has not yet, I believe, described the phenomenon of the weak
monopsonist. But both the Congress and the executive have long since recog­
nized that neither the Government, nor the enterprises who operate as its relay
men in the defense race, drive the tightest of possible bargains in the swift pro­
curement of immense quantities of goods, particularly where these are new and
undeveloped. Such recognition has led to setting up procedures for defense
contract renegotiation. Should it surprise us, therefore, that in the purchase
o f factor inputs, whether raw materials, finished components, or labor that a
similar flexibility should develop? And if it has, how should it not diminish
the mobility of all factors, by diminishing one of the key forces that make men
and capital move on in search of higher rewards?
8. The last factor I shall mention is an encompassing one, probably best termed
“ The Search for Security.” Roller coaster changes in economic activity have
been a traditional source of profits, bankruptcies, ulcers— and heavy labor
mobility. Like flash floods the panics of the 19th century threw hundreds of
thousands of men onto the labor market, and firings in the 20th century’s major
depression threw millions out of work. Mobility was also high when prosperity
returned, turnover among new employees normally being high in the process of
shaking down to a mutually suited employer-employee relationship.
11 Quoted in Helen S. Zahler, “ Eastern Workingmen and National Land Policy,” 18291962 (1941), p. 149.
12 Office of Business Economics, “ U.S. Income and Output, 1958 Supplement to the Survey
of Current Business,” table 1-1. The private expenditure figure used here is the sum of
the figures for personal consumption expenditures on durable goods plus producers durable
equipment. The Federal national defense purchases figure shown in this table includes pay
of the Armed Forces, excludes unilateral transfers under the aid programs. For 1940 the
$2,223 billion figure was reduced to $2 billion as an approximate method of excluding
military pay. For 1957 the reported figure was used on the assumption that the military
pay inclusion would roughly offset the exclusion of durables bought by aid transfers.
More important, a substantial volume of producers durables purchased for the production
of defense goods with Government funds are included under the private heading whereas
for present purposes they should be shifted to the Government category.
13 A variety of other factors, under the head of working conditions, are usually men­
tioned in studies of labor mobility. But it is interesting how often field surveys that report
other causes show that on their new jobs workers report higher wages than on their old.




580

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Today, most groups in the economy are more insistent upon security than
were their predecessors in the 19th century. We have noted above the interest
that the personnel man has in a stabler workforce. But the comptroller has
found no endearing qualities in irregular demands for cash, in unpredictable ups
and downs in requirements for financing inventories or new plant. And the com­
pany president has discovered that evening out the seasonal pattern of produc­
tion, spreading out product lines to stabilize long-run production is an endeavor
worthy of his best talents. Every step taken toward such goals reduces hirings,
firings— and mobility. It is unnecessary to labor the major point that seniority
systems, pension plans and other measures that preceded the massive growth
of union membership in recent decades have, in general, been warmly sup­
ported and pressed for by the labor unions.
Towering above all this has been the endeavor of many groups to have
the Federal Government help to create greater economic stability. In the 19th
century the tariff program was the only one of consequence (and then not great
by today’s standards) that tended to immobilize capital and labor. In our day
we have seen an enormous battery of programs that work to that end, what­
ever their primary purposes—I refer to the programs for farm parity, resale
price maintenance, minimum wages, unemployment insurance, deposit insurance
on through to the broad principle of stability adopted in the Employment Act
of 1946. We need pass judgment on the merits of none of these widely sup­
ported programs to note that one by one they have tended to slow down the
mobility of labor, whether self-employed or employee.
9.
Summary: Let me summarize the above in two sentences. First, big num­
bers are not better than small ones, even those measuring labor mobility. Sec­
ond, the main currents of American economic development in the past cen­
tury, powerfully aided by an impressive number of Federal programs, have
worked to reduce labor mobility because other goals, such as economic stability,
an educated labor force, more homeowners, etc., were felt to be worthy of
national support.
Two observations might be added. (1) We have been dealing with the long­
term trends. It may be useful to consider the absolute amount of labor mobility
today, adding up all the shifts from job to job, all the entrances into and
exits from the labor force. Making such an estimate for 1955' we arrive at
the crudely accurate, if fairly sensational figure of 170 million job changes in
that year.14 The ratio of this figure to our 69 million labor force may well
indicate that despite a long-term decline, U.S. mobility rates are the highest
of any nation, free or otherwise. A recent report by the leading Swedish econo­
mist, Bertil Ohlin, and experts from five other European countries states flatly
that—
“ the extent to which the objective of full employment is interpreted (in Europe)
as implying security of employment in the same job and in the same place has
sometimes amazed outside observers.” 15
14 The derivation of this estimate, based on BLS data for manufacturing turnover, and
census data for nonmanufacturing shifts and for entrances into and exits from the labor
force is outlined in the writer’s “ On the Shape of the Income Distribution,” to appear in
the May 1959, American Economic Review.
15 The entire paragraph reads as follow s: “ Most Western European workers appear to be
reluctant to change their occupation or place of employment. They consequently view with
some apprehension the possibility that schemes for higher productivity or freer trade may
lead to changes in the overall pattern of employment and may thus make it necessary for
some workers to change their jobs. The extent to which the objective of full employment
is interpreted as implying security of employment in the same job and in the same place
has sometimes amazed outside observers. For example, an American author was struck
by the fact that it is not unheard of for European employers to refuse lucrative new business
on .the ground that it would require adding to the workforce new workers for whose con­
tinued employment the employer would then be legally or morally responsible. Conversely,
unemployment tends to mean patient waiting for a new job in the same occupation and
area without consideration of the possibility of moving to an occupation or area of more
active demand.” International Labour Office, “ Social Aspects of European Economic Co­
operation, Report by a Group of Experts” (1956), p. 99, ch. VI, on “ International Move­
ments of Labor and Capital” (and indeed the entire report) is a brilliantly lucid review of
problem of factor mobility as it appears in Europe, but in terms that cast a revealing light
on American problems as well.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

581

(2) In specific instances where workers and industries have been left behind
by the retreating economic tide, community organizations and government will
presumbaly still continue to take action to assist mobility. One may refer to
such programs as that proposed by the administration in 1956 to assist in the
training of farm families in new skills; to the proposals made by the Steel
Workers to the Randall Committee; to suggestions of various economists in the
fine symposium on foreign trade policy issued by the Boggs subcommittee.
Let us turn now to the long-term forces affecting unemployment. I. Seasonal
unemployment gets relatively little attention in our day but in the last century
it was a major factor, the Nation’s dependence on nature then being so much
greater. The declining role of farming alone, occupying 83 percent of the gain­
ful workers in 1800, but only a little more than 10 percent today, would tend
to a marked moderation in seasonal employment.16 When iron was becoming a
major industry in the 1830’s, it was common for ironworks to shut down for 2
months of frost and snow\ It is difficult to imagine blast furnaces today shut­
ting down for winter however unforeseen the weather on the Great Lakes may
be. II. Technological unemployment is, of course, no novelty in human history.
The engineers and master mechanics of the 19th century had their own brilliant
accomplishments. When the reaper came into prominence in President Bu­
chanan’s day, it did the work of 4 to 5 men cutting grain with hand cradles.17
This is much better, for example, than the 2%-fold advantage offered by the
mechanical cornpicker in our own time.18 And pallet loading of ships raises
smaller problems than those brought by the invention of the steamboat. For
while broadhorn arks such as Lincoln navigated downriver were, picturesque,
they disappeared within a few brief years, given the competition of steamboats
that could carry 10 times the load in a fifth of the time.19
But for every 1,000 men displaced by technical advance does more and longer
unemployment result today than in tlie 19th century? We have very little basis
for knowing. However, factors that come to mind suggest the resultant unem­
ployment may, in proportion, have been shorter in the 19th century. For one
thing, a continent is settled only once. The proportion of job opportunities to
disemployment then must have been quite high as millions of migrants were
drawn successively further and further west. For another, the proportion of
the labor force at risk of technological displacement was so much smaller. In
1800 about 10 percent of the labor force were employees; in 1860, about 40 per­
cent were; while today about 90 percent work for others.20 Moreover, the pro­
portion employed in agriculture fell from 90 percent in Jefferson’s day to say 10
percent in our own.21 Since technological displacement affects employees more
promptly than the self-employed, and those in nonfarm pursuits more substan­
tially than those in farming, such changing proportions would imply an increase
in the amount of unemployment produced by technical advance. Thirdly, and
most speculatively, the proportion of skilled workers with links to particular
plants and industries may be greater today than then. A 19th century canal
grubber, cotton mill hand, or farm laborer who lost his job could find work
requiring roughly equal ability without great difficulty—in years of normal
production. But when the window glass union dissolved in 1927, when carpetweavers, machinists, and semiskilled workers lost their jobs during the 1930’s,
they may well have found it more difficult to find work of equal pay and status
than the average displaced worker in the past century.22 On these points, how­
ever, your hearings with industry and labor representatives will undoubtedly
produce useful and authoritative information.
I turn now to the third major factor in bringing unemployment—cyclical
swings. These are, of course, no novelty. As President John Adams wrote
16 Cf. footnote 8.
17 Leo Rogin, “ The Introduction of Farm Machinery” (1981), pp. 133, 135,
18 U.S. Department of Agriculture, Agricultural Research Service, “ Labor Used for Field
Crops,” Statistical Bulletin No. 144- (June 1954).
19 James Hall, “ Sketches of the History, Life, and Manners in the West” (Philadelphia,
1935), 11 : 72,
20 See note 8.
21 Idem.
■22 “ The Passing of the National Window Glass Workers,” Monthly Labor Review (October
19,29). Gladys L. Palmer, “ Union Tactics and Economic Change” (1932), is one of the
classic studies in the field.




582

EMPLOYMENT, GROWTH, AND PRICE LEVELS

many years ago, “ I am old enough to remember the war of 1745 and its end, the
war of 1755 and its close, the war of 1775 and its termination, the War of 1812
and its pacification. Every one of those wars has been followed by a general
distress, embarrassments of commerce, destruction of manufactures, fall of the
price of produce and lands.” 23 Let us pick three typical depressions of the last
century.
A. The first peacetime economic crisis of this Nation is that of 1819. A
fraternal order of the time described it in passionate term s: “A deep shadow
has passed over our land: a commercial and individual gloom has created a
universal stillness. In our remotest villages the hammer is not heard.” 24 Can
we convert such comments into prosaic statistics? Not at this distance. But
detailed contemporary figures for what were then our major manufacturing
centers— Philadelphia, Pittsburgh, the State of Rhode Island—may help us make
a usable guess.25 For the number one industry, cotton textiles, they lead to an
estimate of a 75-percent employment decline. (To put this alongside a standard
of our own time we may note that auto manufacturing employment fell about
25 percent, from 1929 to 1930 and about 37 percent from 1937 to 1938.)28 What
of other contemporary industries? Bricklaying employment in Philadelphia,
then our biggest city, fell by 50 percent. Brewery employment in Pittsburgh
(and presumably elsewhere) fell by only a third. Taking into account these
and other figures, I estimate that manufacturing employment for the Nation as
a whole might have fallen by nearly two-thirds. The 20th century cannot match
this record, fortunately. But we also cannot match the fact that manufacturing
then accounted for less than 5 percent of the labor force.27 And by reckoning in
declines for other industries, based on contemporary reports, we come up with
an estimate for this crisis year of not more than 4-percent unemployment of the
free labor force.
The crisis of 1857 was one of the worst in the nineteenth century. For the
1857-61 period, according to a speech to the Congress made in 1869 by Representa­
tive William Kelley, “not one out of five skilled workmen of the country was
steadily employed.” 28 Furthermore, he added as symptomatic, that when a
Philadelphia contractor advertised for 250 hands at 60 cents a day “more than
5,000 offered, a majority of whom were skilled artisans.” 20 (A 60-cent rate was
about half that paid in Pennsylvania just before the crisis.) Some figures we
have for employment trends in the important manufacturing State of Rhode
Island in 1857 indicate cotton textile employment falling by 68 percent in a
year, jewelry by 78 percent, iron works employment by 43 percent.30 All in all
a decline of two-thirds in jobs in this key State seems a possible estimate. How­
ever, the relief figures for Massachusetts, the leading manufacturing State, rose
only a third, and pig iron output, the key product of our third major factory
State in that period, fell by only a tenth.31 In 1857 only about 10 percent of our
labor force was in factory work— while farming, ocean shipping, and con­
struction were responding to different demands.32 Hence an unemployment rate
greater than say 5 percent or 6 percent would have been most unlikely.
23 John Adams, “ Works,” X, p. 384, quoted V. S. Clark, “ History of American Manufac­
tures,” vol. 1.
24 “ Address of the Society of Tammany or Columbian Order to Its Absent Members”
(New York : George L. Buch & Co., 1819), p. 1.
25 See note 8.
20 Office of Business .Economics, “ National Income,” 1954 ed., table-2ft.
27 See note 8.
28 William D. Kelley, “ Speeches, Addresses, and Letters on Industrial and Financial
Questions” (1872), p. 257.
29 Idem.
30 “ Transactions of the Rhode Island Society for the Encouragement of Domestic Indus­
tries in the Year 1857” (1958), p. 77, quoting the Providence Daily Journal, I am indebted
to Prof. Clarence Danhof of Tulane for this reference.
31 Data from Benjamin F. French, “ History of the Rise and Progress of the Iron Trade
of the United States (1858). Data summarized in K. D. Lumpkin and D. W. Douglas,
“ Child Workers in America” (1937), app. II.
82 The total for free, gainfully ooccupied, aged 16 and over, in 1860 appears in the 1860
census, “ Population,” p. 680. From this total the number of students (p. 677) were de­
ducted. The number of gainfully occupied slaves was added, estimated for each State as
the same proportion of males plus females, aged 10 and over, as were shown in the separate
State data for 1850, for white males 15 ahd over. Analysis of the 1840 census data indi­
cates that virtually all slaves, aged 10 and over, worked and this procedure was not
unreasonable. Minor adjustments were made for certain States. For white and free
colored children 10 to 15 it was assumed that the labor force participation rates from the
1900 census for native whites would apply, with adjustment for the 10-15, 10-14 age
differences. The total for factory employment is that reported in the Manufactures
Census of that year, reprinted in the 1870 census, “ Industry and Wealth,” p. 893.




EMPLOYMENT, GROWTH, AND PRICE, LEVELS

583

And finally the major extended depression of the last century, that of the
1880’s. For 1886 we have a contemporary estimate by the Commissioner of
Labor, of 7% percent of gainful workers unemployed.33
Other crises appear in other years. Lingering depression in the 1840’s ;
1861 a grim precursor of the priorities unemployment of 1941; a long labored
period of depression through the middle 1870’s, and shorter runs following 1893,
etc. To give an indication of these up and downs, table I shows year to year
percent changes in relief loads, in manufacturing production, and in key price
series.34
What of our 20th century record? Table II shows the trend, and is based
on some laborious but still rough estimates that I have prepared for the years
prior to the initiation of the outstandingly reliable and meaningful census series
on which we have all relied since 1940.35 What the table reports is what was
pretty well set out years ago in Paul Douglas’ landmark study on Real Wages
in the United States, 1890 to 1926.
Can we summarize this mass of lives into conclusions relevant to the com­
mittee’s concern ? I believe so, and would suggest three.
1. No decade has passed without severe unemployment (over 7 percent of the
labor force) occurring at least once. And none, except for that of the 1930’s, has
passed without seeing at least one year of what we may call minimum unemploy­
ment (3 percent or less.)
2. More than 1 year in every four, a rate of 3 percent (or less) was achieved,
a rate of 5 percent or less was achieved more than half the time. True, one execu­
tive has asserted that “full employment at high wages in a private enterprise
economy is undesirable and self-destroying.” 36 But I think the outstanding
American record shows that such full employment has not been at all self-destroying—except in the irrelevant sense that all economic and human affairs change.
3. Perhaps the most important inference, however, appears when we consider
both the 19th century indications and the 20th century figures. For they suggest
a paradox: the proportion of the labor force that is exposed to unemployment
has risen notably since 1800, but the proportion actually has shown no trend
whatever.
The proportion exposed to unemployment has gained can be established with­
out much difficulty. For we know that little unemployment appears in farming,
among the self-employed, and it is these groups that have dwindled. Farming
occupied 85 percent of our gainful workers in 1800, today accounts for less than
10 percent.37 An almost parallel change for the self-employed took place. (Most
farmers are self-employed, of course, and vice versa.) At the same time the
share of factory employment was rising enormously, from less than 2 percent of
our labor force in 1800 to 26 percent today.38 But factory employment, and its
associated construction and transport employment, compose the most unemploy­
ment sensitive portion of the labor force. ( If, for example, one charts the changes
in factory employment against those in unemployment for the years since 1900
an extremely close relationship appears.)
That the Marxist conclusion did not follow is obvious—perhaps even to those
across the air space. Unemployment over the 19th century ran from a minimum
33 First Annual Report of the Commissioner of Labor, “ Industrial Depressions” (March
1,886), p. 65. The report estimates, on the basis of many field visits and other checks,
that of the establishments in the country “ such as factories, mines, etc. * * * about 5
percent were absolutely idle during the year ending July 1, 1885, and that perhaps 5 per­
cent were idle a part of the time; or for a just estimate 7% percent.” The estimate is
assumed to apply to all gainfully occupied in agriculture, trade, transportation, mining,
mechanical trades, and manufactures.
34 Relief data per 1,000 population: for New York in the earlier years, shown in paren­
theses, and for Massachusetts, from K. Lumpkin and D. Douglas, op. cit. Production data
from Edwin Frickey, “ Production in the United States,” 1860-1914 (194,7), p. 60, using
his series adjusted for secular trend. For earlier years the tonnage imports of pig iron,
that master material of modern industry, are used as an indication of production sensi­
tivity. Data from French, op. cit., Joseph Swank, “ The American Iron Trade in 1876,”
Annual Report of the American Iron & Steel Association, p. 182.
35Unemployment data from the writer’s “ Annual Estimates of Unemployment in the
United States, 1900-54,” in Universities-National Bureau of Economic Research, “ The
Measurement and Behavior of Unemployment,” Ed. Clarence Long (1957) production data,
1900-28 from William H. Shaw, “ Value of Commodity Outpput Since 1869” (1947), p. 23,
production data, 1929-54 : U.S. Department of Commerce, “ U.S. Output, 1958 National
Income Supplement, Deflated GNP. Price data: BLS, from Census, Historical Statistics
of the United States and 1958 Statistical Abstract.
36 R. I. Nowell, Journal of Farm Economics, February 1947, p. 143i.
37 For 1880, note 8. For 1950 the population census figures were used (1957 Statistical
Abstract, p. 213). The BLS data for more recent years are not directly comparable but
suggest much the same percentage,

38 Cf. note 8.




584

EMPLOYMENT, GROWTH, AND PRICE LEVELS

of say 1 percent to such peaks as the 4 percent we have surmised for 1819 and
1957, the 7^2 percent estimated by the Commissioner of Labor for 1886. We
may infer a close similarity between the average prevailing in the 19th century
and that prevailing in the 20th century— excepting the years of the great de­
pression. By close similarity I mean that the averages differed by less than
did the rates for 1923 and 1924, or 1926 and 1927, or 1953 and 1954. Our con­
clusion is supported for the years since 1869 by the findings in the massive study
by William Shaw on production trends.30
What produced this happy result? No higher law of economic stability, we
may be sure. The major factors are embedded in the causes of our own
economic growth—the settling of the continent, the waves of migration, the
steady rise in factor productivity and the competitive influences that poured
so much of the gains from productivity back into the Nation’s stream of invest­
ment and expenditure. (And as an aside, quite irrelevant unless we wish to
project the trend of that growth, it is interesting how much study is being
given tori ay to economic development in every country in the world but the one
with perhaps the most spectacular combination of real increase and free labor
markets—namely, our own.)
But beyond the basic forces of growth we may note two that worked only
in the labor markets, helping to counteract any rise in unemployment over the
decades. One is the increasing role of women in the labor force. In 1830, 1 in
every 12 white women was gainfully occupied, the proportion rising to 2 in 12
by 1890.40 And for the period from 1900 to today we find that the proportion of
our labor force that consists of women rose from 18 to 33 percent.41 But a char­
acteristic aspect of female employment in today’s market is that it generally
tends to supplement family income, rather than provide the very means of exist­
ence. Women’s lower seniority, often lower skills, makes them disproportion­
ately present among those disemployed. But instead of entering the ranks
of the unemployed, they tend to move directly out of the labor force, hardly
affecting the unemployment totals. From December 1948 to 1949, for exam­
ple, millions of men and women were disemployed. While half the men became
unemployed, only 18 percent of the women did.42 This distinction is a major
element in explaining our experience after World War II, when for the first
time in our history a massive decline in employment occurred without an
almost equally massive rise in unemployment.43
A second force has been the increasing role of Government in insuring stability
of production and thereby of employment. While George Washington’s un­
precedented policies on tariffs and land bounties were steps in that direction,
certainly something new, and potent, was added in the 1930’s as in the Employ­
ment Act of 1946.
Where do we go from here? The long term trend has shown major forces
that tend to reduce labor mobility. But, of course, we have no need for
mobility as such: we desire it to reach one or more of our conflicting goals
for technological advance, price stability, neighborhood property values and

^ W illia m H ow ard Shaw , V alue of Com m odity O utput Since 1869 (1 9 4 7 ), p. 23.
E xclu din g the 1 92 9 -32 con traction no trend appears in the outp u t of finished com m odities.
P articu lar valu e attach es to S haw ’s finding of no increase in th e severity of contractions,
1929r-32 aside, as h is is one of th e fou r or live m ost com prehensive and reliable statistica l
h istorical stud ies ever made of our productive grow th.
40 Cf. th e w riter’s “P op u lation and Labor Force R elation sh ip s,” p. 15, a paper prepared
for th e conference on the in terrelation s o f dem ographic and econom ic change (1958) for
d erivation of th ese estim ates. D ata for n onw hites in volve definition of the labor force
under slavery and are irrelevan t here.
41 Cf. D avid K aplan and C laire Casey, “O ccupational T rends in the U nited S tates, 1900
to 1950,” table 1, B ureau of th e Census W orking Paper, N o. 5. F igu res for a sligh tly
different age in terval, plus an extended valuable d iscussion of long-term trends appear in
a m ajor study by G ertrude B ancroft, “The A m erican Labor F orce (19,58), p. 24 if. (1957
Current P op u lation Survey data lead to a sim ilar figure).
42 U .S. Bureau of th e Census, A nnual R eport on the Labor Force, 19)49, series P -5 0 , No.
19, tab le 20. T hese data relate to gross changes, and w hile being subject to d istin ct
lim itatio n s for other uses the stead iness of the con trast betw een m ale and fem ale rates
ju stifies th eir use here. U nfortu n ately, w e lack gross change d ata for 1953, and because
of the sam ple revision even th e absolute figures on unem ploym ent are in question. Howrever, if one looks to th e O ctober-D ecem ber changes in unem ploym ent by sex (U .S. Bureau
of the Census, A nnual R eport on the Labor Force, 1954, series P -5 0 , N o. 59, tab les C -l
and D - l ) a sim ilar p attern is suggested.
43 P resen t definitions of unem ploym ent do not class th e receipt o f unem ploym ent in su r­
ance as evidence of unem ploym ent. A lthough th e w riter has opposed th is p osition —
R eview of E conom ics and S tatistics, N ovem ber 1954— it is clear th a t in th is particular
period som e w om en receiving unem ploym ent com pensations w ere n ot looking for work w ith
the in ten sity equal say to th at characterizing m ale unem ployed in m ost years.




EM PLOYMENT,

585

GROWTH, AND t>RlCE LEVELS

so on. The economist can say little on tlie values, but the time is overdue for
research on the amount of mobility that may be expected under differing policies
that are recommended to the citizen and Government policymaker for their
adoption.
What about unemployment? Despite the appalling roughness of the data
the record to date suggests no tendency to an increase in the unemployment
rate. And despite the unwisdom of forecasts it hardly looks as though we
need anticipate anything like the worst years of the 1930’s. Even a thorough­
going pessimist must admit the enormity of the advance, within the lifetime of
a man, from almost total Government inaction to the immediate concern and
swift action in the 1948-49 and 1953-54 recessions. The nation has switched
to wThat one may call the visible hand policy.
But in a dynamic economy the best is not good enough for long. We will
continue to spill men out of jobs in consequence. And, in Schumpeter’s words,
“ technological unemployment * * * linking up as it does with innovation, is
cyclical by nature.44 How much such unemployment we will put up with
turns on many conflicting goals—for unemployment, real wages, price stability,
income redistribution, defense expenditure. Resolving these imponderables
is one of the jobs ahead for American citizens and their government, and in
particular this committee.
T a b le

1.—Business declines, 1837-1915

[Ranked by relief load rise]
Percentage changes in—
Pig iron

Rate of relief—
In Massa­
chusetts
1872-76______________________
1837-38______________________
1860-61______________________
1849-50
_______ _______ ______
1892-94______________________
1913-14 _____________________
1856-57______________________
1843-44______________________
1903-4 ______ __________
1907-8 _______ ______________
1898-98______________________
1840-41______________________

+143
-9 6
+52
+47
+30
+14
+13
+9

T a b l e 2 .—

In New
York
+102
+60
+15
-6

Wholesale prices

Produc­
tion

Imports

-24
-6
-2 2
-1

-1 4
-2 9

-6
—2
0

Textiles
-2 2
-6
+1
+5
—16
—5
+7
+10
0
—14
+4
-4

-1 6
+188
+122

Metals
-3 9
-10
+2
—5
-21
-11
-1
+4
-11
—22
-7
0

Business declines, 1900-54

[Ranked by unemployment rises]
Percentage change
Rise in
Output of—
percent
civilian
labor force Finished
Gross
unem­
commod­ national
ployed
ities
product
1929-32__________________________________
1920-21__________________________________
1907-8
______________________________
1913-14__________________________________
1937-38.. ______________________________
1953-54_________ __ ____ ________________
1903-4
_______ ___________ ___ .. .........
1948-49__________________________________
1945-46--- ________________ _____________

20.3
9.6
7.7
5.3
4.7
2.5
2.2
2.1
2.0

-6
—11
—5
—2

44 Joseph Schumpeter, Business Cycles (1939) I I : 515.




-2 8
—5
-2
-1 0

Wholesale Wholesale
metal
textile
prices
prices
-3 7
-4 3
-14 .
—5
-1 3
-2
0
—6
+16

-2 0
-21
—22
-1 1
0
+1
-1 1
-4
+10

586

employment.

GftowTM,

an£> price

Levels

The C h a i r m a n . Our next meeting is tomorrow in this same room,
where the topic which we will consider will be “Past and Current
Personnel Practices Affecting Labor Mobility and Reemploying the
Unemployed.55
One of the discussants is Mr. Joseph Childs, who is vice president of
the United Rubber Workers, and the other, Jerry Morse, who is vice
president of the Minneapolis-Honeywell Corp.
Thank you very much.
(Whereupon, at 11:55 a.m., the hearing was adjourned, to reconvene
on Tuesday, April 28,1959.)




EMPLOYMENT, GROWTH, AND PRICE LEVELS

TUESDAY, APRIL 28, 1959
C o n g r ess o r t h e U n i t e d S t a t e s ,
J o in t E c o n o m ic C o m m it t e e ,

Washington, D.C.

The committee met, pursuant to recess, at 10 a.m., in room 226,
New Senate Office Building, Representative Richard Bolling presiding.

Present: Representatives Bolling and Reuss; Senator Bush.
Representative B o l l i n g . The committee will be in order. Our sub­
ject today is past and current personnel practices affecting labor
mobility and reemployment o f the unemployed. Our first witness is
.Mr. Joseph Childs, vice president o f the International Union, United
Rubber, Cork, Linoleum, & Plastic Workers o f America.
We are glad to have you with us, Mr. Childs. You may proceed as
you wish.
STATEMENT OF JOSEPH CHILDS, VICE PRESIDENT, INTERNA­
TIONAL UNION, UNITED RUBBER, CORK, LINOLEUM & PLASTIC
WORKERS OF AMERICA, AFL-CIO

Mr. C h i l d s . My name is Joseph Childs. I am Vice President of
the International Union, United Rubber, Cork, Linoleum, & Plastic
Workers of America, A F L -C IO .
It is a pleasure for me to appear before you today to present my
views on this particular aspect of the important problem which your
committee is studying. I am sure that these hearings will enable
the committee, and the general public, to arrive at an improved under­
standing o f the economic problems which our country faces.
Labor mobility and reemployment: The problem posed for today’s
discussion actually has three parts to it. When considering the ques­
tion of “ labor mobility” , we must first consider the willingness o f an
employee to leave his job to seek other employment.
“ Labor mobility” relates secondly to the willingness of a worker
to move his f amily to a new community in order to secure employment
when he is unable to find work in his home area.
Thirdly, today’s topic is concerned with the question of the reem­
ployment o f the unemployed and I take this to mean the reemploy­
ment o f laid off workers with their original company, or elsewhere.
Willingness o f an employee to leave his job: “ Labor mobility?” in
the sense of a worker’s willingness to quit his job, is not necessarily a
desirable feature of the American economy. There are good reasons
why such quits cause concern to company managers and why per­
sonnel practices have been adopted to reduce this labor turnover.




587

588

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Indeed, it is fair to say that one of the basic objectives of modern
personnel policies is to reduce labor turnover to a minimum.
This approach to the problem of voluntary quits is not new. In the
1920’s, companies developed personnel practices with exactly this
same objective to reduce the unnecessary labor turnover which was
both expensive and undesirable.
The statistics on voluntary quits indicate that “ labor mobility” in
this sense of the word has declined from the 1920 levels. Company
personnel practices in other words have been largely successful in
achieving this particular goal. In addition, however, there are other
factors which have caused a reduction in voluntary quits.
I should like to call the committee’s attention to a study of this
matter recently prepared by the well respected economist, Prof. A r­
thur Ross of the University of California at Berkeley. His article
was entitled, “ Do We Have New Industrial Feudalism?” and it
appeared in the American Economic Review in December 1958.1
Professor Ross analyzed Government and private statistics on per­
sons who voluntarily left their jobs in manufacturing plants. His
report covered the period 1910-56.
Numerous studies have shown, Professor Ross writes:
That a very high proportion o f labor turnover is concentrated among youth­
ful workers, and that practically all is concentrated among short-service em­
ployees.

This was true in the 1920’s, when union organization wTas weak,
and just as true in the 1950’s after union organization had developed
and fringe benefits had been negotiated.
Professor Ross points out that the younger worker is natural1^
“ shopping around” to find a job in a company where he feels he may
be willing to spend his future years. This type of movement between
plants is a Well-accepted fact on the industrial scene and represents
a healthy approach to the job situation. At the same time, it is
understandable that as the age and service of the worker increases,
there is far less likelihood that he will leave his job voluntarily,
whether we speak of conditions in the 1920’s or in more recent years.
While the quit rates reported for the 1950’s are lower than during
the 1920’s, much of the decline occurred in the 1920-30 decade, and
Professor Ross credits personnel practices with much of this reduc­
tion in labor turnover.
He also describes other reasons for the decline. For example, with
the growth of union organization, an employee now has a greater
opportunity to secure redress for his grievances at work.
Thus, while an employee might have been forced to leave a plant in
the 1920’s after an argument with his foreman, in 1959 he can take
his complaint through the grievance procedure and secure some satis­
faction. This means that additional satisfactions are available to
the employee at his work place and it is not surprising to find that
quit rates have dropped.
Professor Ross points to the stability of the level of total manufac­
turing employment as another explanation for the declining quit
rate of recent years. Further, he notes that the work force in manu1 Reprinted in Joint Economic Committee, Hearings on Economic Report of President,
January 1959, p. 365 ff.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

589

f acturing industries is getting relatively older and therefore less likely
to be “shopping around” to find permanent employment.
Turning to some commonly advanced explanation for the decline
in labor turnover, Professor Ross writes:
It (is) most unlikely that the reduction in the quit rate can be explained by
the attractiveness of seniority protection, group insurance, and industrial
pensions.

I recommend Professor Ross’ article to this committee because it
represents a sober and reasoned analysis of the widespread idea that
union-negotiated fringe benefits are somehow tying a man to his job
so that he is unwilling to move. Such is not the case. And Profes­
sor Ross does a good job of explaining the reasons why it is not.
Worker willingness to move his family: When an employee is with­
out a job, there are those who argue that he should be quickly and
readily willing to uproot himself and his family to seek work in
another community. But such a position does not make clear how a
worker is to know of other job opportunities, nor how he is to finance
the shift. Above all, such a position ignores the strong roots which
Americans have in their home communities, the family ties which we
cherish as part of the American scene.
A recent study of Mount Vernon, 111., illustrates the reluctance of
industrial workers to leave their hometown. The study was
made by Prof. Richard Wilcock of the University of Illinois and
published in the Monthly Labor Review in September 1947 under the
title, “ Employment Effects of a Plant Shutdown in a Depressed
Area.” It was a combined questionnaire and interview study of al­
most 2,000 workers who lost their jobs when a factory wTas closed in
a small community that already had high unemployment.
Professor Wilcock found that a majority of those persons who
had found jobs outside their home community would have preferred
returning to their hometown even at lower earnings level. Indeed,
almost half of those who took jobs in other labor market areas main­
tained their homes and families in Mount Vernon and commuted to
work or came home over weekends.
There was no question here of personnel practices affecting a man’s
decision to seek work elsewhere. Instead, the dominant influences lay
in the attitude toward his hometown, and wage income was considered
secondary to the possibility of finding work in the home community.
Distressed areas: We are faced then with some basic questions to
be answered concerning areas of the United States where hundreds of
thousands of workers are unemployed. I am referring particularly
to distressed areas where unemployment has been over the 6-percent
level for many months. I am hopeful that this session of Congress
will pass Senate bill 722, the area redevelopment bill, which has as
its purpose the relief of these blighted areas of the American scene.
Senator B u s h . I am interested in that, Mr. Childs. I wonder if
this heading you are discussing now and what you just said is not
in conflict with what you said on the previous page. One of the ob­
jectionable features of the so-called depressed area legislation to me is
the fact that it rather encourages the transfer of workers from one
area to another. Amendments were offered in the Senate, in com­
mittee and on the floor, to prevent the use of Federal funds for the
transfer of operations from one area to another. These are called




590

EMPLOYMENT, GROWTH, AND PRICE LEVELS

the antipirating clauses. One of the reasons why I favor such clauses
is that I think they encourage the very thing that you object to,
namely, the mobility of labor. I have argued this way, too, 2 years
ago, when Mr. David McDonald and I served on the Randall Com­
mission together, in connection with his argument for freer trade.
He had a plan which the union sponsored, which would provide for
the transport of workers from an area that was adversely affected by
imports. In other words, if Waterbury, Conn., was to be severely
unemployed because of added imports, never mind that, we will just
move all those people.
I objected to that very strongly. I still do. I don’t mean this un­
kindly, but this is a somewhat callous approach to the thing, because
what you say is so true: After people have lived in an area, and their
children have been brought up there, they don’t want to move. They
have emotional and sentimental ties there and they are entitled to have
them. Those are important things in life.
So I wonder whether you don’t feel that this distressed area legisla­
tion should have in it antipirating clauses, so as to prevent the mov­
ing of one active industry from one area to another at Federal ex­
pense? We can’t stop them from moving. That I would not favor.
But I don’t think the Federal Government should be in the position
of having to finance that type of move. What is your view about
that antipirating clause ?
Mr. C h i l d s . I don’t object to the mobility of labor if the worker is
willing to leave. But I do object to his being pushed around and
pushed out when he does not want to leave. My understanding of
the area development bill is that it will improve the blighted areas,
and will take work into the areas where there is this high unemploy­
ment and it will prevent some of this pushing of the worker around.
Senator B u s h . It takes work in, but where does it come from? My
objection is not to taking the work into the area, but my objection is
to taking it away and creating another distressed area from one that
is not distressed.
Mr. C h i l d s . That is not the objective of the distressed area bill, as
I understand it. It is for plant expansion. It is not for closing
down of an already established operation and moving it into a de­
pressed area.
Senator B u s h . That is not the objective of the bill but it is a very
likely result of the bill. That is the reason the antipirating clauses
I think should go in. I make a point of this because you may have
a chance to express your views on this in the House. Where is that
bill, incidentally ?
Representative B o l l i n g . It was reported out of subcommittee but
has not been acted on by the full committee.
Senator B u s h . I want to call attention to that phase of the bill,
and ask that you give it some consideration.
Mr. C h i l d s . Certainly we are highly in favor of the antipirating
phases of the bill.
Senator B u s h . Thank you very much.
Mr. C h i l d s . Thank you, sir.
I do not wish to deal at length with the problem of distressed areas,
but reference must be made to the important principle contained in
the legislation, I am referring to the concept of the redevelopment




EMPLOYMENT, GROWTH, AND PRICE LEVELS

591

and revitalization of these areas. This bill represents an important
and worthwhile fight against the problems faced by industrial com­
munities as well as rural communities in many parts of the United
States. Those problems cannot be solved by mass outward migration.
It is gratifying to note that Senator Cooper has joined with your
own chairman, Senator Douglas, in sponsoring this legislation. It
would be most unfortunate if this bill were to secure congressional
approval and then suffer a Presidential veto as did a similar piece of
legislation last year.
In Bloomfield, N.J., the General Electric Co. recently closed its
plant. In Cadillac, Mich., the B. F. Goodrich Co., largest single
employer in the community, is closing its plant. Last year, Ford
Motor Co. closed a Memphis, Tenn., assembly plant which had become
obsolete. Also in Tennessee, U.S. Rubber Co. has ceased regular op­
erations at its rubber footwear plant in Milan. In California re­
cently, the Ford Motor Co. closed an assembly plant and moved its
operations to a new streamlined building some miles distant.
These events are occurring in the North and in the South, in the East
and in the West. Unfortunately, they are hastened and intensified
by a vigorous campaign on the part of some States and communities
to secure new industry by offering unwarranted and unjustified eco­
nomic inducements which are ultimately paid for by the residents of
the area.
The special concessions are designed to attract the employer by add­
ing direct financial advantages to whatever natural advantages already
exist. Among the techniques utilized are special tax considerations,
construction and outright gift (or low rental) of the factory building,
assurance of low utility rates, heavy emphasis on low wages in the
area, and an implied promise that no union will be tolerated.
Many of these plants represent a shift in production, and not an
expansion move. With the closing of the older facility the company
is forcing the displaced workers and their community to take on con­
centrated social costs which should more properly be spread over many
shoulders. While Senate bill 722 addresses itself to this problem,
there are parties besides the Government who should recognize their
responsibilities in connection with a plant close-down.
Those who urge that the solution to a major plant shutdown lies in
a migration of the workers are ignoring the related waste which comes
from abandonment of homes and schools and shopping areas, and com­
munity services. Mobility of this sort is expensive from several stand­
points.
Reemployment of the unemployed. The next question concerns the
reemployment of laid-off workers at their places of original employ­
ment. Most union-management agreements provide that such recall
shall be according to seniority provisions. This introduces a measure
of fairness and logic into the rehiring process. Employees have some
idea as to the possibilities of recall and they know that they will be
treated according to a predetermined procedure rather than according
to the whims of the employment officer.
Such an orderly procedure means that experienced employees return
to work for the company, bringing with them their skills and knowl­
edge developed over a past period of work experience. This has an
obvious effect on such matters as training costs, turnover rates, etc.
38563—59—pt. 3 ... 9



592

EMPLOYMENT, GROWTH, AND PRICE LEVELS

There has been some loose talk that the fringe benefits which have
been negotiated by unions tend to reduce the reemployment oppor­
tunities of laid-off workers. According to this argument, management
prefers to pay overtime than add new employees to the work rolls and
thereby take on high fringe costs in addition to the hourly rate. That
argument must be buried once and for all.
Average earnings in manufacturing plants in the United States are
currently $2.20 per hour. For practical purposes then, the overtime
penalty payments are therefore $1.10 per hour.
Recent studies indicate that fringe costs in manufacturing plants
represent an average hourly cost of approximately 45 cents. This
figure is exclusive of overtime premiums which of course should not
be counted since we are considering the alternatives of overtime and
additional hiring.
Can it be said that a company would be making a wise economic deci­
sion to pay $1.10 per hour in order to avoid paying 45 cents per hour ?
In the tire and tube branch of the rubber industry, the industry
with which I am most familiar, the present level of earnings is ap­
proximately $2.70 per hour and overtime is therefore $1.35. Figures
supplied to us from company payroll data indicate that fringe costs,
against exclusive of overtime, are approximately 55 cents. Such
fringe costs are still far below the level at which it becomes economi­
cally justified to substitute overtime for rehiring.
Government figures on employment and hours published in recent
months do show that there has been a tendency to resort to overtime
work rather than to recall all laid-off workers. It is my firm belief
that any company decision on this matter was based more upon an
uncertainty about the future than upon any fringe benefit cost.
In that connection, some remarks of a company spokesman quoted
in a newspaper column by the well-known economics reporter, Mrs.
Sylvia Porter, may be of interest. On March 10, 1959, she wrote as
follows:
The executive in charge of hiring for one of the Nation’s giant corporations
was speaking freely : “ * * * I ’ll tell you this. I ’d rather have our employees
work a longer week and pay overtime than add one more man than necessary
to the payroll. We got such brickbats thrown at us when we had to lay off
men last year that I’m going to do everything I can to avoid taking on new
ones whom I might have to lay off later and invite the brickbats all over again.
It’s cheaper to pay the extra expenses o f overtime than to pay the extra ex­
pense of a public relations drive to explain a layoff.

Mrs. Porter asked him about the unemployed and the new workers
seeking jobs in the area and she received this reply:
It is not the responsibility of individual corporations to employ more than we
need to guarantee full employment at all times. It is my responsibility to my
corporation to try for maximum production and for a maximum— although rea­
sonable— profit.

The economics of managing a business and the decisions on em­
ployment of the unemployed seem to tie in more closely with the costs
of a public relations program than with the costs of a fringe benefit
program.
INCREASED JOB OPPORTUNITIES THROUGH UNION PROGRAMS

This committee is interested in problems associated with the cur­
rent unemployment levels and the possibilities that unemployment for



EMPLOYMENT, GROWTH, AND PRICE LEVELS

593

future years may not decline to reasonably acceptable levels. I think
the committee will be interested, in that context, with the effect of
various union programs on job opportunities and on labor mobility.
We have, first of all, a long-accepted program of seniority in col­
lective bargaining agreements. This means that labor mobility is
forced more upon the younger man than upon the older man and this
is in line with the job opportunities which are open to workers in
different age categories. But in most cases, unions have encountered
the strenuous resistance of management in their drive for a broad
seniority base—plantwide seniority. Such a seniority program pro­
vides increased opportunity for mobility for the older worker within
the plant and provides additional protection to those employees when
any labor cutbacks are required.
Union bargaining programs with respect to pensions have consist­
ently urged that vesting features be included. When such agree­
ments can be negotiated, the employee has the opportunity to shift
employment without suffering the loss of his pension rights built up
over the years of active work for his employer. He takes those rights
with him. To the extent that pension benefits are a factor in a man’s
decision on changing his job, the vesting provisions permit greater
labor mobility.
Also in that connection, we have urged areawide and even industry­
wide pensions programs so that an employee may transfer pension
rights when he changes employment within an area or an industry.
Increased leisure time has long been a foremost goal of the Ameri­
can trade union movement. We have been successful in moving to­
ward that goal on several fronts. Perhaps the most significant is
the vacation program that has been negotiated during the postwar
years.
Take the rubber industry as an example. Our union contracts pro­
vide that an employee with 1 year’s service with the company receives
1 week’s vacation, an employee with 3 years receives 2 weeks, an em­
ployee with 11 years receives 3 weeks, and an employee with 25 years
receives 4 weeks. Such vacations, previously restricted only to the
managerial group in the corporation, represent deserved periods of
leisure and relaxation for the factory worker. It is for that major
pupose that our union has negotiated these vacation benefits, and our
contracts require time away from the job, in spite of management
insistence that the employee should be entitled to pay in lieu of time
off.

Along with the leisure time that comes from a vacation program,
we must recognize that new job opportunities are created. For ex­
ample, in a plant with 2,000 employees, if the average employee re­
ceives 2 weeks vacation in a year, the total number of weeks of vaca­
tion is 4,000 weeks. That in effect provides 50 weeks of work for an
additional 80 employees. This could be put in general terms—in a
plant with an average of 2 weeks vacation, an additional 4 percent of
the work force is required to fill in for such vacation entitlements.
Union programs are basically designed to maintain and improve
the living standards of our members. In many respects, this means
greater freedom for a worker to seek a better life. Increased wages
have been used by many industrial workers for education programs
so that they could leave the factory. While union benefit programs




594

EMPLOYMENT, GROWTH, AND PRICE LEVELS

may prove attractive for security, they also permit the active and
energetic work to get a start in life, and, of at least equal importance,
provide an economic backdrop against which the workers’ children can
plan for a better future.
MANAGEMENT ATTITUDES ON

HIRING POLICIES

From various discussions which I have had with management repre­
sentatives, it does not seem that hiring policies are particularly
affected by fringe costs or outside influences such as the draft law.
Rather, management has today the same type of policy which they
had 30 or 40 years ago—hire the young worker, the strong worker,
the vigorous worker, who can produce the greatest quantity of quality
goods.
I should like to refer to a newspaper advertisement which reads
as follows:
Wanted at once several young men to work in bolt factory. Steady work.
Falls Hallow Stay Bolt Co., 21 E. Portage St., Cuyahoga Falls, O.

This is not a 1959 advertisement. The ad appeared in~the Akron
Evening Times oh October 18, 1922, and yet it represents the same
type of employer approach to hiring new workers as we are today
finding so much concern about.
Several employer spokesmen indicated that there was no problem
in hiring young men who might be subject to the draft. He indicated
that the company wanted to hire workers whose retirement would
be spread over a period of years rather than being concentrated in
a single year. And for that reason, an employee’s birth date was
more important than his possible susceptibility to the draft.
Other employer spokesmen mentioned to me that their company’s
high level of wages and fringe benefits enable it to secure a wide
choice among job seekers. They w^ere in a good position, in other
words, to hire the young, the vigorous, the skilled, and the adaptable
worker.
A decision to hire or not to hire comes from a company’s estimate
of future demand and depends also on the availability of machinery
to which new employees can be assigned. When the need for more
workers is established, the company will add to its employment rolls.
Have basic company hiring policies actually changed over the
years? I don’t think so. Companies are today just as interested in
the highest possible profit as they were years ago. They measure
their actions in terms of dollars and cents, sometimes seeking a shortrun advantage and sometimes seeking a long-run advantage. There
is no room in their policymaking for hourly rated employees to con­
sider human needs or relocation problems or community distress—■
unless forced to by law or by a labor contract.
This means then that company policies may have changed with
respect to something like the required level of education for a new
man, but are still constant on the basic point of cutting costs.
To meet the challenge of unemployment: Today’s unemployment
levels are excessive. Workers have been jobless for too long a period
of time. We are not making adequate progress in reducing the heavy
unemployment.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

595

I understand that this committee is addressing itself to possible
long-term unemployment problems, rather than to the current situa­
tion. But the two problems would both yield to a vigorous program
for economic growth. We have need for the increased goods and
services which our labor force and our productive machinery are
capable of turning out. Let us set our sights on that level of economic
growth which can provide the needed goods and the needed jobs.
Labor mobility and the reemployment of unemployed workers are
both far more dependent upon the general health of the American
economy than upon any provisions of a labor-management agreement
or any company policies related thereto.
Representative B o lling . Thank you very much, Mr. Childs.
The next witness is Mr. Morse, vice president of industrial relations
of the Minneapolis-Honey well Corp.
You may proceed as you wish.
STATEMENT OF GERRY E, MORSE, VICE PRESIDENT, INDUSTRIAL
RELATIONS, MINNEAPOLIS-HONEYWELL CORP.
M r . M o r s e . I am Gerry E. Morse of Edina, Minn.
Currently m y
activities include, among others, service as vice president, personnel
division, American Management Association, member of the Colum­
bia University Seminar on Labor, vice president, employee relations,
Minneapolis-Honeywell Regulator Co., research affiliate of the indus­
trial relations center, University of Minnesota, and a member of the
advisory council to the State of Minnesota Department of Employ­
ment Security. I speak today as an individual citizen interested in,
and experienced with, personnel practices affecting the mobility of
employees and the reemployment of the unemployed. My views are
my own. They are not necessarily the same as the views of others
in the various organizations with which I am, or have been, associated.
In a free society such as ours, individuals, other than some of those
in our institutions, participate in the production of goods and services
on a voluntary basis. They are free to move in and out of the labor
force as they may choose. They are also free to move within the
labor force between employment for hire and self-employment, from
one occupation to another, and from one employer to another. Be­
cause of this freedom of movement, we are never able to determine
with accuracy just who are the unemployed. The true unemployed
are only those who are out of work but able and willing to work. The
first of these tests has some degree of subjectivity; the second is al­
most completely subjective. To date, we have found no very reliable
means for measuring this second factor.
Although we do not wish to remove the freedom of individuals
to choose and change their connection with the labor force, we do
wish to avoid subjecting them to involuntary unemployment. From
the individual’s point of view, the ideal is to be able to make what­
ever movements he wishes in and out of the labor force and within
the labor force with such exact timing that he never lacks employ­
ment when he wants it. From the public’s point of view, the ideal
is to have individuals free to move from contracting operations to
expanding operations with such exact timing that we have neither
labor shortages nor unemployment. In other words, we want em­




596

EMPLOYMENT, GROWTH, AND PRICE LEVELS

ployees and employers so freely responsive to consumer demand that
we can continue to maintain a steadily rising standard of living.
Our goal is not just full employment. That by itself would be very
easy to attain. Rather, our goal is to attain full employment in
company with these corollary goals, such as freedom of individual
movement, freedom to advance to the fullest extent of the individual’s
ability and determination, responsiveness to consumer demand, and a
steadily rising standard of living for all. That is very difficult to
attain. It is important in striving to attain full employment in com­
pany with our corollary goals that we keep constantly in our mind
that our constitutional republican form of government, coupled with
our private enterprise, competitive type of economy, has proven very
much more successful than any other. In seeking to improve our
procedures so that we may more nearly attain full employment, we
should, therefore, make certain that our remedies do not run counter
to our other goals and produce a net loss rather than a net gain.
Changes in the nature of the economy: A high degree of mobility
characterized our American labor force in the earlier days. A study
of the speed with which we have advanced our geographical frontiers
shows that individuals very readily and willingly followed employ­
ment opportunities. Furthermore, our successive waves of immigra­
tion were partly responses to better employment opportunities, A
gradual change has taken place, however. From an economy charac­
terized by self-employment and small owner-managed farms, factor­
ies, stores, and banks, we have come to an economy characterized by
employment for hire, even at the top management level, and by the
giant corporation. No longer does the typical family have its own
garden, pen of chickens, and a cow in the shed. Instead, we buy our
food, eggs, and milk and have replaced the shed with a two-car gar­
age. Gaps in employment which formally were easily tided over may
now be economic crises. In considering problems of maintaining full
employment, therefore, we need to keep in mind that the steady ex­
pansion of technology undoubtedly will mean that the individual em­
ployee will grow less and less self-sufficient and more and more de­
pendent upon adapting to new kinds, and possibly to new locations,
of employment.
Some specific practices: Looking toward the future, it seems that
the trends of our scientific, economic, and political developments in­
dicate a need for periodic review of personnel practices to keep them
up to date. It does not seem likely that a return to past practices, or
the maintenance of a static set of practices, will serve our purpose
best. One of the most serious results of detailed legislation, particu­
larly at the Federal level, in employee relations is its tendency to cre­
ate pressures for a static practice. Our experience with labor legisla­
tion, to date, points clearly to the conclusion that the best results are
obained when such legislation limits itself to the safeguarding of
basic rights of individuals, organizations, and the public but leaves
the parties free to work out the details and particularly the changes
and adjustments that are necessary to meet the ever-changing re­
quirements of day to day administration.
I should like at this point to consider some specific practices and
their relationship to mobility of employees and the problems of re­
employment of unemployed persons.




EM PLOYM ENT, GROWTH, AND PRICE LEVELS

597

First, seniority: Over a long period of time, the practice of giving
increasing weight to length of service in determining which ones
among qualified persons are to have particular employment has quite
clearly reduced the mobility of employees. We have come a very long
distance from the early practice of employing literally by the hour or
by the piece. Gradually a concept of the individual’s relationship to
a particular employer, and indeed to a particular work assignment,
has built up to the point where both the employer and the individual
tend to think of increasing service as synonymous with an increasing
“ right” to the job. Although this concept has advantages for both
the employer and the employee, assuring continuity of employment
and of forming a more predictable basis for the operation of so many
of the benefit programs, it does, nevertheless, steadily reduce the will­
ingness of the employee to change employment even during long
periods when that particular employer does not have work for him.
This increased identification of the individual with a particular job
in a particular company has a further effect of reducing the indi­
vidual’s employability when his basic employer has no work for him
because other employers anticipate that, even if they hire him, he will
leave when the original employer recalls him. This is particularly
true in industrial type bargaining units where a new hire into that
unit finds himself at the bottom of the seniority list however much
service he may have had in the occupation. A test of this effect is
given in the building construction industry where journeymen, because
of the craft basis of their unions, have tended not to give weight to
their seniority with a particular employer. The mobility of indi­
viduals in the building construction trades is noticeably higher than
that of individuals in most industrial occupations.
Another interesting commentary on the effect of seniority is found
in the experience of engineers and scientists. Individuals in those
occupations have a high degree of mobility. The “ Help Wanted”
pages of our metropolitan newspapers, and the experience of our engi­
neering college placement offices show that individuals in these occu­
pations regard the entire country as their potential work area. In
fact, in those few units where engineers and scientists have adopted
collective bargaining, the contracts seldom contain seniority provisions
It would appear, from an appraisal of our overall experience, the
advantages of seniority practices for nonsupervisory, nonprofessional
employees outweigh the disadvantages. With the expected future
developments in automation, however, new approaches to the applica­
tion of seniority rights will undoubtedly be necessary if we are to avoid
reducing the mobility of many employees below that which may be
necessary for them and the public to accommodate to the needs of
changing occupations.
Second is pension benefits. Because of the very large amounts of
money necessary to afford pensions, this benefit has fairly consistently
been geared to length of service. Most plans require 10 or more years
service with an employer for an employee to be eligible for the mini­
mum pension when he works through to his retirement date. In ad­
dition, most plans increase the amount of the retirement benefit in pro­
portion to the employee’s length of service. Powerful incentives are
thereby created for an employee to maintain his service connection
with a particular employer as his equity in that employer's retirement




598

EMPLOYMENT, GROWTH, AND PRICE LEVELS

plan increases. Even under the Federal social security old-age bene­
fits program, mobility of employees is reduced because of their desire
to stay in covered employment at least until they become “ fully in­
sured.” A partial solution to the immobilizing effect of retirement
income equity is the development of vesting provisions. Under the
Federal social security old-age benefit program, an employee’s partici­
pation is uninterrupted as long as he is in covered employment, in
spite of whatever changes he may make from one company to another,
from one industry to another, or from one geographic location to
another. In private pension plans, there is a growing trend toward
the inclusion of vested rights in the form of a deferred benefit starting
at normal retirement age. An employee who has spent a substantial
number of years with an employer who has such a plan does then
create for himself some pension income which w^ill be payable when
he reaches retirement age. If his movement from employer to em­
ployer is not so rapid as to make him ineligible for minimum vested
rights with any of them, he can generate a reasonable retirement
income from the several partial benefits vested in him by his several
employers.
Another aspect of the problem arises after individuals reach normal
retirement age. As a means of protection against double cost through
the financing of a pension benefit plan, on the one hand, and the per­
mitting of individuals to work beyond the age that they are fully
productive, most companies have adopted a practice of compulsory
retirement at a particular age. Contrary to expectations, that has not
had the effect of increasing resistance to the employment of indi­
viduals close to retirement age. In fact, considering the minimum
eligibility requirements of the typical private pension plan, it has,
rather, increased the willingness to hire high-age individuals because
the employer knows that no cost for pension coverage will be involved.
This has been particularly helpful to individuals who have generated
substantial pension benefits with the U.S. Armed Forces at fairly low
ages. There are also an increasing number of policemen and firemen
who have completed their pension service with a city or town and then
taken employment in industry as guards, safety men, or security per­
sonnel. We are learning, therefore, that while the development of
private pension plans has some adverse effect on the mobility of em­
ployees, in other ways it has actually helped to increase mobility.
Third is welfare plans: The very great developments in private
benefit plans in the life insurance, hospital benefit, and medical bene­
fit areas does not seem to have reduced the mobility of employees. In
the life insurance area, this is principally true because the typical
plan is based upon term insurance coverage for the employee. In­
asmuch as no cash values are generated and maximum coverage tends
to be reached after a fairly short period of employment, the indi­
vidual does not regard loss of the coverage with one employer and the
need to qualify for it with another employer as a very serious handi­
cap to making a job change. I f more permanent forms of life in­
surance were to become prevalent, we could then expect the equities
developed by length of service to have an adverse effect on mobility.
Under the hospital and medical benefits coverages, except for
waiting periods for specific items, particularly maternity, full cov­
erage tends to be available after a very short period of employment.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

599

Here, again, the individual does not consider the requirements for
establishing himself under the new employer’s plan to be sufficiently
critical so that they have any observable effect on his willingness to
change employment.
No. 4 is vacations and holidays.
Although holiday pay provisions have no appreciable effect on mo­
bility because they are typically available after very short periods of
employment, vacation plans do have a noticeable effect. In the past,
when vacation plans typically provided only 1 or, at the most 2 weeks
of paid vacation time off, they were not generally a barrier to indi­
viduals changing jobs. Now, with paid vacation plans being lib­
eralized to provide 3, and in some cases 4 weeks paid time off plus
the speed of air travel, we may expect that more and more employees
will regard their vacation eligibility as an important factor when
considering whether or not they should change jobs.
Fifth is overtime: Overtime provisions are difficult to evaluate in
terms of their effect on mobility and upon the reemployment of un­
employed persons. For some individuals, the company which affords
regular overtime work opportunities is attractive. Such individauls
will resist changing to a job which does not afford that opportunity.
On the other hand, other individuals dislike a steady diet of over­
time work to the point where they will resist taking a job with a
company where it is required.
The more important aspect of the overtime practice hawever, is the
effect of the employer’s choice of working overtime, rather than of
increasing the number of his employees on a straight-time basis.
This is partly a question of the availability of qualified personnel but
more often a question of the relative cost of working short periods
of overtime as against the cost of hiring and training additional per­
sonnel, then suffering the adverse effect of laying them off and hav­
ing his unemployment compensation tax rate increased for his entire
payroll.
No. 6, unemployment compensation: Because the circumstances vary
so widely from State to State, it is dangerous to generalize about the
effects of unemployment compensation programs on mobility of em­
ployees and the reemployment of the unemployed. As indicated in
the observations on overtime, unemployment compensation has a very
direct effect on the way an employer will behave when he faces short
periods of additional work. Need is indicated for a much more
thorough study than has been made in the past of just which individ­
uals are truly unemployed. I f a proper differentiation could be made
between those who are clearly a part of the regular labor force and
those who are only casual or temporary or part-time participants at
any particular time, there is hope that local regulations could be
developed which would very greatly increase the mobility of such
individuals and increase the employer’s willingness to give them
employment even though their more permanent connection with the
labor market might be with some other employer. These problems
are so closely interwoven with the customs of employment in a par­
ticular industry or area that it seems quite clear no general approach
would be workable. Furthermore, when supplemental unemploy­
ment plans or guaranteed annual wage plans are also involved, the
problem increases in difficulty. At first glance, such plans might




600

EMPLOYMENT, GROWTH, AND PRICE LEVELS

appear to create strong barriers to mobility. Actually, however, we
may well find that, just as in the case of private pension plans, they
could have the effect of increasing opportunities for reemployment,
particularly when integrated with appropriate local regulations rela­
tive to State unemployment compensation benefits and taxes.
No. 7, military service : The adverse effects of the draft law have
been fairly well removed as a result, on the one hand, of the relatively
low rate of induction and the shortened period of active service re­
quired of individuals in critical occupations. Although the possibil­
ity of being called into military service was a deterrent to employ­
ment following World War II, now most employers have adjusted to
it on the basis of recognizing that it is tetter to hire a desirable
employee and accommodate to his military service than to limit em­
ployment to only those who have completed military service. While,
in general, individuals tend to return to the employer they left when
they entered military service, the effect of this is no greater than the
operation of the typical seniority provisions.
No. 8, training: One of the most encouraging signs in the develop­
ment of means for maintaining full employment is the steady im­
provement and expansion of industrial training programs. As more
and more companies develop their abilities to train their employees
for reassignment from contracting operations into expanding occupa­
tions, some of the need for intercompany or interindustry mobility
will be offset. Furthermore, the tendency to separate from employ­
ment one group of employees while, at the same time, hiring another
group will be reduced. This development is illustrative of the broad
principle that the best way to avoid problems of unemployment is to
develop the best possible chances for full employment. Encourage­
ment of industry and Government appreciation of the problems of
employers in affording high levels of steady employment can be most
helpful. To be concerned only with unemployment is to limit one’s
self to treating the effects rather than the cause. Anything which
can reasonbly be done to generate and maintain a favorable climate
for business will have its rewards in improving the chances for
continued full employment.
Representative B o l l i n g . Thank you very much, Mr. Morse.
Mr. Reuss, do you have some questions ?
Representative R e u s s . I would like to ask Mr. Morse to refer to
what he had to say about seniority on pages 4 and 5 and ask that he
spell out if he desires to his last thought under the seniority section
where he said that new approaches to the application of seniority
rights will undoubtedly be necessary. I f you have some specific
thoughts on what might be meaningful new approaches, it would be
very helpful to have them.
M r . M o r s e . The basic points of view with which seniority has been
approached in the past have been two. One is the craft type of sen­
iority, where the employee’s rights to employment are measured in
terms of his length of experience in the craft. The other is the in­
dustrial type of sensiority where his rights have been measured in
terms of his length of service for a particular employer. Both of
these points of view have been conceived in terms of a fairly stable
division of work. I f a man has been a carpenter or an electrician
or a plumber, the feeling has been that having served the apprentice­




EM PLOYM ENT, GROWTH, AND PRICE LEVELS

601

ship for that craft, and having worked in it steadily, his length of
service is his protection. In an industrial plant, the concept has
been that if a man works in assembly or if he works in punch press
or if he works in the machine shop that having established himself
far enough up the seniority line so that the ups and downs of seasonal
and other minor fluctuations in the work force do not reach him,
that he is protected by his seniority.
With the development of our technology now at a more and more
rapid pace, the problem is becoming not so much the rise and fall of the
number of people required in a particular occupation, but the fact that
the way that products are built or services are afforded is changing so
drastically that jobs which previously were involved in the produc­
tion of those goods or the affording of those services are tending to dis­
appear and new ways of doing them, new kinds of jobs, are coming in.
So that just the opposite of Mr. Childs’ concern is a threat to us,
namely, that the older, longer service, more established employee
relying on his service becomes in danger of unemployment because
he is not equipped by education or training to do the new jobs which
by technological advance are replacing or obsoleting the job that he
has done most of his work life.
My suggestion is that seniority concepts will have to be geared to
taking account of the swap of new jobs and new methods of doing
things for the old jobs, and somehow to get away from the craft or the
occupational or the departmental or the procedural basis of measuring
seniority. I should not say measuring seniority, but of applying what
seniority a man has to determining his eligibility for assignment to a
particular job.
I see an element here that is an addition to the seasonal and cyclical
threats of unemployment. It is a job change threat to employment.
Representative R e u s s . Thank you.
Representative B o l l i n g . I assume that everybody agrees that a
certain amount of mobility in labor is essential in this kind of economy.
I think this was reasonably well demonstrated by the witnesses yes­
terday, and I think everybody would probably agree that certain types
and causes of labor immobility are not necessarily desirable. But I
wonder if either of our witnesses could give us any indication of
how much labor mobility, to use a trite phrase, is a good thing as
opposed to a bad thing. How much is essential? The indications
that we got yesterday from our witnesses were that there had been
a decrease in labor mobility over the years. There was no specific
indication as to “why,” but there has apparently been a decrease in
labor mobility. Would either of you care to comment on the present
state of labor mobility? Is it enough, too much? Should there be
more, and so on? Mr. Childs?
Mr. C h i l d s . I would appraise it something like this: I think it is
just about normal—normal over a long, long period. I think mobility
of labor will fluctuate from period to period. From what I have
seen of it, and what I have experienced, I would say that we are
experiencing about the normal amount of labor mobility. That is sort
of a general answer. There have been times, particularly after or
during periods of recessions or periods of good times, that we will
find a fluctuation in the amount of mobility. I would say that it is
about normal for what we are experiencing.




602

EMPLOYMENT, GROWTH, AND PRICE LEVELS

Representative B o l l i n g . D o you care to comment on that, Mr.
Morse ?
Mr. M o r s e . Yes. I should differentiate between mobility which is
voluntary—the desire of a man to move for any reason, maybe climate,
maybe health of himself or someone in his family, maybe desire to
go to some new occupation or to some new industry, and so on—and
mobility that is forced against the desires of the individual or against
the best interests of an industry or a community. It is very difficult
to look into a particular situation and separate one of these from the
other. In the State of Minnesota, for example, there has been a very
remarkable movement of people. About 50 percent of the population
is now in three centers: Minneapolis, St. Paul, Duluth. We think
of Minnesota essentially as an agricultural or a mining State, and
yet I am sure that there has been only two reasons for that mobility.
One the changing requirements of successful operation of a farm, and.
two, the expansion of industrial employment opportunities in those
three cities.
This type of mobility has been most advantageous. It has per­
mitted the State to broaden its base, to balance its agricultural and its
mining and its raw materials economy with an industry economy.
Second, it has been helpful in avoiding undue disruption or burdens
on the farming communities because it has accommodated or has
afforded a way of moving off those individuals who in the present
agricultural economy in that State were unemployed or excess indi­
viduals. Certainly we would not want to interfere with or prevent
that type of mobility. On the other hand, when an industry or an
occupation or an activity suddenly and unexpectedly is forced to
shut down in a location, there is no question but what then we face
a problem of having to decide whether forcing those people to move
may not be an undue hardship and that it might be more economic,
more advantageous not only to them but to our economy as a whole
to increase the mobility of work. In other words, move work into
that area rather than to move people out.
These are very difficult judgments to make. One of the points in
my presentation is that I fear they do not lend themselves to general
legislative approaches in the sense of trying to spell out just what
moves are to be made. I think that if we could encourage the main­
tenance of the voluntary and the desirable type of mobility, and at
the same time encourage more effective utilization of available person­
nel when suddenly work or the need for services has disappeared in
a location, we then would be on a better track than trying to go the
route of a detailed, planned control of our economy.
Representative B o l l i n g . Would you be a little more specific in de­
scribing your general approach. Let us take as a point of departure
the currently discussed area redevelopment bill. What kind of thing
should be done in this present circumstance when we have very large
pockets of continuing, chronic unemployment in some States, while
unemployment nationwide is at a point somewhat beyond mere hard­
ship. What kind of approach does one take to this aspect of invol­
untary immobility?
M r . M o r s e . I wish I knew the answer to that. Unfortunately, I
don’t. I do not have a specific suggestion for it.




EMPLOYMENT, GROWTH, AND PRICE LEVELS

603

Representative B o l l i n g . In effect, while this should be kept very
flexible, you would agree that some sort of step needs to be taken, to
relieve this type of area hardship at least on a relief basis.
Mr. M o r s e . Absolutely. I should go beyond the need for more
relief. Our economy suffers when any area of it is in trouble and our
productivity as a nation is diminished when any segment of our Nation
is unable to be productive. We should be thinking in terms of
finding those solutions, which at the moment I don’t have ready to
describe, which would either permit such people to move to where
work was available or to move available work to where those people are.
Representative B o l l i n g . I heartily agree.

Mr. Morse. I don’t believe we should settle for either one or the
other. I think our economy is dynamic enough and our peek through
the veil into the future is indicative of a period ahead of us of suffici­
ently rapid change so that we shall need several approaches to the
problem. In a sense we have a problem of balance here. There are
areas where labor is tight. At least there are occupations w7here
the availability of qualified personnel is too low.

Representative B o l l i n g . I think there is only one area in the coun­
try today that has a critical labor shortage according to the Depart­
ment of Labor if their figures are correct. I think your qualification
on the occupational shortage is a wise one.
Mr. M o r s e . I should like to say I agree completely wih Mr. Childs
that attention to the health of our economy and affording work is far
sounder than a handout or relief. Not that relief should be denied.
We certainly have to alleviate suffering, and we have to make provi­
sions for those failures of our system to adjust as quickly or as com­
pletely as we should like. In the long run I think his point of view,
giving attention to what makes our economy most healthful, and w^hat
expands the opportunity for the production of goods and services, not
only in our own country, but throughout the world, is the constructive,
the positive approach, rather than the purely defensive approach.
Representative B o l l i n g . I certainly agree with that. Mr. Childs,
do you have some comments ?
Mr. C h i l d s . I was thinking about one of the examples that I used,
Cadillac, Mich., where the Goodrich Co. is presently in the process of
closing down their operation. Their plant in Cadillac, Mich., had
been operating for better than 20 years. When the company went into
that area, there was considerable reluctance to start an operation there
because of the geographical location of the plant and its availability
to the auto markets, It was so far away from the auto plants and all
the material had to be shipped up past the plants that they were going
to supply, and then the finished product had to be shipped back. So it
was not too desirable for them to go in there in the first instance. But
they did go in there, and they operated their plant for something a
little better than 20 years. Because of various pressures to their busi­
ness, they had to close the plant. They found it necessary to close. I
have had an opportunity to talk to many of the people that have
worked there, some of them up to 20 years, Many of them came from
farms in the surrounding areas. They have lived in the industrial life
of that community for many years. They want to continue working in
industrial plants. Many of them are applying for jobs in other areas.
They are doing it reluctantly, though. They don’t want to leave. But




604

EMPLOYMENT, GROWTH, AND PRICE LEVELS

they are forced to. So there is a matter of choice as to whether they
stay there and compete with the other available workers in that com­
munity with only a few jobs, or whether they go back to the farm,
or whether they get out of Cadillac, Mich., is a decision they will have
to make.
In many instances, the decision is to leave. I think certainly it is
the responsibility of the Federal Government to move into an area of
this type and to see what it can do to help establish industry or business
or enterprises that will make work available for those people that are
already there.
There are other situations where workers would not leave. I have
seen areas where workers refuse to leave. They would rather stay
there. Particularly this is true among the older workers. They just
stay there and hang on. These distressed areas sometimes become
blighted areas. I think probably more specifically of the coal mines
and of the textile areas. I think there it is the responsibility of the
Government to go in and help the community.
Representative B o l l i n g . Thank you. Do either of you have any
further comments ?
Mr. C h il d s . There is one comment that I would like to make in
respect to this matter of seniority. I think it is indicated that I am
a strong believer in seniority. I believe that seniority should be ap­
plied not only at the time of layoff and recall, but seniority should be
applied in periods of job openings, so that the older worker will have
the opportunity of bidding on new work that is made available. I
think that a practice of seniority in job placements within a plant
helps to overcome the conditions that will arise because of techno­
logical changes or the advent of automation within a plant. In not
all instances are these things sudden. In most instances these changes
are gradual. They may occur in one department this year and a few
months later or years later occur in another department. I f the older
workers, the senior employees, are given an opportunity to make the
changes gradually, it will offset some of the hardships that occur when
a worker finds that he is no longer trained or equipped or prepared
to do the type of work that is available by reason of technological
changes. I have seen it in quite a few of the plants. Frankly, I don’t
think it is nearly the problem that it has been made. Certainly it
is the sort of problem that can be overcome by a reasonable application
of seniority and the rights of employees to learn new jobs gradually.
Representative B o l l i n g . Thank you, Mr. Childs. The committee
is grateful to both of you for giving us your time.
This completes the third set of hearings in connection with the com­
mittee’s study of economic policies being conducted under the general
title of “ Employment, Growth and Price Levels.”
The next hearing under this study will be held May 25 through
May 28, and will examine the classical inflation and deflation caused
by increases and decreases in the effective supply of money and credit.
The committee will stand in recess.
(Thereupon at 11:30 a.m., a recess was taken until May 25, 1959,
at 10:00 a.m.)
X