Can Unemployment Be Reduced – Part 2

November 20, 2009 By

It will be necessary to do more than enlist the private efforts of employers in their own plants, however, in order to solve the problem of unemployment in any complete way. In the first place, our cities can help greatly, and in a twofold way. All public work requiring a large percentage of labor can be held off every year until-that time in the year when the average manufacturer’s business is slack. Such an expedient will tend to iron out the yearly seasonal wave of unemployment. There are also the waves of panic years which strike us with disheartening regularity every ten years or so. As provision against these a special reserve fund can be built up to be spent upon the erection of needed public work in times of severe business depression.

The Federal Government should do its part also in sharing this burden. In 1921, for instance, it has been estimated that $158,000,000 of National funds were available for road building. Appropriations for Federal buildings, rivers and harbors, post offices, etc., could be held down to the minimum for several years, and then be expanded with safety when periods of stress threaten. Combating unemployment by these methods is nothing new. So long ago as in 1913 the International Conference on Unemployment adopted the following recommendations:

1. That public works be distributed, as far as possible. in such a way that they may be undertaken in dull seasons or during industrial depression.
2. That budget laws be revised to facilitate the accumulation of reserve funds for this purpose.
3. That permanent institutions be created to study the symptoms of depression in order to advise the authorities when to initiate the reserved work.
4. That such work as land reclamation and improvement of the means of communication, which would tend to increase the permanent demand for labor, be especially undertaken.
5. That, in order to secure the fullest benefits from the reserved work, contracts should be awarded, not as Units, but separately for each trade.

There remains to be mentioned one more vital way of warding off unemployment. That is the adoption by States of compulsory unemployment insurance; Just how such a plan would be worked out is beyond the scope of this article, but it is fair to say that various workable plans have been suggested, in particular a very carefully considered one by the American Association for Labor Legislation. The main points of this plan include the taking out of insurance by the employer, all details as to rates of disbursement, amount of premiums, and the like to be under the supervision of a State board on which would sit representatives of the State, employers, and employees. In addition there would be established by the State at important centers of population governmental employment agencies so that the freest possible interchange between employer and employee would exist. There are many other important features of the plan. but the simplest way to characterize it as a whole is to say that in its own field it would operate much as the workmen’s compensation laws now operate to cut down the number and severity of accidents.

The opponents of such a plan are numerous, including a majority of employers and, curiously enough, Mr. Gompers, of the American Federation of Labor. It is Mr. Gompers’s opinion that such insurance will make pensioners out of unemployed laborers, that in hard times it will create a class who will look upon the State as a huge charitable agency, and that this attitude will gradually break down the keenness and aggressiveness for which union labor has been so well known in the past. This argument seems beside the point if we conceive the plan in mind, not as an effort of the State to dole out charitable payments in time of stress, but as a working, every-day buffer against the irregularities of employment, the whole burden of which will rest upon industry itself. It is no more a “charitable” act for a worker out of employment to accept unemployment insurance than for the same worker to accept accident insurance when he breaks his leg. In either case the worker is insured against the calamitous effects of not being able to work through no fault of his own, and the bill for this insurance is paid by that particular company which is, to some extent, responsible for the worker’s unemployment.

Of course the chief objectors to this plan will be among the employers. Their first comment undoubtedly is that it adds one more burden to overhead expense. This is the same objection that was made during the fight for workmen’s accident laws, and, in fact, for almost any laws that appear to add to the cost of doing business, no matter how salutary their effect in other ways may be. It is a selfish objection-but, more than that, it is a weak objection, for it is not true. The enactment of this law in focusing the attention of employers upon methods to combat unemployment (and thus cut down the amount of their insurance premiums) would undoubtedly have the same effect upon unemployment as a similar law has had upon accidents. It would diminish unemployment, and diminished unemployment would mean stabilized industry, more even production, and thus freer opportunities to increase business profits.

These are some of the ways by which the problem of unemployment can be effectively attacked, not only during the depressing days of bad times, but during every day of any year. With the exception of the plan for unemployment insurance and regular grants by the Federal Government, they are all ways tried before, and tried for the most part with success. There can be no lasting results. however, unless our efforts remain persistent. We have diagnosed the disease. What we must do now is to apply the antidote.

Source: Outlook, 6 September 1922

Filed Under: Industry Tagged With: , , ,

Can Unemployment Be Reduced – Part 1

November 20, 2009 By

BUSINESS men are proverbial opportunists. When skies are clear and winds are fair, they crack on sail until their industrial barks groan under the straining canvas. Let a sudden squall come up, and their alarm is exceeded only by their surprise that such an unlucky, fortuitous circumstance should catch them unawares. Canvas rips, masts snap, and once in a while the whole precious cargo goes to the bottom. But the captain usually conceives himself as the very last one to be blamed. So certain is he of his Own innocence that, once the storm is over, he is eager to jam on sail again just as though periodic squalls were as infrequent as earthquakes.

We all know now that we have been through the greatest economic storm our civilization has ever seen, and most of us feel that the skies are definitely clearing. But whereas a few months ago, when all seemed black and uncertain, we were ready to listen to anyone who had something to say on the increasingly grave problem of unemployment, it is much harder to invoke real interest in the subject to-day, because to so many business men the problem seems solved of its own accord. It will not be until the next depression hits us that we shall realize all over again how little we have done to attack the evil at its roots. Yet since some time we shall have to deal directly with this slow poisoning of our industrial fiber, there can be no harm in stating briefly how necessary is the cure and what we could do to hasten it.

What are the stakes involved in reduclng unemployment? They cover the tremendous material waste in these periodic wrenches of our industrial machinery, to say nothing of the spiritual waste involved. We are just beginning to realize that the high peaks and low hollows of seasonal trade, followed by orgies of hiring, firing, and hiring again, are infinitely more expensive than more or less stabilized production.

According to the Federal Census for 1900, over 6,000,000 persons were unemployed during the year 1899 for periods varying from one to twelve months. The American Association for Labor Legislation has estimated the total annual loss of wages of these workers at over a billion dollars. This loss of a billion dollars had to be underwritten by society in some way; either through public or private relief, loss of savings of the un-employed, or permanent crippling of the physique of those unemployed, which in turn lessens the productive power of the country.

We are also beginning to sense more vividly than ever the deep-seated power of unemployment to breed .labor unrest. Some authorities go so far as to prophesy the virtual collapse of unhealthy restlessness on the part of the workingman if only he can feel a real tenure in his job. The experience of Whiting Williams, a former vice-president of the Hydraulic Pressed Steel Company, who deliberately went to work as a laborer to learn what was on the worker’s mind, confirms this prophecy. He writes: “When we regularize industrial processes and when we make it possible for men to get out of their daily jobs the same sort of satisfaction that keeps you and me going on ours-in the overcoming of difficulties and the solving of problems and getting into our souls our sense of worth and a certain amount of recognition from our friends-then we are going to find men desiring less and less of these strange Utopias that worry us and trouble us and make us wonder what kind of minds these men can have.”

The stakes involved, then, in reducing unemployment are tremendous. They are so great as to challenge the very best of effort on the part of everyone In touch with the situation. This effort is peculiarly an obligation of the em-ployer, because, after all, he is not only as interested, for material reasons, as the employee, but no real advance short of compulsory legislation or ultimate revolution by the workers can be made without his co-operation. But, besides employers, the whole rank and file of society is concerned. It is deeply concerned, for the simple reason that every member of the community is either directly or indirectly affected by its existence.

Unemployment can undoubtedly be reduced, and reduced permanently, first, by attacking the problem in a personal way through the effort of individual employers, and, secondly, by attacking the problem in a public way through the adoption of various expedients to be mentioned later.

‘How can individual employers reduce unemployment in their own plants? The best answer to that question is to cite the experience of employers who have already done it. The Dennison Manufacturing Company, of which Henry S. Dennison is President, has adopted various means to regularize production in its plants. A recent statement by its personnel department shows how seriously and intelligently this problem is being met. It says:

At the plant of the Dennison Manu-facturing Company a marked reduction of seasonal employment has been effected by the application of certain clearly conceived principles. These principles were not put at once into sudden and complete operation, but were given a practical try-out, and were extended first in one direction and then in another, as conditions made possible. In the nature of things, any very considerable reduction must be a matter. of gradual development. It is, indeed, going on here to-day, with the goal far ahead of present attainment: but results so tangible have been secured that the means through which they have been achieved are no longer untested. The five principles applied include:

1. Reduction of seasonal orders by getting customers to order at least a minimum amount well in advance of the season.
2. The increase of the proportion of non-seasonal orders with a long delivery time.
3. The planning of all stock items more than a year in advance.
4. The planning of interdepartmental needs well in advance.
5. The building up of out-of-season items and the varying of our lines so as to balance one demand against another.

Besides these methods of decreasing the pressure of seasonal demands and evening out the inequalities we can meet seasonal employment by conforming ourselves somewhat to it. We can balance the decrease in work of one department against the surplus of another. We can transfer operatives ‘not needed in one line to’ another where there is work on hand. In doing so we make it a rule to transfer our operatives to the same off-season work each time, so that they will develop proficiency in these off-season trades.

Some of the same expedients have been adopted by the Hills Brothers Company, importers and packers of dates. Originally the demand for dates was con-fined to the fall and early winter, and particularly to the holiday season. By judicious advertising as well as sales effort the season for eating dates has been lengthened, so that now dates are considered appetizing (as they should be) from September to June. Even so, it is inevitable that a peak of demand will exist in the early fall. To meet this demand a cold-storage warehouse was erected into which is placed the daily production. Plans are so made that packing these dates continues month in and month out at a comparatively even rate, but, as sales fall off in the summer, a surplus is built up and held in the cold-storage warehouse ready for instant release when the fall demand becomes insistent. As a result of this system, the regularization of employment has been remarkable. The whole factory morale has been strengthened by the avoidance of hiring and firing wrenches, which were so upsetting under the previous conditions.

Although numerous other examples of this nature could be given, their number is pitifully small as compared with the number which might be given if only the requisite amount of foresight and planning were used by all employers alike. To grant that all business is more or less seasonal is not to grant that deep hollows of production must always remain deep. Probably ninety per cent of all business to-day could become more effective as well as more regular in the employment of its workers if the peaks were left’ alone and persistent, careful thought were given to the question of leveling up the hollows, Efforts to regularize employment are not charitable in the sense of being undertaken without hope of pecuniary reward. They are efforts that spell at the same time economic security for the worker and larger profits for the employer.

Source: Outlook, 6 September 1922

Filed Under: Industry Tagged With: ,

Relationship of Government to Business

November 5, 2009 By

Relations of Government to Business

The increasing complexity and interdependence of social life precipitate more sharply than ever the problem of the interrelations between industrial and political forms of organization and control, and this has been accentuated by the rise of large scale industrial units resembling in form while rivaling in magnitude some of the governmental units to which they are technically subordinate.

Unemployment, industrial instability, tariffs, currency and banking, international loans, markets and shipping, agricultural distress, the protection of labor, have raised many vital questions respecting the relationship of government and business, and it is easy to foresee that many others will be raised in the future. Demands are now being made for more effective control over banking, investment trusts, holding companies, stock speculation, electric power industries, railroads, chain stores, and many other activities. The new forms of corporate structure raise many problems of legal control for the protection of the minority interests, and of the community itself. The service functions of government are also likely to expand because of the demands of the special economic groups. The poverty of the marginal and submarginal farmers, the insecurity of the wage earners in industry, the perplexity of the consumers, the plight of the railroads, are likely to call for, indeed have already demanded the close cooperation of the government. Unemployment and industrial instability are of special urgency in their demands for governmental assistance, first of all in times of emergency, but also in preventing the recurrence of disastrous crises or in minimizing their rude shocks and ghastly losses.

Under such circumstances the problem of the interrelationship between government and industry is of grave importance. Shall business men become actual rulers; or shall rulers become industrialists; or shall labor and science rule the older rulers? Practically, the line between so-called “pure” economics and “pure” politics has been blurred in recent years by the events of the late war, and later by the stress of the economic depression. In each of these crises the ancient landmarks between business and government have been disregarded and new social boundaries have been accepted by acclamation. The actual question is that of developing quasi-governmental agencies and quasi-industrial agencies on the borders of the older economic and governmental enterprises, and of the freer intermingling of organization and personnel, along with the recognition of their interdependence in many relations.

Observers of social change may look here for the appearance of new types of politico-economic organization, new constellations of government, industry and technology, forms now only dimly discerned; the quasi-governmental corporation, the government owned corporation, the mixed corporation, the semi- and demi-autonomous industrial groupings in varying relations to the state. We may look for important developments alike in the concentration and in the devolution of social control, experiments perhaps in the direction of the self-government of various industries under central guidance, experiments in cooperation and accommodation between industry and government, especially as the larger units of industrial organization, cooperative and otherwise, become more like governments in personnel and budgets, and as governments become agencies of general welfare as well as of coercion.

The hybrid nature of some of these creations may be the despair of those theorists, both radical and conservative, who see thee world only in terms of an unquestioning acceptance of one or the other of two exclusive dogmas, but these innovations will be welcomed by those who are less concerned about phobias than with the prompt and practical adjustment of actual affairs to the brutal realities of changing social and economic conditions. The American outcome, since all the possible molds of thought and invention have not yet been exhausted, may be a type sui generis,
adapted to the special needs, opportunities, limitations and genius of the American people.

Those who reason in terms of isms or of the theoretical rightness or wrongness of state activity may be profoundly perplexed by the range of governmental expansion or contraction, but the student of social trends observes nothing alarming in the widely varying forms of social adjustment undertaken by government, whether maternal, paternal, or fraternal from one period to another.

Source: Recent Social Trends in the United States, an examination of the social state of the United States at the end of the 1920s undertaken at the direction of President Herbert Hoover.

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