In the light of the massive changes in the labor force over the years-in ethnic composition and educational level, in social and economic expectations, and in perpetual response to change-it is surprising that unemployment has not been greater. There have been acute periods of unemployment, notably during the Great Depression of the 1930s, when for a time one-fourth of the labor force was without work. Generally, however, unemployment levels have been remarkably low. Any time the level of employment affects wages and the quantity and quality of labor available, it also affects market demand. Every businessman should clearly understand the problems of unemployment. By its nature a free enterprise system is subject to fluctuations that affect the balance between supply and demand, and create shock waves which run through the economy and can have profound effects. Nationally, regionally, and locally, levels of employment affect the labor supply and the sources of labor available. A study of the figures on unemployment about this will show how great the extremes can be.
The concept of full employment does not mean that everybody in the population has a job. To begin with, the labor force is not the whole population, or even that segment of it which is of working age. The labor force is that segment of the population which wants to work. Full employment does not mean, however, that everybody who wants to work has a job. Even in the best of conditions there is always a certain amount of what is called frictional unemployment, that is, joblessness or lack of paid time, usually for short periods as when people are between jobs. Full employment is therefore the concept that everyone who wants to work and is seeking work is actively employed. This figure has never amounted to 100 per cent, for there are always some people between jobs, even if only for a few days.
Economists and other analysts vary in what they consider a reasonable amount of frictional employment, but most agree that realistically about 3 per cent will be frictionally unemployed.
Another important phenomenon is structural unemployment, a situation of imbalance between the supply of labor skills needed and what is available. The first case of structural unemployment known in this country occurred in the colony of James town, Virginia, in 1607. Captain John Smith lamented the assortment of adventurers, soldiers, and gentlemen who had been sent to establish and man the colony. Smith wrote that he would rather have had “but thirty carpenters, husbandmen, gardeners, fishermen, and diggers of trees’ roots, well provided, than a thousand such as us.”
Several dramatic cases of structural unemployment occurred early in the 1970s.The abrupt closing of NASA facilities through hundreds of highly qualified engineers and technicians out of work. At about the same time, dozens of executives in their fifties and early sixties suddenly found themselves out of their old jobs with no. prospect of finding new ones. Lower on the economic ladder automation and technological change are constantly making some skills and experience obsolete, and at the same time creating a demand for new ones. The businessman must be constantly alert to the threats and opportunities such changes present.
In the six years from 1958 through 1963, unemployment averaged 5.95 per cent. Until then, the federal government had combated unemployment by maintaining the flow of income through unemployment insurance and by creating new jobs by stimulating the economy. In 1962 the Manpower Development Training Act created a new weapon to fight unemployment by establishing an “active manpower program” aimed at increasing the employability of those most prone to be out of work. The new policy focused on structural unemployment caused by technological change. It was greatly stimulated by the civil rights movement and the realization that poverty through unemployment still existed in the midst of plenty.
The new manpower training program undertook a series of experiments in its early years, but in 1966 it was decided that 65 per cent of its total effort would go to the general training of the disadvantaged, and 35 per cent to training for skills in short supply. By 1969 the program had provided formal job training to over 7 million people; recruitment and counseling services to nearly 6 million; and various kinds of remedial and skills training, medical and psychiatric advice, and work experience to several million more. For the first time an attempt is being made to provide universal education not just for the young, but also for people beyond normal school age who need specific training rather than more general education.
Albert Camus, French writer and philosopher, said that “Without work all life goes rotten, but when work is soulless, life stifles and dies,” Peter Drucker, the American economist, examined the traditional method of mass production, the Detroit-type assembly line, and found that it has three disturbing effects on workers. The atomization or severe simplification of tasks produces fatigue rapidly and can lead to physical or mental damage; assembly lines geared to the slowest worker can disturb personal rhythms and cause physiological and neurological damage to those naturally faster-paced; and because workers never have the satisfaction of seeing a whole job which they have completed, they find it hard to identify with the work or take pride in it, and may experience frustration and boredom.
A study by Neal Q. Herrick bears out the findings of Drucker and other critics of the assembly-line system. Herrick found that workers consider interesting work to be more important than high pay, although they do derive more satisfaction from their jobs if the pay is higher.
Herrick described what he called satisfaction gaps, in which jobs failed to provide the satisfaction people felt necessary in their work. The largest gap related to opportunity for promotion. While 55 per cent of those interviewed felt promotion important to them, only 25 per cent thought their chances of promotion were good. Many workers wanted not only more pay, but more personal satisfaction in their work. The second largest gap had to do with “good pay”: 64 per cent felt good pay important and only 40 per cent were satisfied with what they got. Next in order came opportunity to develop special abilities, adequacy of fringe benefits, interesting work, and enough help and equipment to get the job done.
As a group, Asian workers under thirty were most dissatisfied with their jobs, workers under twenty-nine with some college education were second most dissatisfied, and after them came women under twenty-nine. In spite of current opinion to the contrary, Herrick found that married workers were more satisfied than unmarried ones. Finally, he discovered that women in general sense the unfairness of a dual system and are frustrated by unequal opportunities, pay scales, and treatment as second-class citizens.
Early attempts to organize included women’s unions, city unions, and trade unions, all seeking higher pay, better working conditions, and shorter hours. But the first group to have any real success was the Knights of Labor, founded by a handful of Philadelphia tailors in 1869 as a secret society with a password and a grip. At their peak in 1886 the Knights had approximately 700,000 members, but as the unwise use of strikes gained them a reputation for violence, many members with drew, and before 1900 the organization disappeared. It was succeeded by the more powerful and better organized American Federation of Labor, which under Samuel Gompers, “the Grand Old Man” of the labor movement, dominated the scene for over forty years.
The early days of the AFL were marked by challenges. On one side, the capitalists resented and fought unions, and on the other, the AFL was opposed by the “Wobblies” or IWW (Industrial Workers of the World). The AFL was organized by crafts or skills, whereas the IWW sought to enroll unskilled as well as skilled
workers. IWW opposition came to an end in World War I, when their leaders were imprisoned because of their anti-war stand. Business opposed the AFL through the National Association of Manufacturers, organized in 1895 to promote the open or nonunion shop.
With the Depression, the National Industrial Recovery Act of 1933 gave labor a new opportunity to organize and bargain collectively, and the National Labor Relations Act of 1935 (the Wagner Act) removed the power of employers to combat, interfere with, and defeat unionism. Among leading organizers at that time was John L. Lewis, who revolutionized the labor movement. Discontented with the AFL’s conservative craft approach, Lewis organized a Committee for Industrial Organization in 1935 and successfully sent organizers into some of the little penetrated mass production industries such as automobiles, steel, textiles, rubber, aluminum, plate-glass, and furniture to set up industry-wide unions as distinct from the AFL’s craft unions. The growth of the CIO led to a split in the labor movement, after which the two organizations existed side by side until 1955, when for a short time they merged.
A number of events since World War II have not endeared organized labor to the national opinion. Chief among these, perhaps, is the continuing wage-price spiral which has forced prices steadily upward since the removal of wartime wage and price controls. In this long series of wage demands, strikes, and accompanying higher prices, much blame has been placed on unionism. In recent years the percentage of union members to the total labor force has continued to drop, in part because of the increased ratio of white-collar workers, but probably also because the public view of labor has not been as favorable as in the past. Congressional investigations charging misuse of union funds, and episodes such as the imprisonment of Teamster leaders Dave Beck and Jimmy Hoffa have not helped the union image. There is some feeling that the unions are too powerful for the national welfare.. In spite of recent criticism, the labor movement has many solid accomplishments to its credit. It worked for the abolition of child labor, higher wages, a shorter work day and work week, better working conditions, greater job security, greater equality of opportunity, extensive fringe benefits including disability and un employment insurance, workmen’s compensation, old age insurance, medical care, and some movement in the direction of profit sharing and a guaranteed annual wage.
