This Day in Labor History: December 14, 1945

On December 14, 1945, the House passed what would become the Employment Act of 1946 once Harry Truman signed it. This was an important piece of legislation in moving the nation forward out of a renewed Great Depression after World War II, but was also a heavily watered down version of a real full employment plan, demonstrating the limitations of liberal policy making.

World War II ended the Great Depression. But policymakers knew that the war would end and they didn’t know what would happen to the economy. There was disagreement over the extent to which the underlying factors that led to the Depression had dissipated. Many economists believed that the Great Depression was the natural state of a mature economy and would return without significant government intervention. This was a serious concern as the war ended, with widespread fears of a massive economic downturn. At the same time, while liberals still held powerful positions, even under Truman, and included many notable members of Congress, the nation had been moving to the right since 1938, a shift that arguably has continued to the present. The nation was entering a more conservative period, one that definitely had a major focus on employment issues. That would peak with the Taft-Hartley Act in 1947 and the expulsion of the communists from the labor movement, but there were many policy issues that conservatives–both Republicans and southern Democrats–targeted.

Thus, the ability to get really left-leaning legislation passed in 1945 and 1946 was limited. But that didn’t mean that liberals weren’t going to push for it. This was the peak era of Keynesianism and liberals wanted to build demand for consumption through full employment. Ascendant conservatives saw all of this with suspicion. For people such as the increasingly prominent Robert Taft, nearly the entire New Deal was anti-American and should be overthrown. Meanwhile, FDR had issued his Second Bill of Rights in his 1944 State of the Union address that laid out what he saw as critical economic rights for the postwar period. First on that list was “the right for all…to useful and remunerative jobs.” The Democratic platform in 1944 included a full employment flank. Even Republican nominee Thomas Dewey gave lip service to a full employment policy. Would FDR’s liberal legacy last after his death?

What would have been the Full Employment Act of 1945 was introduced by the great Robert Wagner of New York and James Murray of Montana in January 1945. It stated:

All Americans able to work and seeking work have the right to useful, remunerative, regular and full-time employment. And it is the policy of the United States to assure the existence at all times of sufficient employment opportunities to enable all Americans…to freely exercise this right.

The bill mandated the president issue a report each year to Congress to go along with the national budget that was an overview of the economy and with an emphasis on employment. That report had to estimate the employment rate for the next year and if it was higher than the acceptable decided rate, the government had to implement specific policies to achieve its goal. Organized labor was mostly on board, as were lots of religious and civil rights groups. Granting a right like this had a serious implication for people of color, so long discriminated against in the economy like everywhere else.

Conservatives were outraged. The always odious Robert Taft led the charge against it. He argued that the government should not interfere in business cycles, naturalizing them as a phenomena government could not mitigate. He and other conservatives were horrified by the idea that the government would spend the necessary resources to ensure everyone could have a job. They still hadn’t even accepted the idea of sitting down with a union and negotiating a contract. The reality is that these were the people who controlled Congress. For people who nostalgically long for an era of bipartisanship, what they are asking for is the era where northern conservative Republicans and southern Dixiecrats could come together and eviscerate legislation that might have helped bring the nation closer to justice.

Although the original bill passed 71-10 in the Senate, the House voted it down and forced a compromise. What had happened is that conservatives stalled the bill until later in the year, the economy was doing OK more or less, and the postwar strike wave was alienating large swaths of the public, lowering support for labor from elected officials. This led to a second bill, which was nothing close to what full employment promoters such as Wagner had hoped for. First of all, it was introduced by Taft, so already it was a disaster. There was no meaningful economic report to go along with the budget. Mostly, there were just vague handwaves at creating a full employment economy without actually doing anything useful about it. There was as much emphasis on stable prices as there was on employment. It did create the Council on Economic Advisers, which did help produce a much more minimal report, but again, not one with any meaningful legal standing or mandate. Truman signed the final bill on February 20, 1946, but it did very little to move the nation toward full employment. It isn’t that it wasn’t an important bill at all. The power of Keynesianism and of labor meant that even Taft couldn’t do away with it entirely. It still did increase government economic planning. But it did not do anything around full employment and it did absolutely nothing that would impact the economic discrimination people of color faced.

What actually did do more than anything to promote full employment was the vast expansion of the American military, which day-to-day exists as a gigantic jobs program for working-class Americans, disproportionately people of color. Military Keynesianism has proven difficult for even conservatives to cut off and not coincidentally, it’s absolutely critical to the sustenance of the working class, which is not to paper over the many down sides of this.

In the 1970s, the effort for full employment policy would be revived through the Humphrey-Hawkins Act, but the Carter administration ensured that the same process happened and nothing useful would come out it. It is time to revive these ideas of full employment today.

I consulted Helen Lachs Ginsburg, “Historical Amnesia: The Humphrey-Hawkins Act, Full Employment, and Employment as a Right,” from the March 2012 issue of The Review of Black Political Economy, in the writing of this post. I know our comrade Steve Attewell has written about some of this in his new book, but it’s so new that I haven’t had a chance to read it yet. Soon!

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