“It is the continuing policy and responsibility of the federal government to use all practicable means… to promote maximum employment”. So says the Employment Act of 1946. But just what is “maximum employment”? Yoder tells us that “In ‘maximum employment’, all those capable of working are employed, whether or not they wish to work”.7 Obviously this is not the kind of maximum employment at which the statute is aimed. Congress certainly had no intention of setting up a system of forced labor. In fact, the language in the act restricts the government’s responsibility for providing “employment opportunities” to those who are not only able and willing to work, but who are also “seeking to work”. The term “full employment” is now more commonly used than “maximum employment”, but it has also acquired a wide range of interpretations. At one extreme there are those who broaden the meaning of the term far enough to include all sorts of visionary goals. Again quoting Yoder:
“Full employment” also suggests, in a democratic society, that each individual employee must be occupied, not only at the task for which he is best fitted, but also in that which he wants to do and for the hours per day and days per year that he, as an individual, wants to work.8
It is rather difficult for most of us to believe that anyone could seriously advance such an idea, even as a goal of the far distant future, since it is clearly out of the question until after both human nature and economic necessity have undergone some profound changes, but Yoder goes on to say that “the freedom of individuals to participate how and when and to the extent they wish is itself a major social goal as important or more important than full employment”. Injection of such fantastic concepts into what should be a serious consideration of a basic economic problem does nothing more than confuse the issues and impede the sincere efforts that are being made to reach practical goals. Anyone who keeps his feet on the ground knows that the tasks that must be performed are dictated by the needs of society and of the individuals of whom society is composed, together with the way in which the existing state of technology meets those needs. Inevitably there will be many difficult and disagreeable jobs, and there will be many more monotonous and uninspiring jobs, but nevertheless the workers must accommodate themselves to the work to be done not vice versa. Working at what one wants to do, and only so long as he wants to do it, is not “full employment”; it is complete leisure.
At the other extreme are those who propose to attain full employment by redemption; that is, they select some particular percentage of unemployment as the lowest level that, in their opinion, can reasonably be attained, as matters now stand, and then arbitrarily define “full employment” as a condition in which the unemployment does not exceed this percentage. For instance, Beveridge, one of the pioneers in the effort to establish government responsibility for employment, even though he proposed to manufacture jobs by such expedients as digging and filling useless holes, was still unable to visualize cutting unemployment below three percent. Indeed he intimated that he considered himself greatly daring in mentioning such a low figure.9 At least three workers out of every hundred are to be walking the streets looking for jobs in Beveridge’s Utopia of “full employment”. Just why they could not be digging more useless holes is unexplained. Perhaps Beveridge was in the same predicament as one of our own WPA directors who is reported to have found it necessary to send an urgent telegram to Washington asking for more leaves to rake.
The acme of cynicism comes from the government bureaucracy. According to an official of the Department of Labor, the term full employment “has no meaning apart from its political implications”.10 As he explains it, so long as there is not enough unemployment in any one place to create a public uproar there is nothing to be concerned about, and we can consider that we have full employment. When public dissatisfaction with employment conditions reaches the point where it begins to embarrass governmental officials then it is time to do something about it. Somewhat the same philosophy can be seen in the statements of many economists; in the use of the word “tolerable”, for example. Samuelson gives us his idea of a “tolerable percentage” in these words:
I would hesitate to specify the figure today, but I will say this: It would be, in my mind, less than a 4 percent figure—that is for the period ahead. I would not, realistically, think we could hope for a 2 percent figure in the near future.11
Edwin G. Nourse is more specific. He sets up a range within which the unemployment is acceptable, with upper and lower “peril points”. The upper peril point, the maximum tolerable unemployment, he places at 4 or 5 percent. A level of 2 percent he regards as the lower peril point: a “warning of inflationary overemployment, overextension of credit, or overinvestment”.12 The report of the President’s Commission on National Goals (1960) gives us a consensus as follows: “In practice, we must seek to keep unemployment consistently below 4 percent of the labor force”.12
A particularly disturbing feature of the present situation is that no one is able to say just what a “4 percent unemployment” means in terms of the number of individuals who want to work and do not have jobs. One would naturally assume that a 4 percent unemployment rate means that four out of every hundred who want jobs cannot find employment, but this is not at all true. To those who compile the statistics, “unemployment”, like “full employment” is a matter of definition, and since unemployment is a sensitive matter for the government, the term is continually being redefined to reduce the reported figures. For example, a person who becomes convinced that he cannot find a job and quits looking for one is no longer defined as unemployed, and the tendency is to get him out of the unemployment statistics as quickly as possible. According to news reports, a change made by the Bureau of Labor Statistics in 1967 reduced the “live” period to four weeks. Anyone who is out of work and says that he wants a job, but has not actually looked for one in the preceding four weeks is no longer counted.14
In view of the lack of agreement as to the meaning that should be attached to the term “full employment”, our first step in the direction of identifying the road that will lead us toward the goal we have somewhat vaguely specified by using this expression in the title of the present volume must be to identify the goal itself more clearly. It becomes apparent immediately, however, that the formulation of a precise definition of this goal is a more complex undertaking than is generally realized, as there are two separate categories of employment which are subject to altogether different considerations, both from the economic standpoint and from the social standpoint. One of these is the kind of employment toward which the policy laid down in the Employment Act of 1946 is directed; that is, jobs for those who are “able, willing and seeking to work”. For purposes of the present discussion we will designate this as primary employment.
Any broad statement of policy such as that contained in the Employment Act requires some further qualification and interpretation in application to specific circumstances, and it should be recognized that in using the term “able and willing” to work, Congress intended this to mean able and willing to work at some kind of a job currently available, under the conditions normally applicable to such jobs, and for the rate of compensation currently being paid for such work. We cannot undertake, as a matter of national policy, to provide each individual with the specific kind of a job that he likes best. The need for ski instructors or tea tasters is definitely limited, and while there are many openings for movie actresses and for bank presidents, the supply of such jobs is infinitesimal in comparison with the number of individuals who would like to have them. Anyone who puts unreasonable or unrealistic restrictions on the kind of a job that he is willing to accept is not “willing to work” in the sense in which that term is used in the Employment Act. He is not looking for primary employment.
The same comments apply to those who attach similar restrictions to the hours of employment or other working conditions that they are willing to accept, or who demand compensation in excess of the current rates as one of the conditions under which they will accept employment. Efficient organization of the productive system requires that certain regular schedules of working hours be maintained, and unless an individual is willing to adapt himself to such a schedule, he is not seeking primary employment as herein defined, and he is outside the area in which the Employment Act assumes responsibility. The primary employment is not necessarily confined, however, to what is usually termed “full time” work. Many operations are regularly scheduled on the basis of working hours that are shorter than the current “full time” standard, and other operations are regularly scheduled on a seasonal basis. Here the classification of the work depends on the part that it plays in the economy of the individual. If he depends on such employment for all, or a substantial part, of his livelihood, it is primary employment. If the work accounts for only a minor or incidental portion of his income, it is secondary employment.
The principal reason why we are distinguishing, in this analysis, between primary employment and secondary employment, in which category we will put all jobs that do not qualify under the primary classification, is the same reason that prompted Congress to make a practically identical distinction and to limit the national responsibility for providing jobs to those persons who are seeking primary employment. Such persons are the only ones who suffer hardship because of unemployment.
It is true that other persons may suffer hardship because of lack of income. Anyone who is unable to work at any normal job under normal conditions of employment may very well face serious problems, but these are not due to the failure of the economy to provide a sufficient number of jobs; they are due to the disability, whatever it may be. Likewise, the individual who is not willing to work at all unless he is provided with a job that meets his exact specifications may encounter some hardships as a result, and his family may suffer to an even greater extent, but here again the problem is not a lack of enough jobs, and the remedy lies elsewhere.
A second reason for distinguishing between primary and secondary employment is that primary employment is essentially an individual problem; that is, the consequences of lack of such employment fall most heavily on the individuals who are unemployed, and only to a lesser degree on society as a whole. Secondary employment, on the other hand, is essentially a problem of the community. If the optimum provisions for creating employment of this nature are not made, the loss manifests itself primarily as a lower standard of living for the public in general. Some individuals lose the benefit of income that they might have had, but there is no catastrophic effect on the individual worker comparable to that resulting from inability to find primary employment.
Finally, the third reason for making the distinction between these two types of employment is to lay the groundwork for development of a valid and workable theory of employment. Whatever relevance supply and demand considerations may have to the employment situation applies only to the secondary employment. Contrary to present-day economic opinion, primary employment is, in total, completely independent of supply and demand.
On the foregoing basis, we may now define full primary employment in essentially the same way that the term “maximum employment” is used in the Employment Act; that is, it is a condition in which jobs are available for all those who are able to do the kind of work required by the existing state of technology, who are willing to accept such work on the basis of current standards of working conditions, hours, and compensation, and who actually request such employment.
Since primary employment is fundamentally a matter of individual rather than collective concern, we cannot legitimately introduce any percentage margin into our definition. From the standpoint of the community, any program that reduces unemployment to very low proportions, say to one percent, would be quite satisfactory, but this low percentage has no meaning to the individual still without a job. He is not one percent unemployed; he is one hundred percent unemployed, and from his standpoint such a program is a total failure. An essential feature of a full employment program must therefore be one hundred percent primary employment.
Furthermore, in order to accomplish the clean sweep that is necessary to eliminate individual hardship, we must devise a program that will enable us to guarantee this full primary employment. A declaration of good intentions, such as that contained in the 1946 Employment Act will not serve the purpose. Nor can we be content with a program that almost reaches the one hundred percent goal. So far as the individual is concerned, there is an immense difference between a situation in which he has a reasonably good assurance of having a job and one in which he is certain of employment. As long as there is any element of uncertainty, even though relatively small, the worker always has the threat of unemployment hanging over his head, and he can never be free from apprehension about the future. Many contingencies in life are impossible to eliminate, and we must deal with these as they arise, but it will be demonstrated in this work that we can guarantee employment, and if each citizen is thus assured that so long as he is willing and able to work there will be a job for him, one of the principal burdens that the family breadwinner now carries will be lifted.
There is a very common impression that expecting the community to insure the availability of employment is impractical and unreasonable; that it is the individual’s responsibility to find himself a job, and that the most that can legitimately be expected from the community at large is some assistance toward this end. The issue of practicability will be disposed of in the chapters that follow, where it will be shown that it is entirely feasible to provide full-time employment on a guaranteed basis to all persons who are willing and able to do normal work. So far as the responsibility is concerned, it should be recognized that unemployment is purely a product of the economic organization. In a society where each individual, family or tribe is economically independent, there is no unemployment. It is only when an economic organization is developed in order to gain the benefit of specialization of effort that such a thing as lack of work enters the picture. In the ensuing discussion it will be shown that unemployment is a result of deficiencies in the economic organization rather than of any inherent lack of productive work to be done, but irrespective of the precise nature of the originating causes, it is clear that the existing inability to provide employment for everyone is an unfortunate by-product of the economic progress that has taken place. The responsibility for taking action to reduce its impact on the individual therefore rests with those who are the beneficiaries of organized economic activity; that is, the general public.
There is also a school of thought that opposes a guarantee of employment on the ground that it would tend to cause employment instability and inefficiency, inasmuch as workers would not be as responsive to pressures for efficient production if they are assured of getting another job if they quit or are discharged. Undoubtedly there will be a tendency in this direction. but the employer will still retain a powerful control over the efficiency of his working force, since the better jobs will still go to those who are the most competent and most stable, and he should find this adequate for his purpose.
It should also be remembered that, in the final analysis, the whole economic mechanism exists for the benefit of the individual workers. (Throughout this work the term “worker” refers to all those who do productive work of any kind. Where the reference is to industrial workers only, the text will so state.) In view of this fact, the use of fear as a weapon to secure greater effort from the worker is totally out of order. If workers in general prefer to work under less pressure, or to work shorter hours, or to follow any other policy that curtails production, there is no one else who is legitimately entitled to object, as long as the workers are willing to accept the reduction in income resulting from the lower production. Certainly they are overwhelmingly in favor of a guarantee of employment, if such a guarantee can be had on any reasonable terms, and this must therefore be listed as an essential feature of the employment goal.
Another requirement of a satisfactory employment program is that it should provide self-sustaining employment: jobs in which the marketable values produced by the work performed are sufficient to cover the wage payments to the workers. This is highly desirable from the standpoint of the worker, as his morale is likely to suffer if the work provided for him has an aspect of charity, but it is more than desirable, it is essential, from the standpoint of the community as a whole, since only a self-sustaining program can provide the basis for a guarantee of employment. As long as all or part of the cost has to be borne by the general public, there is always a possibility that, under extreme conditions, the cost of the program will exceed the ability or the willingness of the regularly employed population to pay the bill, and the program will collapse. In order to make a guarantee mean what it says there must be no cost to the general public, so that the program has no inherent limitations, and can be extended sufficiently to meet any situation that may develop.
In addition to eliminating the heavy weight of uncertainty that now hangs over the workers’ heads, a program that guarantees one hundred percent primary employment will also have some important collateral advantages. One of these is that elimination of “make work” practices will become possible. Restriction of output, rules that require the assignment of unnecessary workers to certain jobs, opposition to mechanization, rigid jurisdictional lines that cause lost time and delays, and similar practices are hard to combat under present conditions, in spite of the heavy cost to the general public, because the workers feel that such measures constitute an added degree of protection against loss of their jobs. When we are able, by means of a program such as the one that will be presented in the pages that follow, to guarantee every worker full-time employment, and to assure skilled workers that they will not suffer any loss if they are displaced by technological improvements, we will cut the ground out from under these obstacles to maximum production.
There is probably a minority among the workers that favors such work-limiting practices as a means of earning a living with less effort, but few of those who are in close contact with commercial and industrial operations will challenge the assertion that the average American workman would much rather be busy doing something constructive than drawing pay for wasting time. Once the job protection argument is eliminated, these restrictive practices will not only lose all semblance of support by the general public, but will also cease to appeal to the great majority of the workers.
Another important collateral benefit will be that the shiftless and indolent will lose their excuse for not working. Under present conditions it is difficult to take issue with anyone who says he cannot find a job, even though there may be good reasons for believing that he does not want to work, and is avoiding employment rather than looking for it. When we are ready to provide jobs for all who are able to work, we will put ourselves in a position where we can refuse to continue supporting able-bodied individuals in idleness, and can at least require them to earn their own subsistence. This will not only relieve the taxpayers of a large burden that they are now carrying, but will also have some salutary effects on the individuals concerned, as there is no question but that living in idleness on welfare payments or other forms of charity is definitely demoralizing.
There are some problems in connection with the administration of a guaranteed employment plan that will require some special attention. For instance, there is the question of the kind of jobs which came up earlier in the discussion. Whenever society as a whole, acting through government agencies, undertakes to provide employment for individuals who are unable to find jobs for themselves, or to compensate them in the event that such employment cannot be provided, a question arises as to how far the government is justified in permitting the workers to reject jobs that are not entirely to their liking. At present the official policies range all the way from one extreme wherein workers are allowed to draw unemployment compensation if there is no work immediately available in their narrow field of specialization, even though there is ample work in related fields, to the other extreme, which generally prevails where “made work” is the order of the day, in which workers are assigned mainly to pick and shovel jobs or to work of the “leaf raking” type without regard to their normal occupations.
In order to arrive at a sound basis for a policy with respect to this issue, we need to bear in mind that the primary reason for insisting on full primary employment is to avoid individual hardship. We are therefore justified in going as far as is necessary in order to prevent hardship, but we cannot justify burdening the taxpayer merely for the convenience of the worker. There is no definite standard by which we can judge the suitability of any particular kind of work for any specific worker, but this distinction between hardship and convenience gives us a general criterion. The character of the work that is available depends on the current state of technology, and the workers must in the aggregate, accommodate themselves to the kind of work thus determined. In an economy such as that of India, for example, where the efforts of 70 percent of the population are required to produce the needed agricultural products, it is not possible, at this time, to provide industrial jobs for any substantial proportion of the working force, irrespective of how many persons may desire such jobs, or how many may be qualified to do this kind of work. As a rule, we cannot consider that there is any hardship involved in being assigned to work of the same general type as that to which the individual is accustomed. Requiring office personnel to do hard manual labor is, of course, unreasonable, but we cannot justify allowing steamfitters to remain idle at public expense if there is plenty of work for plumbers.
It should also be noted that the present tendency on the part of social activists and politicians to condemn so-called “menial” jobs as an affront to the dignity of the workers, especially if they happen to be members of a minority group, is a disservice to the nation and to its economy. As already pointed out, the nature of the work that must be done is determined by the needs of the population and by the state of the technology, not by the occupational preferences of the workers. For the present, and as far as we can see into the future, there will be a great many essential jobs that are monotonous, difficult, or disagreeable. Some very drastic changes will be required before we can dispense with sewers, for example, and this is only one of a multitude of areas in which the working environment is necessarily somewhat less than ideal. But someone must perform each of these tasks, and as long as he is appropriately compensated, and not denied the privilege of moving to some other job for which he is qualified, if and when an opening occurs, he is simply carrying his share of the common burden. He is not being mistreated by being assigned to a “menial” job, and the repeated assertions to this effect are simply aggravating the employment situation and creating dissatisfaction that is neither justified nor remediable.
The question of the location of the available jobs will also come up for consideration. This is a rather touchy subject, as it involves not only the personal preferences of the individual workers but also the community spirit in the areas where normal employment opportunities are diminishing. If we apply the hardship criterion, however, there does not appear to be any adequate justification for making the job location a controlling factor in determining the suitability of available employment. Some provision will have to be made for absorbing any additional costs to the worker, but neither the necessity of changing the place of residence nor the blow to community pride by reason of loss of population can be classified as a genuine hardship. Of course, this phase of the program will have to be administered intelligently, with due regard for special circumstances, but in general, the program should be set up on the basis of a reasonable degree of mobility of the labor force.
A program specifically directed toward providing jobs for everyone, rather than merely assisting the individual to find something for himself (which is about as far as we go now), will eliminate most of the so-called “frictional” unemployment. However, some time interval between jobs is, on the average, unavoidable, and in a full employment program this unavoidable idle time between jobs should be handled in the same manner as the unavoidable idle time that often occurs during a working day; that is, it should be regarded as a normal feature of the job, and the worker should be paid at his regular rate. It will probably be advisable to have this payment made by the employment authority, since the placement interval will vary, but it would not be out of order to levy a severance charge against the employer. This would not be an undue burden on him, as he will be relieved of the unemployment insurance contribution that he now makes, as well as any severance pay for which he is currently obligated, but it would exert a certain amount of pressure on him to maintain as stable a labor force as possible.
Some special provisions will have to be made to take care of workers whose performance is unsatisfactory. Obviously it would not be sound policy to continue full wage payments to an individual discharged for cause, but he should have a guarantee of another job opportunity within a reasonable time. Also the severance charge should be assessed against the employer in such a case, just as in an ordinary layoff, so that he would not have a chance to gain any advantage from the discharge. Some suitable program will also have to be worked out for handling those who are chronically unable to maintain a satisfactory standard of performance on the jobs to which they are assigned, but such items are matters of detail that do not have to be spelled out specifically in a discussion of general policy. All that we are attempting to do here is to clarify the “full employment” goal at which we are aiming: to outline in a general way the kind of an employment situation that will exist once we have formulated and put into effect a practical program for achieving that goal.