THE LIBRARY OF THE NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS AT CORNELL UNIVERSITY Digitized by Microsoft® This book was digitized by Microsoft Corporation in cooperation witli Cornell University Libraries, 2007. You may use and print this copy in limited quantity for your personal purposes, but may not distribute or provide access to it (or modified or partial versions of it) for revenue-generating or other commercial purposes. Digitized by Microsoft® Digitized by Microsoft® THE UNEMPLOYMENT PROBLEM Research Report Number 43 November, 1921 National Industrial Conference Board THE CENTURY CO. NEW YORK PUBLISHERS Digitized by Microsoft® Copyright, 1922 National Industrial Conference Board Digitized by Microsoft® Foreword The depression in business activity which has prevailed during the past year, and the recent Conference on Unemploy- ment called by the President, have emphasized the importance of the unemployment problem as an outstanding question of modern industry. The survey and analysis of the extent and causes and the methods of reducing unemployment presented in this report by the National Industrial Conference Board are therefore of timely interest. Data as to the extent of unemployment are so incomplete and unsystematic, and experience in applying methods of reducing unemployment so clearly local and circumstantial in character, that there exists no adequate basis for a sweeping program of alleviation. The report rather sets forth certain funda- mental principles to be taken into account in considering the problem, derived from analysis of existing data and expe- rience and from basic economic considerations. It is the Board's belief that these will furnish a guide by which indivi- dual employers, local organizations or official bodies may approach their unemployment problems more successfully. Digitized by Microsoft® Digitized by Microsoft® CONTENTS PAGE I. The Problem Defined 1 The Significance" of Unemployment 5 II. The Extent of Unemployment 8 Industrial Employment 8 Estimates of General Extent of Unertiploy- ment 10 Unemployment by Sectiqns '. 11 Other Data on Extent of Unemployment . . 20 Idleness Among Organized Wage-Earners in New York State and Massachusetts . . 23 Fluctuations in General Factory Employ- ment 32 Conclusions as to Extent of Unemployment 34 III. Causes of Unemployment 35 (1) Internal Causes of Unemployment 35 (a) Personal Factors 35 Unemployment due to Labor Disputes 38 Sickness and other Disabilities as a Cause of Idleness 40 (b) Impersonal Factors 41 High Production Costs 41 IneflFective Sales Methods 42 Lack of Materials 42 Labor Turnover 42 Unemployment due to Personal Inefficiency of Employees 44 Readjustments due to Introduction of New Inventions and Processes *45 (2) External Causes of Unemployment 46 (a) Of Economic Origin 46 Over-expansion in Industry 46 Wages, profits and prices 48 Seasonal Unemployment 49 Unemployment Accompanying Business De- pressions 50 Wasteful Systems of Commodity Distribution 53 Deficient Labor- Placement Facilities 54 (b) Of Political Origin 57 Immigration 57 Government Fiscal Policy 59 Tariffs 59 International Relations 60 V Digitized by Microsoft® PAGE IV. Suggested Remjidies for Unemployment 61 (1) Reducing Unemployment Due to Causes Arising Within the Factory 62 (a) Personal Factors 62 Strikes, Lockouts and Sickness 62 (b) Impersonal Factors 64 Lower Production Costs and Improved Fac- tory Methods 65 Personnel Administration; Reduction of Labor Turnover 65 (2) Reducing Unemployment Due to Influences Operating Outside of the Plant 67 (a) Causes of Economic Origin 67 Seasonal Unemployment 68 Unemployment Accompanying Business De- pressions 70 Standardized Reports 72 Reduction of Transportation Costs 74 Encouragement of Foreign Trade. 74 Improvement of Employment Facilities 75 Unemployment Insurance Plans 77 (b) Causes of Political Origin 79 Control of Immigration 79 Government Fiscal Policies 80 Tariff Policy 81 International Relations 81 (c) The Present Depression and Emergency Measures 82 Temporary Relief Funds 82 Rotation of Employment 82 Plant Extensions, Repairs and Rearrangements 83 Reduction of Prices 83 Revival of the Building Industry 83 Public Construction Work 84 V. General Summary and Conclusions 86 Digitized by Microsoft® LIST OF CHARTS PAGE Chart 1 : Idleness of Members of Representative Trade Unions — Massachusetts, 1908 to 1920 — New York, 1904 to 1915— Mean Yearly Percentage 23 Chart 2: Idleness of Members of Representative Trade Unions in Massachusetts, by Industries, 1908-1921, Quarterly 30 Chart 3: Idleness of Members of Representative Trade Unions in New York State, by Industries, 1904- 1916, Quarterly 31 Chart 4: Fluctuations in Factory Employment in New York, Massachusetts, Wisconsin and New Jersey, 1914 to 1921 32 Chart 5: Causes of Idleness among Organized Wage- Earners in New York State — Mean Yearly Percent- ages, 1904-1915 36 Chart 6: Causes of Idleness among Organized Wage- Earners in Massachusetts — Mean Yearly Percent- ages, 1908-1920 37 Chart 7: Fluctuations in Factory Employment in Massachusetts, by Months, 1909-1918 51 Chart 8: Idleness in the Building Trades in New York State, by Months, 1908-1914 52 Chart 9: Net Immigration, Skilled and Common Labor, United States, 1911-1920 58 Digitized by Microsoft® Digitized by Microsoft® The Unemployment Problem THE PROBLEM DEFINED It is evident that constructive discussion of the un- employment problem requires, in the first place, an under- standing of and agreement upon the terminology used in connection with it. "Idleness" and "Unemployment" are often confounded as signifying identical conditions, whereas the one has an inclusive and the other an exclusive inter- pretation. Consequently the differences between the con- ditions to which these terms apply necessitate clear definition of them. "Idleness" is comprehensive in scope; it includes inactivity in a useful pursuit due to whatsoever causes, whether within or beyond the control of the idle worker. In the main, idleness arises from three principal sources, namely; unwilling- ness to work on the part of those who are capable of performing work; disability, physical or mental, of otherwise willing workers; and unemployment of those who are capable and willing to work but cannot find work because of industrial maladjustments within the plant or industry, or because of general economic conditions at home or abroad. A man may be out of work even though work is available for him, because he is lazy, suflFers from vicious habits or is averse to any useful occupation. The problem of idleness in his case becomes one of applying discipline, legislation or education as corrective measures, or of recognizing the right of the individual, under existing laws, to order his own life if thereby he does not prove either a charge upon society or a danger to the state or his fellowmen. This condition is essentially a concern of society and not of industry. A man may be out of work because, though willing to work, 1 Digitized by Microsoft® he suffers from such physical or mental disablement as to throw him either temporarily or permanently into idleness. Such disablement may be due to personal factors or social negligence quite apart from industrial conditions, or may be due to causes arising out of his industrial environment. If such an idle worker be incapacitated for work because of his physical or mental condition, permanent or temporary in character, he must become an object of private or public attention and care as a social obligation, except that, if his disablement be caused by and in consequence of his employ- ment, the employer must be made to contribute to his care as now provided for under workmen's compensation laws and similar enactments. If the disablement be of very short duration, the worker may only temporarily be subjected to a loss of wages and usually has his old job waiting for him, or has at least a good prospect of returning upon recovery to the previous or a similar job and wage-earning capacity. Finally, a man may be out of work even though he is capable and willing to perform work, because the circumstances of business have deprived him of his job and of the possibility of promptly finding another job. These circumstances may arise from causes either internal or external to the plant or industry. The internal causes may, in turn, refer to per- sonal or impersonal factors, and the external causes may be economic or political in character. The personal factors among the internal causes grow out of the maladjustments and conflicts of interests of the parties concerned in a plant or industry and, unless checked in time, may lead to strikes or lockouts and consequent unemploy- ment. Such unemployment is temporary in nature. While usually of short duration, it may, in exceptional cases, extend over long periods or even lead to a permanent condition be- cause of the discontinuance of the business affected by the strike or lockout. The principal remedy for this situation lies in providing effective adjustment of differences In the employment rela- tion before they become so acute as to lead to cessation of work by either party. This adjustment may be nothing else than a process of education for the recognition of the Insep- arable interests of employers and their employees in the common work, In many cases aided by an organized system of conciliation, mediation or arbitration, or by works councils Digitized by Microsoft® and shop committees, to establish and maintain harmony between employers and their employees. The impersonal factors relate to the failure of management to provide required raw materials and equipment, or otherwise properly to arrange the processes of manufacture for the con- tinuous flow of goods in various stages of completion from de- partment to department; or to inadequate sales methods; or to inefficient personnel administration, i.e., faulty or- ganization for the hiring, training, and discharging of em- ployees, resulting in a disproportionately high rate of labor turnover. Improvement in the efficiency of management is the essential remedy of the unemployment situation arising out of these impersonal factors in the internal situation. Sometimes the introduction of labor-saving machinery or of marked improvements in existing machinery may result in the temporary or permanent readjustment of a number of workers, but since such introduction is contingent upon a considerable time element, opportunity usually is and should be afforded to management and employees to anticipate the possibility of resultant unemployment and to arrange new means of utilizing the labor force that thereby becomes available. Still another factor internal to the industry is that of high production costs within the control of management or em- ployees. Its effects are particularly noticeable during periods of marked deflation, and are often accompanied by efforts on the part of management or employees to stem the tide of price or wage readjustment. External causes of unemployment are the most serious fac- tors in the situation, because they are more widespread in their consequences, and are more difficult to control and eliminate than the other factors herein mentioned. Aside from unpreventable calamities brought on by natural forces, this type of unemployment is the result of seasonal variations and the recurring changes from industrial pros- perity to depression; it is also influenced by wasteful systems of distribution of commodities and by inadequate distribution of the labor supply of the country. This situation is largely beyond the control of a particular plant or industry. Moreover, it is seriously affected by political factors such as are involved in immigration and tariff policies, or in inter- national relations. Digitized by Microsoft® A national immigration policy may furnish a surplus or create a deficiency of labor supply and may, therefore, either accentuate the variation in unemployment or tend to stabilize industry. A national tariff policy, by influencing the flow of foreign- made goods into the country and, consequently, the demand for home-made goods, may increase or reduce the oppor- tunity for employment of American workers and thus similarly affect the employment situation beyond the control of indivi- dual plants or industry at large. International relationships may in one case lead to reduced, and in another case to highly accentuated productivity and consequent employment, as when estrangement between nations or unsatisfactory credit arrangements may greatly and even completely curtail the opportunity for production and shipment of certain products, or a war may create great indus- trial activity due to the highly intensified manufacture of materials needed by the participants in the war. In this case also, responsibility for, and correction of, the situation rests with the state or political authority rather than with industry. Finally, a clear distinction must be made between normal and abnormal unemployment; these may result from different causes and may require somewhat different methods of treatment. The diagram below illustrates the meaning of the term "Idleness" and the nature and relationship of its causes, as herein outlined. IDLENESS caused by Unwillingness | to work Disability Unemployment due to Physical Mental Permanent Temporary Internal External Causes Personal \ Economic Impersonal Political Digitized by Microsoft® The discussions in this report do not deal with idleness caused by unwillingness to work or that caused by mental or physical disability, except for certain references to the latter subject as it affects causes and suggests remedies for unemployment. This report deals essentially with "Unem- ployment" as previously defined. The Significance of Unemployment The frequency with which serious and widespread unem- ployment has recurred, and the increasing number of persons who have become adversely affected by seasonal variations in production and by industrial depression, have placed un- employment in the first rank among important industrial problems. So much the more surprising and disappointing it is,, therefore, that so little has been accomplished, save in a few isolated instances, toward a practical solution of the problem. In the nature of things, the problem of unemploy- ment is not altogether soluble, but the possibility and neces- sity of a great forward step toward its solution must a priori be conceded. It must equally be admitted that, if the present unemployment situation contains an indictment, such indict- ment must be brought against employers, employed and consumers collectively, for only a co-ordinated effort by those three factors of society can bring ultimate and permanent relief. Modern industrial society has been built around the prin- ciple and method of division of labor. It has been slow to appreciate that interdependence of all parties concerned is a necessary accompaniment of division of labor. For this reason slight consideration has been given to the fundamental inter- relationship which exists between employers, employed and consumers, as the participants in the processes of production and consumption in our economic life. This interrelation- ship is especially noticeable in a period of unemployment of large proportions. Fundamentally, the process of production is started by the demand of the consumer and proceeds through retailer and wholesaler to the manufacturer. In practice, however, the manufacturer frequently takes the initiative in start- ing the productive process by anticipating the potential demand. This is highly important in a period of depression 5 Digitized by Microsoft® and unemployment. If anything curtails the buying power of the consumer, it must have its reaction upon the produc- tion of the country. The majority of consumers are wage- earners and their families. Actual reduction of the buying power of the wage-earners, which must necessarily result from a prolonged period of unemployment, or restriction of con- sumption due to the psychological effect of depression, means that they purchase less goods from the retailer. In turn, the retailer orders that much less from the wholesaler, and the demand for the manufacturer's goods is correspondingly reduced. This may necessitate the discharge of part of the working forces. Those who are laid off are unable, because of their lack of wages, to buy goods, except insofar as they can for a time draw on accumulated savings or are temporarily supplied with funds by other persons; and the circle of curtail- ment begins all over again. Unemployment thus results in more unemployment. The' condition in which, as is shown later in this report, normally approximately one-eighth of the wage-earners in the manufacturing industries of the country are out of work and unable to buy their normal quantity of commodities, means that the normal flow of goods is checked and obstructed to that extent. If the reduction in the total of the annual wages received amounts, as has been estimated, to between one and two billion dollars, it means that much less demand for goods. Unemployment, therefore, is a brake on business, whether viewed from the standpoint of the manufacturer, whose lack of orders may be caused by the diminishing purchasing power of the workers; from the standpoint of the wage-earners, some of whom are out of work and others only working part time; or from the standpoint of the merchant, whose goods do not move, due to the reduced buying power of those of his customers who are out of a job. Again, from the stand- point of the public, unemployment is a condition of grave concern, for, in addition to lowering the economic strength of the community, it places upon the latter the burden of helping in one way or another to support the unemployed. Moreover, unemployment tends to dishearten the work- man who is unemployed, and to fill him with resentment against conditions as they exist. To the wage-earner the amount of his unemployment is quite as important in determin- Digitized by Microsoft® ing his earnings as are his wage rates. Since a worker's earnings mean a certain wage rate multiplied by so many days of work, fewer days of work cut as seriously into his earnings as lowered wages. Part-time employment as well as unemployment play a role in this situation, but in different degrees. Although a worker may remain on the payroll of a particular em- ployer, his earnings may be greatly reduced by irregular employment which keeps him busy for only a part of the normal number of days per week or hours per day. Thus part-time employment is a factor in lessening the steadiness of the wage-earners' buying power. In general, unemploy- ment means no wage income, no matter what the wage rate. On the psychological side, unemployment produces weak- ened morale, discouragement, discontent, a tendency to radicalism — evils as serious as those which accompany reduced buying power. 7 • Digitized by Microsoft® II THE EXTENT OF UNEMPLOYMENT In this section is presented certain information bearing on the extent of unemployment. In connection with it, it should be noted that reliable statistical data on this question are meager and unsystematic and comparable in only a general way, so that it is impossible to draw from them definite and accurate conclusions as to the character and volume of unem- ployment either in normal times or in the prevailing business depression. Moreover, the unemployment situation is chang- ing continually with changes in the industrial situation and with seasonal fluctuations in business activity. The data here assembled have been gathered from all available authori- tative sources and cover conditions down to the date of prep- aration of the report. They have been selected and arranged only for the purpose of presenting a general statistical picture of the extent and character of industrial unemployment and to bring out the salient points in connection with this question. Industrial Employment Persons engaged in gainful occupations in the United States fall roughly into three groups. About a quarter of our people work on farms, raising crops and livestock; a third is engaged in manufacturing, mining and the building trades, converting raw materials into useful finished products; while the re- mainder carry on the tasks of distribution and perform the necessary auxiliary work connected with transportation, wholesale and retail trade, and personal and professional service. The number of persons and the percentage in each of the main classes who were thus gainfully occupied, accord- ing to preliminary figures of the United States Census of 1920, was as follows: Digitized by Microsoft® Occupation Number Per Cent Agriculture, forestry and animal husbandry 10,951,074 26.3 Extraction of minerals 1,090,854 2.6 Manufacturing and mechanical industries 12,812,701 30.8 Transportation 3,066,305 7.4 Trade and auxiliary occupations — Trade (retail and wholesale) 4,244,354 10.2 Public service (not elsewhere classified) 771,120 1 .9 Professional service 2,152,464 5.2 Domestic and personal service 3,400,365 8.2 Clerical occupations 3,119,955 7.5 Total engaged in gainful occupations 41,609,192 100.0 In this discussion of the unemployment problem the term "employment" refers to persons who are employed by some one. Many of those gainfully occupied are employers, self- employed persons or independent operators rather than employees. The terms "employee" and "employment" there- fore do not apply to an estimated number of 6,000,000 farm- ers, 1,500,000 merchants and shop keepers, 275,000 manufac- turers and oiEcials, and 2,500,000 professional and other per- sons included in the 41,609,192 gainfully occupied in 1920. These groups, totalling over 10,000,000 persons, must be left out of consideration, thus reducing the population "engaged in gainful occupations" in 1920 to about 31,000,000 persons. In this report we are concerned chiefly with the "industrial wage-earners," in which group fall those employed in manu- facturing and mechanical industries, in transportation and in the extraction of minerals, totalling in 1920, 16,969,860 persons. It is estimated that in 1920 the total number of those engaged in the group of manufacturing and mechanical indus- tries was 12,800,000. It is impossible to estimate accurately how many of those gainfully occupied in this group are not to be included among employes, so that the figure as given is used in later discussion in this report. Most of the available em- ployment statistics pertain to the wage-earners in this group, and for this reason, as well as on account of the preponderance of their numbers, cognizance in this report is taken chiefly of them. Consequently, whenever the terms "industrial wage- earners" and "industrial employment" are used here, they must be understood as referring chiefly to the wage-earners engaged in manufacturing and mechanical industries. 9 Digitized by Microsoft® Estimates of General Extent of Unemployment An unemployment survey of the entire country, conducted by the Federal Government in January, 1921, estimated that the number of persons in "industrial employment" was 3,473,446 less than in January, 1920.^ The survey of unemployment made by the Federal Reserve Board in April, 1921, showed 25 per cent fewer persons employed in industry than in April, 1920.^ In New York State, employment was 25 per cent less at the close of January, 1921, than in January, 1920.^ The State of Massachusetts, in which over a period of thirteen years, from 1908 to 1920 inclusive, the yearly percentage of unemployment of organized wage- earners averaged 9.6 per cent, reported 30 per cent at the close of the quarter ending March 31, 1921. The highest percentages in years previous to 1920 were 17.9 per cent for the quarter ending March, 1908, a season of panic, and 18.3 per cent for the quarter ending December, 1914, following the business slump which came at the beginning of the World War.* The United States Industrial Employment Survey Bulletin,^ covering employment in 14 manufacturing industries as ob- tained from the payroll records of 1424 concerns, each usually employing 501 or more employees, in the 65 leading industrial centers, shows that on January 31, 1921, these 1424 concerns employed 1,628,134 and on April 30, 1921, only 1,580,749, a decrease of 47,385 persons, or about 3 per cent. For May 31, 1921, the report covers 1428 firms in the same industries and cities, employing 1,573,538 persons, which on July 31, 1921, had decreased their aggregate labor force to 1,510,210, a de- crease of 63,328, or over 4 per cent. The figures released on September 5, 1921, by this same service, indicate that on Aug- ust 31 these firms had 16,269 more employees on their payroll than on July 31, or an increase of 1.08 per cent. Of the 65 cities, 38 reported employment increases and 27 reported decreases. The Bulletin suggests that "in any just appraise- ment of the situation, it must be borne in mind that the 1 United States Employment Service. Industrial Employment Survey Bulletin No. 1, p. 2. ' Federal Reserve Bulletin. May, 1921, p. 526. • New York State. Bulletin of the Industrial Commission. Press Releases of February, 1921. * Massachusetts. Industrial Review. June, 1921, p. 25. ' Bulletin No. 7, August, 1921. 10 Digitized by Microsoft® . improvement shown can be traced in great measure to the vast agricultural activities of the month, and that as yet the major manufacturing, mining and transportation interests have given less conclusive evidence of the value and perma- nency of such small gains as they have experienced." Unemployment by Sections In its Service Letter No. 82, of September 19, 1921, the National Industrial Conference Board says: A survey of the unemployment situation throughout the United States made during the latter half of August, 1921 , shows that Amer- ican industry as a whole is at present employing from 20% to 25% fewer persons than it did in July, 1920. The peak in 1920 marked an unusual period of industrial development in the United States when many persons who had never been previously employed and others who had engaged in non-industrial occupations, such as domestic service and agriculture, were attracted to industry. Many of these, particularly women and previous farm workers, have since the beginning of the depression withdrawn and returned to their former occupations. On this account, the farms which for several years have been reporting a continued shortage of labor, now report a surplus. Specific industries show, in some cases, a better employment condition than prevailed at the beginning of the year, while others show a markedly worse con- dition. Returns from the individual states give an intimate view of the existing employment situation. New England States Throughout the New England States unemployment was re- ported as most serious in the metal and building trades. The textile mills, both in the cotton and woolen industries, were oper- ating, however, "at a good proportion of their maximum capacity." In close step with them were the boot and shoe factories, which have taken increased orders and are speeding up production. The paper industry is improving, although rather slowly, and progress has been made in the readjustment of wages. The metal trades have not yet experienced a definite revival and are exceedingly dull. In Maine, the boot and shoe industry, which normally employs about 12,000 persons, is now occupying about 30% of these on full-time work, 50% on part-time work, while 20% are unem- ployed. In the cotton industry normally employing slightly more than 14,000 persons, 65% are engaged on full time, 20% on part- time and 15% are idle. In the pulp and paper industry, employ- ing about 15,000 under normal conditions, 60% are now engaged on full time, 20% on part time and 20% are unemployed. Of these unemployed, three-quarters are idle on account of strikes. In the wool manufacturing industry, normally employing about 11,000 persons, 80% are working full time and the remainder are working part time. The lumber mills, with about 11,000 workers normally, are employing about 50% of these on full time, 20% on 11 Digitized by Microsoft® part time, while 30% are unemployed. Because of the dullness in the building trades many lumber mills in the state have been entirely shut down. Of the 5,000 persons normally employed in the shipbuilding industry, 25% are engaged on full time, while 75% are unemployed. In the sardine industry, also employing in excess of 5,000 persons, about 25% are employed and the remainder are idle; in this industry, however, the employees are drawn from villages surrounding the plants and when not engaged at sardine packing find part-time employment in other occupa- tions. Common and farm labor are plentiful and a large number of woodsmen are out of work. Some of the unemployed have found work in agriculture, seasonal occupations and on the state roads. Altogether the number of unemployed in the state is estimated as between 18,000 and 20,000. According to the Deputy Commissioner of Labor, "this is comparatively the same number that was out of work at the end of last summer, but is rather more than were unemployed in January, owing to the fact that the woolen mills were practically closed down during the latter part of 1920 and the first of 1921, but the building trades during that period were quite busy. This condition has reversed itself so that now while the woolen mills are running nearly normal the building trades are very dull." In New Hampshire, a state investigation in June showed that about 61% of the persons in the state were working full time, 18% part-time, while the remainder, 21%, were totally idle. The best condition at that time prevailed in textile, food, lumber, pulp and paper, and boot and shoe establishments. About one-third of the employees in metal trades were totally idle and one-fourth more working part time. During the latter half of August with the exception of some further improvement in textile and boot and shoe manufacturing, conditions were unchanged. In Vermont the metal trades are reported at a low ebb, and the stone working industries (granite, marble and slate) are consider- ably depressed and show a worse condition on the average than in January, 1921. Since the beginning of the year, however, a marked improvement has taken place in the textile industries, which at present are running at from 75% to 85% of full capacity. In Massachusetts about 25% of the workers are unemployed. This represents an improvement over the close of December, 1920, when the percentage of unemployed was 31.8, but a worse condi- tion than that at the end of September, 1920, when the percentage was 19.3. The building trades are less active, while textile and boot and shoe establishments show more employment than in recent months. In the printing industry, where there are many orders on hand, operations have been seriously interfered with by widespread efforts of trade union employees to secure a 44-hour week. Although unemployment remains at a high point, it is felt that the demand for labor is slowly but steadily increasing. The situation in Rhode Island has changed little since June. Some textile establishments have shown improvement, while with others the reverse has taken place. Unemployment and part time are general in the metal trades, while the printing industry is idle, substantially due to disagreement over working conditions. About 33,000 are totally idle in the state and the general indus- trial outlook is uncertain. The greatest unemployment exists in 12 Digitized by Microsoft® the metal and jewelry trades and in quarries and stone work. Textile plants are working at 75% of their full capacity. In Connecticut, 120,000 persons were estimated to be idle on August 15, 1921. This represented a decline of 51% in employ- ment since July 1, 1920. With the exception of the woolen in- dustry, most plants were on part time, running from three to five days a week. The metal plants, which were most affected by the general slump, were slowly improving at the beginning of September. Middle Atlantic States The situation in the Middle Atlantic States is, on the whole, rather serious, there being about a million persons unemployed in this highly industrial section of the United States. Prevailing opinion among business men is that while improvement will take place, it will be slow in development. In the state of New York over 450,000 factory workers are totally unemployed. Between July, 1920, and July, 1921, em- ployment declined 27%, and between January and July, 1921, the decrease was 5%. Further curtailments during August are reported by the State Industrial Commission. The metal trades, which in July showed the worst condition of all the industries in the state, were more active in August. This was due to increased employment in factories producing iron and steel, railway equip- ment, heating apparatus, brass and copper goods and jewelry. Sheet and metal plants and factories making hardware, firearms, machinery, electrical goods, typewriters and automobiles reduced their forces, but not enough to offset increases in other metal manufacturing plants. Food, textile, paper and shoe and leather goods continued to add to their personnel, but this greater activity in the food, textile and shoe industries is largely seasonal. The clothing industries as a whole were in better state in August than July, but operations were not uniform. The men's clothing in- dustry, for example, reported a further increase in employment, but the men's furnishing industries reported a decrease. Shirt and collar factories in the Troy district were closed during most of August, the annual vacation shutdown being extended because of business conditions. Women's clothing and millinery estab- lishments likewise showed a gain in employment during August, but plants manufacturing women's undergarments reported les- sened employment. On the whole, those industries in the state which were first affected by the depression, like the textile and clothing industries, appear to be in a better condition now than they were several months ago, but this improvement is partly due to seasonal variations in employment. In New Jersey about 110,000 persons are idle throughout the state. This number, while representing an increase over un- employment in January, does not indicate the full liquidation of labor, because many, upon termination of employment, have left the state. In Delaware unskilled and skilled labor share equally in the existing unemployment. Shipbuilding, which during the war gave employment to many thousands, is now reported as "perhaps the dullest of all the industries here, with steel manufacturing in- 13 Digitized by Microsoft® dustries running a close second." The canning industries, which give employment to a large number, are facing a decline, the feehng being that "the growers will find it more to their financial advan-; tage to sell their products raw in the open market, rather than sell them to the canners where a much lower price would be given." In Pennsylvania, extensive curtailments of operations in the iron and steel and coal mining industries, two of the leading in- dustries of the state, have taken place. Many of the mines are closed and others are operating on short time. Iron and steel mills in the Pittsburgh district were reported as running at 30% of capacity at the beginning of September and machine shops at between 25% to 45% of capacity. The total number of persons idle in the state on August 15th was estimated at 300,000, among which approximately 69,000 were formerly engaged in metal and machinery plants, about 48,000 in mines and quarries, over 20,000 in wholesale and retail establishments, about 12,000 in transportation industries and in public utilities, while over 61,000 were classed as common laborers. On July IS, 1921, a month before, the total number of idle in the state was estimated at about 285,000, among which were 59,000 metal and machinery workers, 49,000 common laborers, 28,000 miners and quarry- men, 12,000 building laborers, 14,000 transportation workers and 16,000 persons formerly employed in wholesale and in retail establishments. South Atlantic States In all of the states in the South Atlantic section the larger number of those unemployed are unskilled workers. Part-time work is prevalent and, while there is a surplus of farm labor, it is expected that much of this will be absorbed in the planting of winter vege- tables and in handling the citrous crop. The financial resources of many of the unemployed are low and should no improvement in employment take place in the next few months a large part of those idle will be destitute. The recent upward trend in cotton prices, which is one of the most important crops in this locality, is expected to have a favorable influence on all other industries. In Maryland, unemployment continues to grow slowly, but the total number of idle in the state is not excessively large. Clothing and textile establishments, machinery and chemical manufacturing plants show a better condition at the end of August than in the preceding month, while foundry, shipbuilding, canning, furniture and paper box activities show declines. In Virginia the Conference Board is advised that 90% of those without work are unskilled. Employment has declined since January and the opinion prevails that a major part of those idle are non-residents of the state who have drifted in from other localities in search of employment and "who are not financially able to support themselves." In West Virginia the number of unemployed has increased 40% since January. Labor troubles in the mining districts are re- sponsible for much of the idleness and with about half the em- ployees in the state epgaged in mining and others dependent for work on the operation of the mines, the situation is much de- pressed. Strong hopes for revival by late fall or early spring prevail, however. 14 Digitized by Microsoft® In North Carolina and in South Carolina the situation during re- cent months has improved. This is due to the augmented activity of textile and lumber mills. Tobacco factories are generally oper- ating full time. Unemployment is confined almost solely to the unskilled. In Georgia unemployment is almost entirely limited to the urban districts. Textile mills are more active, sawmills and wood- working concerns report no change, while iron and steel plants and machine shops are running much below normal. In Alabama unemployment is confined to coal, iron and allied industries. This state is one of the few instances in which un- employment has already resulted in destitution sufficient to make relief by local agencies necessary. Negro labor constitutes a large part of the working force in the state. The situation, while worse than at the beginning of the year, is at present showing "a slight gradual improvement toward normalcy." In Florida unemployment is negligible and in some localities a shortage of labor prevails. North Central States In the North Central States, which constitute an important manufacturing section, the situation is tinged with much pessi- mism, although some states report favorable employment condi- tions. From Ohio it is reported that the situation is more acute than at this time last year, or compared with last January, inas- much as the men unemployed at those periods had just been released from a most profitable employment period. Continua- tion of unemployment has caused many of them to use most of their resources, so that they not only find themselves out of work but without money. Steel mills and rubber manufacturing plants are operating at about 30% of normal. 50,000 miners are prac- tically idle, automobile plants which showed some improvement recently, have sagged again and only the boot and shoe industry shows a healthy state of employment. In some of the industrial centers the unemployed are being fed as a matter of charityfand this situation will grow more acute as winter approaches. Hun- dreds of cases have been reported to the charitable organizations wherein gas has been shut off, due to the inability of the people to pay their bills. In Michigan the improved condition of the automobile and truck manufacturing industry, the largest in the state, has reacted on important allied and accessory industries to such an extent that the situation is pronounced about 25% better than January last, and better than October, 1920. Common labor constitutes the major part of the unemployed group. In Wisconsin about 130,000 persons are idle and unemployment has affected the skilled laborer just as severely as the unskilled. From one-quarter to one-half the factories now running are oper- ating on a shorter basis than they were last summer. In July, 1921, there were 10.6% less persons employed than in January, 1921, and 39.2% less than in January, 1920, the peak month of employment in the state. The automobile industry in Wisconsin is stated not to have shown the recovery that is indicated, for that industry elsewhere and the number of employees is, therefore, 15 Digitized by Microsoft® continuing to decline. Mining and the metal industries have been affected most severely and, next to them, wood-working. Since January the decrease in the number of employees from month to month has been small. Improvement is looked for with the passing of the dull summer months. South Central States In the South Central States the situation is not much unlike that of the South Atlantic group, although not so serious in character. Business appears to be in a static condition with little outlook for immediate improvement. Rather it is expected that the number of unemployed will be increased by the return of men from the harvest fields. In southeastern Kentucky and in Tennessee more than one-third of the mines are shut down, while those that are running operate no more than two or three days a week, except such as are loading coal for the railroads. The demand for this coal is, however, reported as "far short of normal." The number of unemployed in Kentucky is placed at 60,000. With the majority of these "practically out of money and very near ready to become objects of charity," and with no likelihood of immediate improvement, the situation is regarded as serious. Unemployment is most noticeable in Kentucky tobacco, coal and agricultural industries, but most factories, with the exception of textile mills and clothing establishments, are working below normal. Lumber mills in Mississippi are operating at 80% of normal at this time of the year. In Louisiana unemployment and part- time work are general. In Arkansas large numbers are unemployed and no immediate improvement is looked for. Middle Western States In the Middle West the situation is one of hesitancy with much dubiousness as to the future. While the fact that the harvest season is now in full swing has relieved the surplus of labor, much speculation prevails as to what will happen when the harvesting has terminated. In Illinois many factories are operating at one-third of capacity. Disputes in the building industries have kept from 50,000 to 60,000 persons idle for some time, but a recent decision which both employers and employees bound themselves to accept and which cut wages from 10% to 36% is expected to influence the situation for the better. Some slight improvement in the iron and steel industry occurred in the last month. Plant operations through- out the state range from 10% to over 75% of normal. Indiana reports unemployment, but not of a serious character. In Minnesota the situation is little improved over last fall. Iron ore mines in the northern part of the state are practically closed down and building operations have not shown the revival that was anticipated. Railroads have been adding to their personnel but are still running with smaller forces than they had prior ta July, 1920. Harvesting operations now at their height have 16 Digitized by Microsoft® absorbed much of the labor surplus but, according to the Secretary of the State Industrial Commission, the real problem will come when the harvest is over. In Nebraska, too, the situation is little improved over the beginning of the year, and an increase in unemployment is looked for with the termination of the harvest. A somewhat different condition exists in North Dakota and in South Dakota. From the former it is reported that unemployment is almost negligible. The North Dakota Industrial Commissioner states that at present any laborer who will work on a farm at the wages oflFered, can secure work. There is no more unemployment now than there was in the state last year at this time. About 1,000 persons in the state are unemployed at this time and these are largely migratory laborers who have just finished threshing and are drifting out into other localities. Skilled laborers are all working about as usual and such unemployment as exists affects common laborers only. With the end of seasonal agricultural work, the number of unemployed is expected to increase. The Industrial Commissioner of South Dakota states: "We have made no study in regard to the unemployment here for the reason that it has not been at any time very serious. I think the per- centage of unemployed is very small, in fact, I can hardly think of any at all that I know personally. Doubtless as the season advances and agricultural operations are finished up, there will be some unemployment for the winter. I should say that the general industrial outlook in this state, while not exceptionally bright, is not noticeably dull." In Iowa, the situation is much improved and in the industrial sections the opinion is general that the depression is passing. During June, plants were employing about 40% of their maximum number, and since then steady improvement has occurred. Packing plants are running about normal. The cereal mill indus- try is only partially active and the brick and tile manufacturing establishments are practically idle. Railroad shops have, how- ever, added to their employees and between the middle of August and early part of September a number of other industries showed marked improvement. Employment in the state is estimated at 60% of normal. Low prices of farm products tend to deter increased employment in agriculture and consequently prevent the usual drift from city to farm. In Missouri the situation at the beginning of September was reported as much improved over recent months, with most fac- tories busy. Boot and shoe establishments have been hampered by lack of skilled help. Flour mills are operating at capacity; railroad shops are rehiring employees, and only the metal trades are generally quiet, "such plants as are operating carrying only skeleton crews." In Kansas the number of totally unemployed is placed at not more than 10,000. Only a small percentage of skilled workers are out of employment. The industries most affected are rail- roads, packing plants, oil refineries and automobile factories. A good demand for farm help prevails throughout the state. Con- struction work is increasing and is giving employment to many unskilled workmen. Until cold weather puts a halt to building activities, little stringency from lack of work is expected. 17 Digitized by Microsoft® Western States In the Western States employment, though sub-normal, has shown improvement, due to seasonal activities. The lumber mills are, however, operating at about 65% of their usual capacity and many mills and logging camps are closed. In Oklahoma unemployment is greatest in the oil industry, in railroad repair shops, packing houses and in the coal, lumber and building trades, but half of those in the building trades are idle, while in the packing houses about 35% are unemployed. Some improvement is looked for on the railroads, due to the seasonal demand for freight cars. In Texas employment in all factories has been at a low ebb, but the building trades are active. The number of unemployed in the state is much augmented by unskilled workers of the "floater" type from other localities. In Montana, the situation is worse than in January. Coal mines are working on the average three or four days a week and coal reserves are reported lower than they have been at this time for any number of years. Unemployment is mostly confined to the copper mines and lumber mills. No general industrial im- provement is expected until the prices of metals increase and freight rates decrease. The Idaho Commissioner of the Department of Immigration, Labor and Statistics states that unemployment has subsided sub- stantially since January and that at present the fruit and grain harvest and other seasonal occupations are requiring a maximum amount of help. This condition is expected to continue for about two months longer. Meanwhile few physically capable of work are totally idle; half of those working are engaged on part time. Such unemployment as exists is confined to the lumber and mining industries and affects unskilled labor to a larger degree than semi-skilled or skilled workmen. In Wyoming dullness characterizes many industries. The oil refineries have recently decreased their number of employees but are nevertheless showing a better condition than last summer. Coal mines in various parts of the state, which at the beginning of the year were working not more than one day a week, showed evidences of improvement at the end of August. The building trades expect a decline, but this is somewhat offset by an improve- ment of employment on the railroads, which is taken as presaging improved employment in other lines. In Colorado, while the situation during the latter half of August showed improvement over last January and a somewhat better condition than prevailed at end of last summer, between 15,000 and 20,000 are totally idle. Unemployment is most prevalent in the packing industries and in metalliferous mining and smelting. Employment in the coal fields is intermittent. In Utah considerable re-employment has taken place in coal mining and in railroad shops. Metal mining continues somewhat restricted and the situation in neither Arizona nor Utah is con- sidered as serious. In JVfOfliia, employment, though not so good as expected at this time of the year, is better in all the basic industries of the state than last summer. Unemployment is confined principally to 18 Digitized by Microsoft® mining, railroading and in some degree to agriculture. Most of those unemployed are unskilled . Retrenchment due to uncertain market conditions, as much as lack of orders, is responsible for the present state of industrial employment. Nevada's leading indus- tries are agriculture, mining and railroads; these are the first affected in a depression and also the first to recover. The depression in the copper mining industry in Arizona has been partially offset by greater building and road construction activity and by a good demand for labor in agricultural pursuits. In New Mexico the general employment situation is about the same as last summer. "Very few physically able to labor are totally unemployed at this time. About 50% are engaged in part- time work." In Washington, Oregon and in California a high upward trend in employment has taken place, due especially to seasonal ac- tivities, such as the harvest season in the fruit industry, greater activity in canneries, on farms and in public works. The outlook is, however, uncertain. In Washington several large logging camps have resumed operations in the last two months, but, according to the Supervisor of Industrial Relations of the state, "if the freight rates east on lumber are not reduced, a number of the largest plants that are now operating will have to close." He adds that "the general industrial outlook is not encouraging at the present time. The unemployment will materially increase during the fall and winter months, owing to the grain and fruit harvesting being through by November 1, and there are no indications of industry resuming its normal condition before the spring of 1922." In California conditions are better than they were last January, due to the harvest season in the fruit industry throughout the state. In metal and shipbuilding establishments there is but little employment. The outstanding factor in the industrial situation at the present time is the extremely depressed condition of the metal trades. These constitute a basic industry of first importance and their low state exercises a strong influence in other industries. Testi- fying before the Senate Finance Committee at the end of August, the Chairman of the Board of the Republic -Iron and Steel Com- pany stated that of the 15,000 persons usually employed by that concern 12,000 were idle. He added that this condition was typical of the iron and steel industry as a whole and estimated that of the 1,500,000 iron and steel workers 500,000 were un- employed. Of the 40,000 employees of the Midvale Steel and Ordnance Company, one of its vice-presidents stated that 29,000 were without work. The Jones and Laughlin Steel Company, one of the largest independent steel mills in the United States, stated through one of its representatives that, of a normal force of 25,000, only from 5,000 to 6,000 were being employed at the latter part of August. 19 Digitized by Microsoft® Other Data on Extent of Unemployment Perhaps the most comprehensive among recent estimates of the extent of unemployment was furnished the United States Senate on August 12, 1921 by the Bureau of Labor Statistics of the Department of Labor. ^ This estimate is based on "the differences in numbers carried on payrolls in July, 1921, as compared with the peak of employment in 1920." The figures of the unemployed by industries are: Manufacturing and mechanical industries",^ 3,900,000 Transportation 800,000 Mining 250,000 Trade and clerical workers 450,000 Domestic and personal service 335,000 Total 5,735,000 This is frankly an estimate and is probably to be discounted somewhat because of the following factors entering into the situation. It is reasonable to expect that many of those out of work in industry have found employment on farms during the period of greatest demand for agricultural workers. Moreover, there has been considerable reduction of the numbers of women and boys who were on the payrolls during the peak of employment. Many of these have gone back to non-gainful home work or school activities. Also it would seem that the estimate of the numbers of unemployed among domestic and personal service workers is apt to be more undependable than the data obtained from payrolls. In an accompanying statement, published later, the Secretary of Labor qualified this estimate by pointing out that it included great numbers of persons upon whose earnings no one actually was dependent, and saying that in 1914 there were 7,000,000 persons out of work, a larger percentage of whom were men and actual breadwinners than among the present unemployed.* Unemployment was acute in the winter of 1914—1915, though probably less in volume than today, and efforts were made to measure it. The Metropolitan Life Insurance Com- pany in January, 1915 made an investigation of over 155,000 families in New York City and found 45,421 wage-earners un- employed at that time, or 18 per cent of all the wage-earners in ' Congressional Record August 16, 1921, p. 5487. 2 Includes the building trades. 3 New Yorlc Times, September 15, 1921, p. 29. 20 Digitized by Microsoft® those families.* About the same time, the Federal Bureau of Labor Statistics made a census of 95,443 wage-earners in 104 city blocks^ representing the various industries and nationalities in New York City, between January 30 and February 17, 1915, and found 16.2 per cent unemployed. More than half of these had been out of work over sixty days. A supplementary investigation by the Metropolitan Life Insurance Company of unemployment among its policy holders in New Jersey (Jersey City, Newark, Hoboken, Orange, Bloomfield, etc.) disclosed 14,314 unemployed wage- earners out of a total of 97,026 or 14.6 per cent.^ Later, in April, 1915, a second investigation by the United States Bureau of Labor Statistics of sixteen other cities in the East and Middle West, covering 401,500 families and 647,400 wage-earners, showed 11.5 per cent entirely unemployed, while 16.6 per cent in addition were found to be partially employed, that is, working part time.'* While much information is available regarding unemploy- ment averages during the war years, these data cannot be regarded as typical because of the rapid rise in the number of industrial wage-earners which began about the middle of 1915, due to the entry into munition plants and machine shops of men and women not previously employed in indus- try. Nor are the data typical of the percentage of persons normally unemployed, the pressure for production having re- sulted in the lowest unemployment in years. The entire period from 1916 to 1920, for this reason, is not representative of peace-time industry, and it is necessary to go back of this period and study earlier years in order to see the normal ebb and flow of the labor market and to arrive at a figure of 1 United States. Bureau of Labor Statistics. J 'Unemployment in New York City." Bulletin 172, p. IS. ^ "The blocks were carefully selected with the purpose of including a representative number of families of the various nationalities and all classes of workers. This study was supplemented by a further census of the families living in 3,703 individual tenement houses and residences covering a still wider range of distribution. . . . All persons who had any employment what- ever, regular or irregular, full time or part time, at the time of the agent's visit were recorded as employed." Of 54,849 families visited and schedules filled out, there were 95,443 wage-earners, of which 15,417 or 16.2 per cent were unemployed. The trades in which there was the largest unemploy- ment were: common labor, the building trades, and the clothing trades. Ibid., p. 7. 5 Ibid., page 18. * United States. Bureau of Labor Statistics. "Unemployment in the United States." Bulletin 195, July, 1916, p. 6. 21 Digitized by Microsoft® average unemployment with which to compare the present. A ten-year period at least is required to understand the ups and downs of industry; in fact, it is desirable to have a longer period available for examination. Pertinent data have been gathered only by a few states, notably New York and Massachusetts, and to a limited extent by the Federal Government, as follows: 1. Fluctuations in idleness of organized wage-earners in New York State, mainly in the manufacturing and the building trades, reported by months from 1902 to June, 1916,^ and in Massachusetts by quarters from 1908 to 1921.^ 2. Fluctuations in employment of factory wage-earners in certain manufacturing industries in New York State,' by months, June, 1914, to date, and in New Jersey, from 1895 to 1918.* 3. Idleness data, for the first half of the year 1915 for New Hampshire,^ and fuller employment data for the same year for Ohio;® partial data of factory employment since 1915 for Wis- consin,^ and since October 15, 1920, for Arkansas.* 4. Employment data for Massachusetts reported monthly, 1889 to 1918.' 5. Employment data of the United States Census of Manu- factures for the three separate years 1904, 1909 and 1914, showing for each month of the year the total number of wage- earners employed, by industries. 6. Employment data of the United States Employment Service reported monthly from January, 1921.^° These records afford only a partial basis for an estimate of unemployment for the United States as a whole, and the pertinent data from them are later herein discussed. 1 New York State. Bureau of Labor Statistics. Annual Reports. ' Massachusetts. Department of Labor and Industries. Annual Reports on Statistics of Labor; ibid., Bulletins Nos. 58, 69, 73. ' Department of Labor. Labor Market Bulletin. • New Jersey. Bureau of Industrial Statistics. Annual Reports. ' New Hampshire. Bureau of Labor. 11th Biennial Report, 1915-16, p. 36. ' Ohio. Industrial Commission. Department of Investigation and Sta- tistics. Report No. 28, December, 1916. ' Wisconsin. Industrial Commission. Wisconsin Labor Market. ' Arkansas. Bureau of Labor Statistics. Employment Bulletin. ' Massachusetts. Division of Statistics. Annual Reports on the Statistics of Manufacturers, 1889 to 1918. "> U. S. Employment Service. Industrial Employment Service Bulletins from January, 1921. 22 Digitized by Microsoft® Idleness Among Organized Wage-Earners in New York State and Massachusetts Records of the statistical or labor department of New York State show that the number of those idle among organized wage-earners as reported for the last day of each month for the twelve years 1904-1915, inclusive, was about 20 per cent of the total number reporting to these departments. No figures were gathered in New York State after June, 1916. In Massachusetts, reports over a period of thirteen years, 1908- 1920, for the last day of each quarter, show an average idle- ness of about 10 per cent of the total number reporting. The yearly percentages are given in Chart 1 and in the following table: chart i: idleness of members of representative trade unions ^MASSACHUSETTS, 1908 TO 1920 NEW YORK, 1904 to 1915 — ^MEAN YEARLY PERCENTAGeI (National Industrial Conference Board) PERCENT SO 45 AO 35 30 25 £0 IS 10 5 1904 1805 i90S 1907 1906 1909 1910 1911 1912 1913 1914 1915 1916 1917 I9ld 1319 1920 / \ / \ / \ OfUI ^ ^ / V i 1 \ ^ \ f « • « \ •s. / \ / ••♦, a m 9 r \ ■■■■ MASS _CH[1S1 lEKC ♦ \ ..•' •"• ..•• » 1 Based on data from New York State Department of Labor and^Massachu- setts Department of Labor and Industries. 23 Digitized by Microsoft® IDLENESS OF MEMBERS OF REPRESENTATIVE TRADE UNIONS, NEW YORK STATE AND MASSACHUSETTS, ALL INDUSTRIES, MEAN YEARLY PERCENTAGE' Massachusetts ' New York ' 1904 16.9 1905 11.2 1906 9.3 1907 16.2 1908 14.2 29.7 1909 8.0 18.5 1910 7.5 19.1 1911 8.1 21.1 1912 8.3 17.3 1913 8.7 25.3 1914 13.0 28.9 1915 10.7 24.7 1916 5.7 1917 7.2 1918 6.1 1919 7.5 1920 19.7 Average 9.6 19.8 While the periods of time covered by the statistics of these two states are not entirely identical, they cover a common period of eight years and are roughly comparable. Averaging the two states for all the available years, the number of organized wage-earners out of work in these two of the five leading industrial states of the country is 14.7 per cent. Taking only the years identical to both states, 1908-1915, the average idleness is 9.8 per cent for Massachusetts and 23.1 per cent for New York, or 16.5 per cent for both states. The average of idleness' in the state of New York is made high by the inclusion of the unstable clothing trades, which embrace about 50 per cent of the clothing workers of the country. Omitting these clothing trades, the yearly per- centage of idleness is about 17 per cent. It is probable, how- ever, that there are additional reasons, inherent in the labor and industrial conditions peculiar to these states, which account for the rather wide difference in the percentages for these two states. ' The yearly percentage is an average of twelve months in New York, and of four quarters in Massachusetts, covering about 250,000 wage-earners in Massa- chusetts, and 150,000 representative wage-earners in New York, the number in the latter state having been selected as typical of 550,000 organized wage- earners. > Massachusetts. Industrial Review, June, 1921, p. 25. ' New York. Bureau of Labor Statistics. "Course of Employment in New York State from 1904-1916." Special Bulletin No. 85, p. 50. 24 Digitized by Microsoft® How far is the idleness of organized wage-earners in Massachu- setts typical of idleness of all wage-earners in that state? The general opinion has been that "union men capable of performing high-grade skilled labor are much more likely to be employed than unskilled workmen and that, therefore, the percentage idle among union men is much lower than among industrial workers as a whole. "^ While entirely satisfactory data cannot be had on this point, such information as is available points to the probability that the percentage of idle- ness of all wage-earners does not differ greatly from that of organized wage-earners. A survey made by the Department of Labor and Industries in Massachusetts of the number of persons employed Decem- ber 18, 1920 in representative factories in the state, as com- pared with the number employed in the same factories during the week of highest employment in 1920, showed for three leading industries a close parallelism between the percentage of organized wage-earners unemployed and the reduction in the percentage of all wage-earners employed. The difference did not, in any of these three industries, exceed 3.1 per cent. This is shown in the following table: COMPARISON OF UNION UNEMPLOYMENT AND REDUCED FACTORY EMPLOYMENT, MASSACHUSETTS", DECEMBER, 1920 Union reports, December 31, 1920 Reports from manufacturing estab- lishments, December 18, 1920 INDUSTRY Number reporting Unemployed Number reporting Number and per cent less employ- ed than in maxi- mum weekinl920 Un- ions Mem- ber- ship Mem- bers Per- cent Estab- lish- ments Employ- ees h Num- ber Per- cent c Boot and shoe Textile 112 83 106 54,561 34,049 22,043 25,138 19,818 5,851 46.0 58.2 26.5 72 130 85 46,445 163,600 91,870 19,903 94,142 21,449 42.9 57 5 Metals & machinery 23.3 a Phelps, Roswell F.. Director of Statistics, Massachusetts Department of^abor and Industries. Letter to N. I. C. B., April U, 1921. h Maximum week in 1920. c Based on number employed in maximum week in 1920, •United States. Bureau of Labor. Bulletin No. 109, 1912, p. 24. 25 ■ * Digitized by Microsoft® Data with reference to industries other than the three specified are not sufficiently exhaustive or representative to justify a comparison of the percentages unemployed, and the closeness of agreement in the foregoing table must be con- sidered more interesting than conclusive. The extensive survey of idleness in Massachusetts, made in 1885 by state authorities,^ covering all wage-earners in the commonwealth, non-union and union alike, showed that 29.59 per cent of the workers were idle an average of 4.11 months in that year, which is equivalent to about 10 per cent idle during the entire year. When cognizance is taken of the differences in the working day, this average percentage is in- creased to Viyi per cent, which is almost identical with that of idleness of union labor for each quarter from 1908 to 1920 and indicates that idleness of all wage-earners does not vary greatly from that of organized labor taken separately in Massachusetts. Extent to which idleness conditions in Massachusetts and New York State are typical of the whole country. Such material as there is available appears to make it prob- able that conditions in regard to idleness in these two large industrial states are not considerably different from th'ose in other large industrial states of the country. A study made by the United States Bureau of Labor^ of 24,402 families of wage-earners distributed throughout the United States, showed that, of this number, 12,000 heads of families, or approximately half the total number, were out of work an average of 9.43 weeks during the fairly typical year 1901, which is equivalent to the average rate of 4.7 weeks idle for all heads of families. This is equal to thirty-two days lost during the year by each head of a family, with recognition given to the difference in length of working day. This figure is thus not far from the twenty-nine days of idleness per year found for Massachusetts union labor in the period 1908-1920. An investigation into conditions of employment in the iron and steel industry made by the United States Department of Commerce and Labor in the year 1910 and covering over 90,000 workers, showed that the average wage-earner was out of work seven weeks or about sixty-three working days of 'Massachusetts. Report on the Statistics of Labor, 1887, p. 294. "Eighteenth Annual Report of the Commissioner of Labor, 1903, p. 43. 26 Digitized by Microsoft® comparable length. This figure, which applies to both union and non-union wage-earners in this industry, is rather far from that of the average idleness of union workers in Massachusetts and New York taken together, primarily because of the long working day prevailing in the iron and steel industry. The following table summarizes these investigations. In the absence of conclusive figures, the average of forty-two days lost per wage-earner per year as shown in the table is taken as probably roughly typical of conditions in the country as a whole. AVERAGE DAYS LOST PER WAGE-EARNER PER YEAR IN CERTAIN STATES, ACCORDING TO VARIOUS INVESTIGATIONS, 1885-1920 INVESTIGATION Period covered Workers covered Average idleness found per person employed Equivalent days lost per wage-earner per year Massachusetts' Bureau of Statistics of Labor Massachusetts^ Depart- ment of Labor and Industries 1885 1908tol920 1901 1910 1904tol915 816,470 100,000 t to 300,000 24,402 90,757 in steel indus- try 100,000* to 150,000 30% for 4 months, or 10% for 12 months 9.6% 4.7 weeks 7 weeks or 13.5% 19.8% 37 U. S. Commissioner of Labor' 29 32 U. S. Department of Commerce and Labor *. New York Bureau of Labor 63 59 Averaffe of five items . . . 12% 42 c a Number of persons gainfully employed in the state. 6 Organized wage-earners. c Includes about 7 days lost annually from sickness. See page 40. ' Massachusetts. Report on the Statistics of Labor, 1887, p. 294. 3 Massachusetts. Annual Reports on the Statistics of Labor, 1908-1919, inclusive; Quarterly Reports on Employment, 1919; Industrial Review, 1920. * United states. Bureau of Labor. Eighteenth Annual Reportof the Commissioner of Labor, 1903, p. 43. ' Report on Conditions of Employment in the Iron and Steel Industry in the United States, 1911-1913, Vol. m., pp. 21, 214. • New York State. Department of Labor. Reports of the Bureau of Labor Statistics, 1897-1912, inclusive; ihid., "Idleness of Organized Wage-Earners in 1914." Special Bulletin 69; iWi., "Course of Employment in New York State from 1904-1916." Special Bulletin 85. 27 Digitized by Microsoft® There have been omitted, from this table idleness data from two sources, for the accuracy of which evidence was lacking. One figure appears to be too high, the other too low. The estimate that the average wage-earner loses sixty to seventy-five days a year from lack of work, made by the United States Commission on Industrial Relations (1912), is not accepted for lack of supporting evidence. On the other hand, the figures published in the American Federationist,^ the official organ of the American Federation of Labor, as to the per cent of organized workers idle at the end of each month from' 1902 to 1909, show no indication of having been gathered with sufficient care to be regarded as statistically correct; in fact they were discontinued in 1909 because, in the opinion of the editor of that publication, they were so meagre as to be of uncertain value. The unemployment data from the United States Census of 1900, although containing data not entirely comparable, should be considered in addition to the figures given in the preceding table. They show that 27.2 per cent of the persons gainfully employed in manufacturing and mechanical pursuits were out of work at some time during the census year. Since persons gainfully employed include employers and officials, the number of whom out of work is presumably small, this average may be too low for "industrial wage-earners." The data con- tained in the Census of Manufactures for 1909 and 1914 sh(DW the percentage by which the number of wage-earners employed in American factories in the month of highest employment exceeds the number employed in the month of lowest employ- ment. They cannot be accepted as they stand, for the reason that the percentage of difference in the numbers employed is based on the assumption that all labor is in one reservoir and that workmen pass freely from one industry to every other industry. This is clearly not true. Industry consists of a series of labor reservoirs, at least one in each industry. An average of the percentages of diflFerence in the leading indus- tries shows a range of employment between high and low months at least twice as large as for the industrial reservoir taken as a whole. These census figures, therefore, are not of particular value in this connection. 1 United States. Bureau of Labor. Bulletin No. 109, p. 25. 28 Digitized by Microsoft® Extent to which figures on idleness conditions in Massachusetts and New York State are applicable to particular industries. It does not follow, however, that this average of 42 days lost, amounting to 14 per cent of the wage-earner's working time, applies to every industry, since some industries will naturally show a percentage of idleness greater and some less than that for all industries as a whole. The percentages in the building and clothing trades are probably higher. On the other hand, in the metal and printing trades in New York State and Massachusetts, there is greater stability. The following table and Charts 2 and 3 show the per- centages of idleness in certain industries in these states: YEARLY PERCENTAGE OF IDLENESS OF MEMBERS OF REPRE- SENTATIVE TRADE UNIONS, BY INDUSTRIES IN MASSACHUSETTS AND NEW YORK STATE, ALL INDUSTRIES AND PARTICULAR INDUSTRIES* All indus- tries' Building trades Boot& shoe mfg. Textiles & clothing Metal trades Print- ing Mass. N.Y. Mass N.Y. Mass. N.Y. Mass. N.Y. Mass. N.Y. Mass. N.Y. 1904... 1905 .. 1906. . . 1907... 1908... 8.0 7.5 8.1 8.3 8.7 13.0 10.7 5.7 7.2 6.1 7.5 19.7 16.9 11.2 9.3 16.2 29.7 18.5 19.1 21.1 17.3 25.3 28.9 24.7 isis 11.1 8.9 12.9 9.3 13.6 22.4 16.4 11.1 11.6 9.5 9.4 12.8 21,4 15.3 10.1 25.0 42.3 26.7 24.1 30.7 21.2 25. 2 39.8 36.9 i2!4 7.8 7.5 5.8 9.0 7.7 13.8 10.3 4.0 12.0 4.5 4.2 33.6 23^5 7.8 10.7 12.6 12.4 11.6 11.1 6.2 3.3 3.9 5.1 7.4 29.1 26.0 11.0 8.5 16.4 34.3 18.8 34.1 22.8 28.8 40.9 38.9 32.5 16^7 8.0 6.9 10.0 10.2 10.7 14.2 13.1 3.1 3.2 6,3 11.7 16.8 11.9 5.2 5.4 10.4 29.0 13.7 7.7 24.0 11.4 10.5 20,2 15.0 i6'.4 5.0 3,8 5,4 4.7 4.2 8.7 8.0 4.7 3.8 4.9 3.6 3.6 11.2 9.9 16.4 11.9 18 7 1909... 9 4 1910... 5 1911... 1912 . 5.2 5 7 1913... 7 1 1914. . . 10 4 1915 .. 9 5 1916... 1917... 1918... 1919... 1920... Average 9.6 19.8 12.9 26.6 10.2 11.1 26.1 10.1 13.7 5.4 10.0 Aver 190 age 3-1915... 9.8 23.1 14.1 30.9 9.3 12.0 31.4 11.3 16.4 6.3 8.9 ^Sources: Massachusetts. "Statistics of Labor Organizations in Massachusetts, 1916, 1917." Labor BuUetin No. 126 (summarizing Annual Reports on the Statistics of Labor, 1908 to 1917); ibid.f Quarterly Reports on Employment, 1919; ihid.. Industrial Review, 1920. New York State. "Idleness of Organized Wage-Earners in 1914." Special Bulletin No. 69 (summarizing Annual Reports of the Bureau of Labor Statistics, 1905 to 1915); ibid., "Course of Employment in New Vork State from 1904 to 1916." Special Bulletin No. 85. 2 Figures are for end of each month in New York and end of each quarter in Massachusetts. 29 Digitized by Microsoft® CHART 2: IDLENESS OF MEMBERS OF REPRESENTATIVE TRADE UNIONS IN MASSACHUSETTS, BY INDUSTRIES, 1908-1921, QUARTERLY^ (National Industrial Conference Board) ptBctNT BUILDIN G TRADES 60 SO 40 30 BO 10 SO 40 30 ao 10 1908 1909 I9ID 1911 1912 1913 1914 1915 1916 1917 1916 1919 1920 I9EI BOOT AND SHOE INDUSTRY 1 I J m ■ 1 -_- 1 L Ahj fUg^j^hh ■ L Jl I90B ma 1910 1911 I9IE 1913 1914 IgiT 1916 1917 1918^ 1919 I9Z0 isei 60 90 40 30 eo 10 TEXTILE INDUSTRY 1 1 1 1 J . 1 J U 1 J JtU ^^ d 1 ■ wU ll ■Ub k. JL ■ 1908 1909 T9ir 1311 191 Z 1913 ■914 tSiT 191? J9I7 1910 1919 iSSTi 921 40 30 20 ia METAL TRADES 1 ■ J m 1 ■ ■ i J 1 1 LJ- ■ hJ^JM iBl^BH J tilii ISOB 1909 1910 1911 T9I^^^^^^ 1919 1914 1915 1916 1917 1918 liiT 1920 1921 PRINTING AND ALLIED TRADES ZO 10 'Based on data from Massachusetts Department of Labor and Industries. 30 J- 1908 _!. ■ _ ^Mm- ■ 191? ■ 190? 1910 1911 151? I9I3 19I4 1915 1916 wTgir 1920^921 Digitized by Microsoft® CHART 3: IDLENESS OF MEMBERS OF REPRESENTATIVE TRADE UNIONS IN NEW YORK STATE, BY INDUSTRIES, 1904-1916, QUARTERLY ' (National Industrial Conference Board) BUILDING TRADES 1904 1905 I90B 1907 1308 1909 1910 1911 1912 1913 1914 IBIS I9IB SO BO 70 BO 50 40 30 ao 10 D CLOTHING TRADES J ll 1 11 1 n 11 1 1 L ■ - nil n 1 ■ Mil M I90S I9DB ■ Mh m 1900 1909 1310 u 1911 ■ isia 1913 1914 1913 igiB METAL TRADES 1904 leOS IBOB 1907 IBOB 1909 I9ID 1911 I9IB 1913 1914 i BIS IBIB PRINTING TRADES eo L K. ' Jb _ 1904 IBOS IBOB IB07 IBOB 1909 I9ID 1911 1912 1913 1914 1915 1918 * Based on data from New York State Department of Labor. 3 1 Digitized by Microsoft® Fluctuations in General Factory Employment Turning now to figures showing the variations in general factory employment rather than the idleness of organized wage-earners, Chart 4 presents data for four states. Mas- CHART 4: fluctuations in factory employment in new YORK, MASSACHUSETTS, WISCONSIN AND NEW JERSEY, 1914^1921 1 (National Industrial Conference Board) 1914 ISIS 1316 1317 ISIB ' Sources of data are given in footnotes on p. 33. 32 1919 i3eo I9EI Digitized by Microsoft® sachusetts, 1914 to 1918;^ New Jersey, 1914 to 1918;^ New York, 1914 to date'; and Wisconsin, 1915 to date''. These figures show by months, or quarters, the number of persons employed in all or in a representative part of the industrial establishments of each state. Since the middle of 1914, the state of New York has kept employment figures for wage- earners in 1600 leading factories, carefully selected in order to assure their being typical of the entire state, including more than one-third of the wage-earners in the state. In Massachusetts and New Jersey the figures are for the majority of industrial wage-earners. These figures show the trend of volume of employment since 1914. During the war period the fluctuations from year to year and from month to month were not normal. Nor are the figures comparable with those of unemployment, since there is always a certain per cent of wage-earners who are out of work, even at times of the greatest employment, and whose names, therefore, do not appear on the payroll even at the time of maximum employment. These are persons who have left one job and are not yet located in another, and those who are out of work on account of sick- ness or for other reasons. In Wisconsin, the collection of monthly data was begun in 1920 and an estimate made back to 1915 from figures at hand, by the State Industrial Commission. They cover about a third of the industrial workers of the state. It is interesting to note the similarities in the curves of all four states. In the two states for which 1920 data are avail- able, the peak of employment was reached after the war, in the early part of 1920. Employment in January, 1921, had receded to the level of January, 1915. This means that employment in the state of New York, for example, is at present below the level which it should now normally occupy, by at least 25 per cent, in consideration of the facts that there should have been a normal increase in the number of factory workers employed of at least 15 per cent during the last six 'Massachusetts. Bureau of Statistics of Labor. The Annual Statistics of Manufactures, 1914-1918, inclusive. 2 New Jersey. Annual Reports of the Bureau of Industrial Statistics, 191S- 1918. No data published since 1918. 3 New York. Department of Labor. Labor Market Bulletin. * Wisconsin. Industrial Commission. Current figures in "Wisconsin Labor Market." 33 Digitized by Microsoft® and a half years, or since July, 1914, and that the figure for January, 1915, is 10 per cent below normal as represented by July, 1914. Conclusions as to Extent of Unemployment The data presented suggest the following broad conclusions regarding the extent of unemployment: 1. The present unemployment situation is abnormal, due to business depression. Over one-quarter of the "industrial wage-earners" were out of work June 1, 1921, representing an estimated total of about 3,500,000 persons.^ The average number of those idle during normal times is about 1,800,000, which figure is arrived at by applying the estimate of fourteen per cent of average idleness among wage-earners in four states to the estimated 12,800,000 "industrial wage-earners" of the whole country. 2. So far as evidence is available, the average number of days lost per year by each industrial wage-earner appears to be about forty-two, that is, about fourteen per cent of his total working time. Exclusive of days lost from sickness, the total appears to be about thirty-five days. This does not take into account part-time employment, for which no reliable figures are to be had. 3. This average does not apply to every industry, although it is broadly true for industry as a whole. 4. The building trades and clothing trades show a relatively high percentage of unemployment; the printing trades, a relatively low percentage. 5. Unemployment is clearly not an occasional or accidental condition to be met by charitable or philanthropic relief, but a continuing condition, at times becoming acute. Its improve- ment is, in part, an industrial problem of the first magnitude. It concerns so large a number of industrial workers, and is so costly to industry through its efi^ects on the buying power of communities as well as for many other reasons, that it merits the united efforts of employers and employees and the public toward understanding its causes and devising methods for its reduction. ' Cf. p. 20, estimate of Secretary of Labor. 34 Digitized by Microsoft® Ill CAUSES OF UNEMPLOYMENT The causes of unemployment fall into two main classes: 1 . Internal causes arising from conditions within individual manufacturing plants. These embrace: a. Personal factors such as Strikes'and Lockouts, and Disability. b. Impersonal factors relating either to Failures of Management resulting in Faulty Factory Organization, to High Pro- ductionCosts within the Control of Management, Ineflfective Sales Methods, Lack of Materials and Equipment, High Labor Turnover, or to Failure of Employees because of Inefficiency, or to the Displacement of Hand Labor by Machinery. In the aggregate, these causes produce a more or less con- tinuous percentage of unemployment from month to month and from year to year. 2. External causes due to influences operating outside of the plant. These are: a. Of Economic origin, resulting from Seasonal Variations, Busi- ness Depressions, Wasteful Systems of Commodity Distri- bution, Deficient Labor-Placement Facilities. b. Of Political origin, due to Immigration and Tariff Policies and International Relationships. Frequent temporary unemployment arising from conditions within the plant, and recurring acute unemployment due to influences outside the plant, are the subjects of our principal interest. Causes of temporary acute unemployment such as fires, floods, or earthquakes, are not included in this dis- cussion. Such emergency conditions cannot be foreseen, their causes vary, their effects are usually local, and they require relief measures which differ in each case. (1) Internal Causes of Unemployment (a) Personal Factors Two of the internal causes which are usually enumerated in statistics as producing unemployment are strikes and lock- outs, and sickness 35 Digitized by Microsoft® Unemployment due to labor disputes and sickness is of a different sort from that produced by cyclical or seasonal variations in labor demand. Strikes and lockouts are friction- al unemployment due to a failure to agree on wages, hours or working conditions. The stoppage of work which they pro- duce is initiated either by the employees or by the employers, for the purpose of forcing the other side to yield the point at issue. This form of unemployment is not involuntary; nevertheless, it interferes with both employer and employee, stopping the income of the employee and reducing the pro- ductiveness of industry and the buying power of the com- munity. The causes of idleness among organized wage-earners in Massachusetts and New York State are classified in the re- ports of those states as labor disputes (strikes and lockouts), disability, and "lack of work." The latter phrase is a term used to cover all causes except the two first named. Strikes and lockouts and disability together cause about a fourth of the idleness of organized wage-earners in these two states. These conditions are shown in the following table and in Charts 5 and 6. CHART 5: CAUSES OF IDLENESS AMONG ORGANIZED WAGE- EARNERS IN NEW YORK STATE MEAN YEARLY PERCENTAGES, 1904-19151 (National Industrial Conference Board) 1904 1905 IS06 1907 1908 1909 1910 1911 1912 19)3 1914 1919 ' Based on data from New York State Department of Labor. 36 Digitized by Microsoft® CHART 6: CAUSES OF IDLENESS AMONG ORGANIZED WAGE- EARNERS IN MASSACHUSETTS MEAN YEARLY PERCENTAGES, 1908-19201 (National Industrial Conference Board) PFDCCNT 50 4S 40 35 30 15 I30B IS09 1910 1911 ISIS 1913 1914 1915 I9IB 1917 l9tB ISIS 1920 CAUSES OF IDLENESS OF ORGANIZED WAGE-EARNERS IN MASSA- CHUSETTS AND NEW YORK STATE MEAN YEARLY PERCENTAGES' Wl causes Ladt of work* Strikes and lock- Disabmty (sickness UJ outs and accident) Mass. N. Y. Mass. N.Y. Mass. N.Y. Mass. N.Y. 1904 16.9 11.2 9.3 16.2 29.7 "ii'.s 12.1 8.4 6.7 13.6 27.9 "".6" 3.6 1.6 1.4 1.2 0.4 ....... 1.2 1905 1.2 1906 1.2 1907 1.4 1908 14.2 1.4 1909 8.0 18.5 6.6 15.0 .2 2.2 1.2 1.3 1910 7.S 19.1 6.1 13.6 .1 4.2 1.3 1.3 1911 8.1 21.1 6.5 18.7 .3 1.2 1.3 1.2 1912 8.3 17.3 5.1 15.2 1.9 0.9 1.3 1.2 1913 8.7 25.3 6.5 20.8 .9 3.5 1.3 1.0 1914 13.0 28.9 11.0 27.5 .5 0.3 1.5 1.1 1915 10.7 24.7 7.9 1.1 1.7 1916 5.7 3.3 .9 1.5 1917 7.2 4.6 1.1 1.5 1918 6.1 3.3 .•4 2.4» 1919 7.5 5.3 .9 1.3 1920 19.7 16.5 2.0 1.2 Average . 9.6 19.8 7.4 16.3 .8 1.9 1.4 1.2 1 Sources: Massachusetts. "Statistics of Labor Organizations in Massachusetts, 1916, 1917." Labor Bulletin No. 126 (summarizing Annual Reports on the Statistics of Labor, 1908 to 1917); ibid.. Quarterly Reports on Employment, 1919; ibid.. Industrial Review, 1920. New York State. "Idleness of Organized Wage-Earners in 1914." Special Bulletin No. 69 (summarizing. Annual Reports of the Bureau of Labor Statistics, 1905 to 1915); ibid., "Course of Employment in New York State from 1904 to 1916." Special Bulletin No. 85. s Includes a few other causes such as vacations, temporary shut downs for repairs, stock-taking, etc., and unfavorable weather. These average annually less than one per cent in Massachusetts. a Influenia epidemic. 37 Digitized by Microsoft® Figures for New Hampshire for the first two quarters of 1915 given in the following table show a similar distribution of causes in seventy-three occupations reported. They do not cover persons working part time. CAUSES OF IDLENESS AMONG ORGANIZED WAGE EARNERS OF NEW HAMPSHIRE, ALL OCCUPATIONS, JANUARY-JUNE, 1915^ CAUSES Number Percentage reported as unemployed Unemployed 1st qtr. Unemployed 2nd qtr. Jan., Feb., March AprU, May, June Lack of work (or material^ ). . . Sickness, accident, old age .. . . Unfavorable weather 703 129 46 IS 31 488 115 11 15 29 11.16 2.04 .73 .23 .49 8.19 1.93 .18 .25 Other causes .48 Total unemployed 924 710 14.67 11.93 * New Hampshire. Bureau of Labor. EleventhSBiennial Report, 1915-16, p. 36. ■ Mostly lack of work. The following table summarizes for the three foregoing states the relative importance of labor disputes, disability, and "lack of work": Years covered Total per cent Causes of unemployment — ^Per cent STATES Percentdueto labor disputes Per cent due to disability Per cent due to lack of wk. Massachusetts New York. . . . 190&-1920 1904-1914 1915" 9.6 19.8 13.3 .8 1.9 .2 1.4 1.2 2.0 7.4 16 3 New Hampshire . . . 9.7 a Half year. Unemployment Due to Labor Disputes: Time lost because of labor disputes, during which the productive work of the factory is interfered with and workmen are unemployed, is shown by these tables to be a relatively minor cause of unemployment. In Massachusetts, according to the above table, over a period of twelve years, unemployment due to labor disputes among organized wage-earners has averaged less than one per cent; in New York State the average was about twice as high — a little less than two per cent. The figures of the New York State Board of Mediation and Arbitration, however, which record the number of man-days 38 Digitized by Microsoft® lost by all wage-earners because of strikes and lockouts show that the number of working days in the year lost by all workers on account of labor disputes is a little less than one per cent. These figures are regarded as representative of the general situation in other states. The following table shows for the United States as a whole the number of employees thrown out of work in establishments involved in strikes, between 1881 and 1905: EMPLOYEES THROWN OUT OF WORK IN ESTABLISHMENTS IN- VOLVED IN STRIKES ORDERED BY LABOR ORGANIZA- TIONS AND NOT SO ORDERED, UNITED STATES, BY YEARS, 1881 TO 19051 Total number Employees thrown out of work in establishments in- volved in strikes YEAR Ordered by labor organization Not ordered by labor organization Number Per cent Number Per cent 1881 129,521 154,671 149,763 147,054 242,705 508,044 379,672 147,556 249,559 351,702 291,939 206,671 265,914 660,335 392,318 241,145 408,391 249,002 417,072 505,066 543,386 659,792 656,055 517,211 221,686 72,751 100,461 99,511 88,960 162,871 381,056 279,722 108,182 192,526 264,142 226,437 159,326 200,808 564,099 271,547 174,280 301,845 172,107» 296,694 406,253 450,595 580,598 549,020 468,715 162,767 56.17 64.95 66.45 60.49 67.11 75.00 . 73.67 73.32 77.15 75.10 77.56 77.09 75.52 85.43 69.22 72.27 73.91 69.12" 71.14 80.44 82.92 88.00 83.69 90,62 73.42 56,770 54,210 50,252 58,094 79,834 126,988 99,950 39,374 57,033 87,560 65,502 47,345 65,106 96,236 120,771 66,865 106,546 76,895 120,378 98,813 92,791 79,194 107,035 48,496 58,919 43.83 1882 35.05 1883 33.55 1884 39.51 1885 32.89 1886 25.00 1887 26.33 1888 26.68 1889 22.85 1890 24.90 1891 22.44 1892 22.91 1893 24.48 1894 14.57 1895 30.78 1896 27.73 1897 26.09 1898 30.88 1899 28.86 1900 19.56 1901 17.08 1902 12.00 1903 16.31 1904 9.38 1905 26.58 Total 8,696,230 6,735,273° 77.45» 1,960,957 22.55 ' United States Commission of Labor. Twenty-first Annual Report, 1906, p. 42. The figures since 1905 were not compiled with equal completeness and therefore are not so conclusive, but tliere is no reason to believe that they differ materially from those for the years given. For further information on strikes, see also National Industrial Conference Board. "Strikes in American Industry in Wartime." Research Report No. 3. a Not including 33 establishments not reported. 39 Digitized by Microsoft® Sickness and Other Disabilities as a Cause of Idleness: Dis- ability appears in the table on page 34 as another minor cause of idleness of organized wage-earners, averaging annually 1.4 per cent in Massachusetts and 1.2 per cent in New York State, in the periods covered. That the average for all wage-earners is a little higher is shown by figures from several independent investigations such as those made by the Metropolitan Life Insurance Company and other organizations. Their evidence is to the effect that the average time lost by all wage-earners from sickness is from six to nine days per year. The average of the more extensive and reliable investigations is, however, about seven days per year, out of a total of three hundred work- ing days, as shown in the following table. If this propor- tion, which was arrived at from surveys covering in the aggre- gate over 2,800,000 persons, holds true oi all wage-earners, it indicates that about lyi per cent of their total time is lost because of sickness. WORKING TIME LOST ON ACCOUNT OF SICKNESS, ACCORDING TO INVESTIGATIONS IN VARIOUS HEALTH SURVEYS* INVESTIGATION Number of persons covered Average number of working days lost U. S. Commission on Industrial Relations, 19152. Ohio Health Insurance Commission study of nine benefit associations in Ohio, 1912-1917' Metropolitan Life Insurance Company Survey of seven communities* Statistics of American Establishment Sickness Funds in California^ 1,000,000 663,163 376,573 302,584 184,985 343,268 140,000 9 5.8 6.9 5 8 Study of the Workmen's Sick and Death Benefit Fund, 1912-19166 6 3 Pennsylvania Health Insurance Commission (data from Kensington Survey; Philadelphia Survey; and Western Pennsylvania Survey, including Pittsburgh^ Survey of Factory Workers in New York State^ . 6 9.7 Average About 7 days ' There is some overlapping in the items of this table, but it does not aSect the final average of about seven days. Accidents and old age cause the loss of a small additional amount of time, estimated roughly at not over a half day, making the total loss from disability about 7K days per worker per year. 'Warren, B. S., and Sydenstricker, Edgar. "Health Insurance — Its relation to the Public Health." Public Health Bulletin, No. 76, Washington, March, 1916, p. 6. » Ohio. Health and Old Age Insurance Commission. "Health, Healtii Insurance, Old Age Pensions," February, 1919, pp. 2, 79, 80. ' Metropolitan Life Insurance Company, "Some Recent Morbidity Data," 1919, p. 23. ' California. Report of the Social Insurance Commission, January, 1917, p. 313. •Illinois. Report of the Health Insurance Commission, May 1, 1919, pp. 335-344. Ohio Health and Old Age Insurance Commission. February, 1919, p. 95. ' Pennsylvania. Report of Health Insurance Commission, January, 1919, pp. 3, 70-77. » New York State. Department of Labor. Special Bulletin No. 108, August, 1921. 40 Digitized by Microsoft® (i) Impersonal Factors That there is opportunity for increasing the efficiency of management in relation to certain of its functions has been proven by the experiments of enterprising business executives and production engineers. The emphasis on scientific man- agement in industry in recent years is an outstanding fea- ture of industrial development. Some of the significant directions in which there is room for improvement are: provision of raw materials and of tools and equipment as a basis of steady productivity; improved methods of labor administration for the reduction of labor turnover; improved sales methods and effective planning in the adjustment of production processes and in the introduction of new labor- saving inventions and machinery. High Production Costs: A fundamental factor which hinders the manufacturer from producing for a market governed by falling prices is the high cost of production. The cost of pro- duction of a commodity serves as an indicator according to which the producer can or cannot make his offering of goods in the market. There are many unit costs which enter into the final cost of placing an article on sale. The labor cost in many industries is a very important item. Where high wages exist, one of two alternatives is present in connection with an effort to reduce the total cost of production of com- modities. Either wages must be reduced or efficient methods and equipment must be introduced which will lower the labor cost and the other unit costs that enter into the article. Emphasis upon the former alone results in cutting off of the income of workers, reduces their demand for the commodities of other industries, encourages unemployment therein, and lowers the standard of living of all thus affected. The most efficient management places its emphasis upon the reduction of the unit costs in obtaining raw materials, upon establishing better processes, installing the best types of tools and equip- ment, and lowering overhead costs. After comprehensive efforts have been made along these lines, there may still be need for emphasis upon the reduction of wages. But, if reductions in wages are not to cause unemployment in other industries by lessening the demand of workers for their prod- ucts, the wage cuts should be applied first to those industries where workers have a strategic advantage and have not 41 Digitized by Microsoft® accepted their fair share of the deflation of prices. In any case, it comes within the realm of efficient and intelligent management to make the wisest adjustments which will reduce the cost of production within the particular plant and enable the concern to offset goods on the market at prices that the consuming public can aff"ord to pay. It will then be in a position to produce more steadily and influence favorably the interactions between industries while they are adjusting them- selves to new price relationships. Ineffective Sales Methods: It has frequently been found that sales departments have not functioned in a way to encourage the maximum productivity. Firms which have sought to rec- tify this situation have found that the first problem they faced was the necessity of convincing the sales department that its activities and methods should be governed primarily by the effects which the eflForts of the department had upon produc- tion. The problem of the sales department is to educate the buyer to co-operate in such a way that the best production methods can be employed. This enables the firm to produce for a fairly well-known market and to concentrate upon pro- duction in one or another line so as to attain the maximum regularity of operation in the various departments of a plant. Experiments by various concerns have shown that it is possible for management in these and similar ways to introduce a considerable control over regularity of production and employment. Lack of Materials: Lack of materials and equipment needed in manufacturing is one of the causes of lessened production and of "unemployment within employment." The amount of employment lost thereby does not appear in the records of most factories, and is difficult to measure on that account. This relatively small loss, however, is gradually being re- duced through improvement in factory organization, including transportation within the plant and purchasing and stock- keeping methods. There is usually no valid excuse for failure to maintain full-time employment because of deficiency in this regard. Labor Turnover: Labor turnover means that wage-earners are replacing other wage-earners in the same employment. This creates for the replaced workmen a succession of shorter or 42 Digitized by Microsoft® longer periods of unemployment, which reduce their yearly earnings and lessen the productivity of the plant as well as increase the cost of production through the time and expense required to break in new hands. Numerous causes operate to produce rapid changes among the persons composing the labor force of any given plant, and are responsible for a considerable degree of unemployment. How much unemployment is due to these causes it is impos- sible to say until we know how long the man who leaves one job is idle, on the average, before he gets another job. For these conditions either the wage-earner or the employer may be responsible. Such data as are available show that approximately three-fourths of the separations from the pay- roll of factories are voluntary, that is to say, are initiated by the workmen. The following table shows, for plants employing about 700,000 employees in the aggregate, the number of separations of all types and the percentage voluntary with the employee: type of separation (discharge, lay-off or voluntary quitting) of employees leaving, by years from 1910 to 1915, inclusive, and for the 12-month period ending may 31, 1918, in certain establishments' Number of estab- lish- ments Number of workers Acces- sions Number of separations Per centage YEAR Dis- charges oSs Voluntary separa- tions Total volun- tary separa- tions 1910.. 1911.. 1912.. 1913.. 1914.. 1915.. 1917- 1918.. 7 13 20 35 50 28 108 23,273 56,577 72,526 134,823 118,195 78,984 207,303 15,936 53,506 78,843 182,276 82,585 50,421 393,164 2,608 9,837 13,628 32,094 19,565 6,946 51,400 514 5,082 4,057 13,334 29,737 8,536 29,833 14,230 35,716 49,806 141,035 46,660 26,862 299,157 17,352 50,635 67,491 186,463 95,962 42,344 380,390 82 71 74 76 49 63 79 Total. 261 691,681 856,731 136,078 91,093 613,466 840,637 73 These figures do not indicate, however, whether the period of unemployment which follows each separation is short or long for the individual workman. There are no conclusive data on this point. During good times, when it is easy to ■Brissenden, Paul F., and Frankel, Emil. "The Mobility of Industrial Labor." Political Science Quarterly, December, 1920, p. 58S. 43 Digitized by Microsoft® get another job, unemployment is probably short; when times are bad, unemployment from this cause is more serious. That it is possible to reduce considerably the number of persons separated annually from the payroll and replaced by others, is shown by what has actually been done by employers who have undertaken the task seriously. The following fig- ures compare the number of payroll separations in ten plants which paid special attention to reducing labor turnover, with that of other concerns which made no special effort in this direction. They show that in 1919 the former had an average rate of separation for the five years of 2.3 per 10,000 labor hours, while the latter had an average rate of 3.7 per 10,000 labor hours. If this be found to apply to industry generally, it will mean that close attention to the problem can sub- stantially reduce the number of separations. COMPARISON OF LABOR CHANGES IN TEN SELECTED ESTABLISH- MENTS WITH CHANGES IN ALL OTHER ESTABLISHMENTS REPORTING, 1913 TO 1919, INCLUSIVE^ Labor change rates per 10,000 labor hours YEAR 10 selected establishmentss All other establishments reporting Accession Separation Total Accession Separation Total 1913... 5.4 5.5 10.9 4.4 4.3 8.7 1914... 1.1 1.5 2.6 2.8 3.1 5.9 1915... 1.6 0.8 2.4 3.0 2.6 5.6 1916... 2.6 1.4 4.0 6.2 4.5 10.7 1917... 1.7 1.9 3.6 5.8 5.7 11.5 1918... 3.4 2.7 6.1 7.4 6.2 13.6 1919... 3.2 2.4 5.6 3.6 3.4 7.0 2.8 2.3 5.1 3.8 3.7 7.5 iBrissenden, Paul F., and Frankel, Emil. "The Mobility of Industrial Labor." Political Science Quarterly, December, 1920, p. 600. 3 The aggregate number of workers in these ten plants averaged about 50,000 for each of the seven years 1913-1919 inclusive. The aggregate number of workers in the other plants averaged over 125,000. Unemployment Due to Personal Inefficiency of Employees: An unmeasured but no less real percentage of unemployment is due to the personal inefficiency of employees which causes them to fail to perform their work properly and leads to their discharge. Some are lazy, others incornpetent because of lack of training or capacity, others irresponsible in their 44 Digitized by Microsoft® care of property. Their unemployment over a shorter or longer period is directly caused by these faults. Personal characteristics and temperament also cause men to absent themselves from the factory, or to quit their job for reasons otherwise unexplained. Mental instability, desire for a change, a wish to spend a few weeks out of doors, or a spirit of wanderlust lead to unemployment of a more or less extended period. The records of four large manufacturers show absence of employees for "personal reasons" to run from three to six days per year, but no adequate figures are available for industry as a whole. This is usually classed as absence from work, rather than unemployment, and is closely connected with the subject of labor turnover. Readjustments Due to the Introduction of New Inventions and Processes: A contributing cause of unemployment is the intro- duction of labor-saving machinery, or of marked improve- ments in existing machinery, or of new and improved processes. It is true that new inventions are constantly being made, some of which cause important changes in the number of workers needed in the production process. For this reason, labor unions have in many instances resisted the introduction of improved machinery. Such changes in industry, however, have usually come slowly, and the adoption of patented de- vices has been so gradual that adjustment could be made without great difficulty. In a few instances, such as in the printing trades, when typesetting machines were first introduced, a considerable number of persons were thrown out of employment. While no thorough or comprehensive study of this entire field has been made, so far as is known, the information at hand indicates that reductions in the number of wage-earners from this cause in most instances have not been sufficiently drastic or sudden to cause any large number of unemployed. For example, the introduction of stone-planing machinery, stoutly resisted by the labor unions, was very gradual in the stone-cutting industry, and had no sudden marked effect on employment. Over a considerable length of time new inventions undoubt- edly operate to reduce the number of persons required for a particular industry or process, and make possible the accom- plishment of the required work by fewer persons in a shorter 45 Digitized by Microsoft® time. In any particular year, however, the amount of un- employment due to this cause is believed, with few exceptions, to have been relatively small. It should be noted also that improved machinery or processes, by cheapening the cost of goods, increases demand and thus in turn serves to stimulate wider employment. Furthermore, with the increase in popu- lation and with the larger demand for goods as civilization has reached higher standards, there has been an increasing amount of work in society which needs to be done. This has been an important factor in offsetting the effects of sub- stituting machinery for human effort. In short, displacement of hand labor by machinery may be classed generally as one of the least of the causes of unemployment. (2) External Causes of Unemployment (a) Of Economic Origin Over-expansion in Industry: In the ordinary operation of our industrial system there are causes at work which are ulti- mately conducive to unemployment unless checked. Up to this time the development of division of labor and specializa- tion as a system of production has evolved no co-ordinating factor between industries analagous to the control which man- agement exercises to effect steadiness of production in the de- partments of a single plant. There are many difficulties in the way of attaining such control and co-ordination. The first difficulty is due to the fact that the industrial system is interrelated in such a manner that expansion in one industry usually calls for considerable expansion in other industries. For example, expansion of the manufacture of steel may make increasing demands for the development of iron and coal mining and of other industries. Another difficulty arises from the fact that different in- dustries require different lengths of time for the delivery of their products in a finished form. From the time when an investment in ore is made for the manufacture of farm machinery until the finished product reaches the farmer, a much longer period elapses than in the production of coal, bricks and glassware. The immobility of capital and labor in the various indus- tries is a further difficulty which has to be met. When 46 Digitized by Microsoft® capital is once invested in specialized machinery a long period may elapse before the investment yields a return suffi- cient to replace the equipment. Workmen who by long training have attained skill in one trade and have established homes are not willing to be transferred to other industries and localities as the demand for commodities varies. The fact that price levels and profit margins have been practically the sole indicators of the need and opportunity for the employment of capital and labor involves modern industry in still further difficulties in attaining co-ordination and continuity of production. These indicators are merely an attractive force in times of prosperity and a deterrent influence in times of stagnation and depression. The responsiveness of the managers of industry to them is slow as compared with the despatch with which manage- ment manipulates materials, capital, and labor in a particular plant where its decisions are based on close first- hand information. Again, the reponsiveness of management to these indicators of the general industrial situation in carrying on production is determined primarily by the relative opportunity of making money. If the prospects are favorable, industry will expand; if they are unfavorable, production will be decreased or cut oflF. The particular concern cannot bear the burden of loss involved by continued production while waiting for the whole industrial system to strike a new balance under different price levels. Furthermore, production as governed by price levels and profit margins is carried on in anticipation of demand. It is based on comparatively loose estimates of what will be needed and purchased by consumers. If these estimates are wrong, things for which there is little demand will be made and loss will be entailed. Moreover, demand may change before goods which pass through many stages of production reach the market. As the market becomes greater in extent, the difficulty of estimating demand in- creases and the hazards and risks in production become greater. Under the system of division of labor the inter- dependence of production is such that industries become the customers of each other and uncertainty regarding produc- tion in one affects production in others. Besides the above difficulties, another complicating element is the psychological factor during times of prosperity and 47 Digitized by Microsoft® depression. When industry is prosperous, prices are rising, and good profits may be expected, the psychology of optimism is dominant. When these conditions are reversed pessimism is prevalent. The influence of the psychological factor is very subtle and it is but rarely among business men that it is properly tempered by adequate information. A further incitement to over-expansion in some in- dustries and to an upward trend in prices is given by the func- tioning of the banking system in extending credit. If the banks are in a position to extend credit, those who are optimistic and see opportunities for obtaining profits make heavy investments in anticipation of a rising market. This may be carried on to a degree which will later result in over-expansion, the development of a crisis, and forced liquidation. Thus it will be seen that there are many factors of causation at work in the industrial system which are conducive to over- expansion. The result is that the industrial system is thrown out of balance, production in some lines slows down, un- employment develops and ultimately affects the whole system of production. Wages, Profits and Prices as Causes of Present Unemployment: The European war had hardly gotten under way when the modern nations realized that there would be a demand for commodities on an unprecedented scale. The prices of stocks on hand rose rapidly. As the wage workers had to meet an increasing cost of living, strenuous demands for increases in wages were made. The placing of large numbers of men in the armies also created a scarcity of workers and helped labor to make its demands efi"ective. Wherever production costs were increased through increased labor costs, business men were furnished with an incentive to raise prices. Additional impetus was given to the raising of prices by the way demand kept ahead of production and by the expansion of credit. To the extent that the rise in prices kept ahead of the rise of wages and other costs, producers were able to realize large profits. The culmination of this sequence of cause and effect between wages, profits, and prices was reached in May of 1920.1 1 National Industrial Conference Board. Service Letter No. 80, Septem- ber 5, 1921. 48 Digitized by Microsoft® With the cessation of war, the demand for many lines of goods rapidly declined, production was limited or cut off, prices began to fall, wages were cut or ceased altogether, profits were eliminated and losses entailed. In other indus- tries where demand remained strong and this sequence did not follow, prices were maintained, high wage levels were demanded, and profits were made. To the extent that employers and employees in such in- dustries take advantage of the opportunity to demand high prices and high wages they hold back the process of deflation throughout the industrial system. The retardation of this process handicaps the less favored industries, their production is limited or ceases, and unemployment ensues. Seasonal Unemployment: Among the most important factors which operate outside of the individual manufacturing plant to cause unemployment are the seasonal ones. In some cases it is the seasonal character of the raw materials, as in factory canning of vegetables, which makes it necessary that the product be handled promptly and that the labor be employed only part of the time. Sometimes it is the weather and the human psychology which accompanies it, which are the deter- mining elements in modifying demand for goods. In the case of most articles of wearing apparel, seasonal changes and style are closely related. The summer months, with their slacken- ing of activity, and the vacations, which interrupt the contin- uity of business, are followed by the busy autumn period; after the rush of the holidays comes another dull season. Changes in the demand for particular goods and changes in fashions produce a flood of orders in the spring and fall. The habits of buyers in connection ^with particular classes of commodities constitute another element in fluctuations in production and employment. All these seasonal factors affect the number of workers employed. They produce a winter peak of employment in some industries, in others a summer peak, and there are two- peak industries which include such lines as hosiery manu- facture, garment making, and the manufacture of shoes and wearing apparel generally. Building and other out-of-door trades in the North are largely at a standstill in winter. The manufacturers of agricultural implements have their maximum 49 PROPERTY OF LIBRARY mmVML AlD LMSfi RELATJONS 10791 number of employees in the late winter, to meet the high point of demand for tillage tools to be used in the spring. As part of the seasonal fluctuations of industry there occur monthly changes in employment which portray the trend of production during the transitions between seasons. Chart 7 shows, for a series of years beginning with 1910, the fluctuations from month to month of the number of persons employed in factories in Massachusetts.^ It is inter- esting to note that the movement is remarkably similar from year to year. The curve for 1914 fell off sharply after the middle of the year, being afi^ected by the slump in demand due to the depression which began at that time, following the interference with normal demand by wartime factors. The 1915 curve began low, but by the middle of the year the demand for workers in munition factories and machine shops sent it sharply upward. The years 1916, 1917 and 1918 are war years and, therefore, their curves are irregular; they show the number of persons employed in Massachusetts to be from 30,000 to 80,000 greater than at the highest point of 1914. As indicative of seasonal unemployment it has been found that about twice as many workers are idle in Massachusetts and New York State at the end of March as at the end of September of the same year. In New York State the per- centage of union workers reported idle in the month of March averaged 23.4 per cent during the years 1904-1915. The average percentage reported idle in the month of September for the same years wafi 13.4 per cent. In Massachusetts the average in March for the years 1908-1919 was 11.4 per cent, and that in September for the same years was 6.4 per cent. Chart 8 shows graphically the fluctuations in employ- ment in the building trades in New York State. Unemployment Accompanying Business Depressions: Probably the most important period of unemployment due to a busi- ness depression or panic, which we have ever experienced, is that through which we are now passing. It is clear that a very large part of our existing unemployment is due to the business depression. Lack of orders accompanying the depression is responsible for about 60 per cent of the present 'Massachusetts. Bureau of Statistics of Labor. The Annual Statistics of Manufactures, 1886-1918. 50 Digitized by Microsoft® CHART 7: FLUCTUATIONS IN FACTORY EMPLOYMENT IN MASSA- CHUSETTS, BY MONTHS, 1909-19181 (National Industrial Conference Board) THOUSANDS OF WAOt-CAIlNUS 750 740 / V. ,•• [/■- -i2i£. ^ ^..•••** \ / / \..' '■■••- fQl-r V / / ^N ■■■■••T. •*, ,. ,.•• N / f ■** •« "■■"-•■. ^ ^^ "-■^ _l9\e - — / y ,,'" ^ ^ ** .'' "* *'^:? K, j> €-• — .._ *N <^ > ^i^ > .'.?'2 k 4 ■/. / j909. ^^ , y' [/. ^<.^- -■^: i>!,>, 1915 /^ • y' .y ^^ .> ;•>' ~~* — — jk. ^^r- •--., ,'' ...4^ >• y <"'' ^ "^v- .-•■ -,j,to" ^'' \ •"' 730 720 710 700 690 680 670 660 650 640 630 BSD 610 600 590 560 570 560 SSO 540 530 SSO 510 500 JAN. FEE MAD. APQ. MAY JUN. JUL. AUS. SEPi: OCT NOV DEC unemployment, as shown from the fact that upwards of 3,500,000 are unemployed today as compared with 1,800,000 in normal business times. The remedy for this situation is orders, more business, the creation of a market for goods. Increased demand for manufacturers' products is the first 1 Based on data from the Massachusetts Department of Labor and Industries. SI Digitized by Microsoft® CHART 8: IDLENESS IN THE BUILDING TRADES IN NEW YORK STATE BY MONTHS, 1908-19141 (National Industrial Conference Board) _J/tN.. FEB. MAR. XfSL MAY JUN. JUL. MK. SEPT. OCT. NOV. DE^^ requisite in reducing the unemployment which accompanies the present dull business situation. But a demand for goods cannot be created until the causes underlying the present industrial impasse are understood and removed. The scale of ascending prices during the war period and following the armistice had an increasing tendency to get ahead of the •Based on data from the New York State Department of Labor. 52 Digitized by Microsoft® consumer's ability to purchase. This situation was still further accentuated by the decrease in the European de- mand for goods. Lack of demand for goods slowed down production, lessened or cut off wages, and reduced the effec- tive demand of the worker for commodities. The more widely this sequence ramified, the more unemployment ex- tended, until the present industrial situation developed. High prices, as a factor which further encouraged the tendency to slow down production are in their turn due to the following causes: First, high costs of raw materials. These in many instances, had soared to heights previously unknown. Second, high transportation rates. This item necessarily en- ters into the cost of production, both on raw materials coming in, and usually on the finished product going out. Third, high labor costs. Wages constitute, as a general rule, the largest item of the cost of production. Fourth, large profits. During the early period following the armistice, when the business world should have been antici- pating adjustments to a lower price level, there was a wide- spread unwillingness to begin to accept the necessary losses accompanying the disposal of goods manufactured at high cost. Many insisted upon holding goods off the market and demanded renewals of credit that would carry them until stocks were disposed of, or advocated extensions of credit to keep prices up to the high level. When, finally, the trend of prices started downward the unevenness in price declines retarded general adjustment to a more stable relationship. This means that prices declined to pre-war levels or below in some products, while others re- mained relatively high. This has kept the industrial situa- tion out of balance and is undoubtedly responsible for the failure of many other factors to adjust themselves. Wasteful Systems of Commodity Distribution. A large part of the waste and irregularity of our system of production and dis- tribution of commodities is due to making goods for an un- known market. This factor in turn is largely due to the lack of an adequate system of acquiring comprehensive and reliable data as to the requirements of the market. Thus producers S3 Digitized by Microsoft® are not in a position to make as close a correspondence as they should between market conditions and their production orders and needs. The fact that the products of many industries which are amenable to more careful grading and standardization have not been thus treated has furnished occasion for middlemen to exact disproportionate charges for their services and de- fraud both producers and consumers. Moreover, production for markets, based upon inadequate information, frequently results in dumping surpluses and places the middlemen in a still more strategic position. Under such circumstances they are often able to choose whether they shall sell few units of goods at high prices or many units at low prices. To the extent that there is such a hindrance to the free flow of pro- duction and trade, irregularity is introduced and unemploy- ment increased. Complementary to these factors in distribution is the failure to adjust transportation rates so as to permit the maximum movements of goods. The chaotic state of rail- road rate systems and of classification of commodities is one of the most important problems involved in obtain- ing the greatest service from our transportation system. In so far as rates are adjusted so as to encourage the maxi- mum distribution of goods and provide adequate earnings for the railroads it will have a direct effect upon regularity of production and upon the consumption of commodities. Deficient Labor-Placement Facilities: In the present state of social organization, the quantitative and qualitative variations in the demands of various groups and elements of society, sometimes arising out of seasonal demands and changing often with the changes in the severity of each season, and sometimes resulting from unusual developments, create almost synchron- ous fluctuations in the operations of industry and an unbalanc- ing of the industrial mechanism. The high and low peaks of industrial activity thus created necessitate an available labor surplus above the normal demand. The presence of an unnecessarily large labor surplus in some industries, or a failure to provide adequate facilities for readily shifting this surplus, particularly common labor, from one industry or plant to another, is responsible for a large amount of unemployment. Our labor market is decen- 54 Digitized by Microsoft® tralized. The means of communication between employers wanting men and workers desiring jobs are inadequate. If the markets for raw materials and finished products were de- pendent upon equally poor facilities for bringing buyer and seller together, industry would be chaotic. The full meaning of a decentralized labor market can be comprehended only by considering the actual working of the methods used to dis- tribute the labor supply. There are five classes of employment agencies operating at present in the United States: (1) Commercial employment agencies, (2) employers' bureaus of employment, (3) em- ployment bureaus of labor unions, (4) free public employ- ment agencies, (5) employment agencies operated by philanthropic or charitable organizations. The total number of persons placed by all these agencies is unknown and there are no present means of obtaining an even fairly accurate aggregate figure. Neither can the rela- tive value of their services be fairly measured. In the majority of states there are no records of placements by commercial employment agencies and usually no regulatory supervision of their operations. It stands, however, as a matter of record that they often take advantage of the needs of the employer and the employee in the charges for their services, and that they thrive most under circumstances which occasion frequent labor turnover. They furnish the employer and the employee with information regarding jobs and workers based only upon very limited knowledge without any pretense at gathering comprehensive data. This results from their decentralized activities and inadequate facilities. The employment bureaus of individual employers or em- ployers' associations place a very large number, but again, accurate or even approximate figures are lacking as well as a fair measure of the effectiveness of this service. It stands to reason, however, that over a limited area at least, this service connects expeditiously and economically the right man and the right job. The usual method of procedure is to advertise in newspapers and otherwise for the kind of workers wanted, and to hire them at the factory gates. This, it should be frankly recognized, gives the employer a strategic advantage in bargaining, particularly in times of marked unemployment and when the advertising has resulted in bringing to his door a considerable assortment of men fitted for the vacant posi- SS Digitized by Microsoft® tions. However, advertising for men and hiring at the gate may work to the disadvantage of employers when they are competing strongly for men during a period of great produc- tivity, as was the case during the war. It frequently fur- nishes both skilled and unskilled workers the opportunity to profiteer in bidding one employer against another. It under- mines the necessary emphasis upon the right allocation of men in industry. As to the effect upon unemployment of placements of idle labor union members by their organizations, some indications are furnished by the statistics made available by certain labor unions. The International Typographical Union and its local branches have been particularly active in placing idle union members and, generally, where closed union or pre- ferential union shops exist in an industry, the respective labor organizations have been obliged to maintain employment bureaus. Free public employment agencies are most active when productive activity is at the lowest and, consequently un- employment is most acute. In times of great need for workers in industry, those who are out of work or desirous of changing their employment, usually do not avail themselves of free public employment agencies. The period immediately fol- lowing the war, however, constituted an exception. From January, 1918, to June, 1920, the United States Employment Service and co-operating public employment offices claim to have placed 6,846,028 workers in essential industries.'^ The number of persons placed by the state employment bureaus cooperating with the United States Employment Service dur- ing the year ending June 30, 1920, was 2,020,252. A large number of persons still find work through the infor- mal interchange of information between one employer and another, or one workman and another. The amount of this interchange cannot be exactly measured. The employer is not properly served under existing condi- tions because in most industries there is no central place to which he can go when he needs workers. The employee finds it unnecessarily difficult to find a job because there is no one place to which he can go for information as to where his work is in demand. It is not to the interest of employer or worker > United States, Department of Labor. Annual Report, 1920. Report of Director General United States Employment Service, pp. 935-946. 56 Digitized by Microsoft® for the employee to be tired and discouraged by tramping from place to place before he begins work for his new employer. The existing employment bureaus operated by private- commercial, public or charitable bodies, are not co-ordinated in any single placement plan, and this lack of organization of labor-placement facilities is an important factor in unemploy- ment. It does not directly produce unemployment, but once unemployment exists it prolongs it by failing to provide prompt and adequate labor clearing houses for employers and (b) Of Political Origin Immigration as a Factor in Unemployment: The immigration of European labor is sometimes charged with part of the responsibility for increased unemployment, for the reason that it has added annually large numbers of unskilled laborers to our labor supply. Foreign-born workers constituted in 1910 more than 50 per cent of all the employees in some indus- tries. About a million and a half common laborers and over half a million skilled workers were added to our labor force during the five years immediately preceding the war; but since 1915 the net immigration — that is, the excess of immi- gration over emigration — has not been enough to satisfy the needs of the country for common labor. The number of wage-earners that have come in since the war ended has been too small to be an important factor in the present unemploy- ment, which is due to other causes already described. The following table shows the proportion of foreign born employed in certain industries in 1910, and Chart 9 gives the net immigration since 1910. PER CENT OF FOREIGN BORN WAGE-EARNERS IN LEADING INDUSTRIES, 1910^ Agricultural implements and vehicles 59 .6 Boots and shoes 2/ .3 Cigars and tobacco 32 .6 Clothing. 72.2 Coal mining (bituminous) 61 .9 Construction work 76.6 Copper mining and smelting 65 . 3 Cotton goods 68 .7 Furniture 59 . 1 Glass 39.3 Iron and steel 57 .7 Iron ore mining ? Leather 67.0 Oil refining 66.7 Silk goods 34.3 Slaughtering and meat packing 60.7 Sugar refining. °5 .3 Wool and worsted goods ■ • • • 61 .9 ' United States. Abstracts of Reports of the Immigration Comnussion, Document No. 747 Vol.I, pp. 332-333. 57 Digitized by Microsoft® CHART 9: NET IMMIGRATION, SKILLED AND COMMON LABOR, UNITED STATES, 1911-1920 (FISCAL YEARS)! TMOUSWDS ISO 100 50 (National Industrial Conference Board) SKILLED LABOR / \ r \ EXCESS OF IMMIGRATION OVER| EMIGRATION — \ u^ K ^^ / 400 350 COMMON LABOR 1911 ISie 1913 1914 1915 1916 1917 1918 I9IS ISZO I9EI ' Based on data from the United States Bureau of Immigration. 58 Digitized by Microsoft® Government Fiscal Policy as a Cause of Unemployment: One of the most disturbing features of government activity in its effect upon business is uncertainty of tax levies. A gen- erally accepted principle evolved from the experience of modern nations is that tax levies should be known far enough ahead to permit producers to anticipate them and to adjust their affairs so that payment can be made with the least possible inconvenience. The many obligations which the Government has assumed as the result of the expenditures due to the war must be met. The problem resolves itself into one of applying forms of taxation which will best dis- tribute the burden according to the accepted canon of ability to pay and at the same time hinder as little as possible needed investment in industry. Another principle underlying sound fiscal policy is that government should not take from the income of citizens of a country more than is needed to provide efficient govern- mental service. To the extent that money is spent in ex- travagant and wasteful ways, to that degree funds are di- verted from their normal flow among consumers who make demands for goods upon industry and who invest their sur- pluses in productive enterprises. Tariffs as a Factor in Unemployment: An increase of tariffs on imports as a means of obtaining revenue or of giving pro- tection to industry has established a political factor of causa- tion which at one time may favorably affect industry and at another time produce unfavorable results. This form of indi- rect subsidy to certain industries has furnished incentive to produce commodities in competition with foreign-made goods. In theory, such assistance may be lessened or discontinued when the home industry can compete successfully in the home market with foreign commodities. In practice, lowering the tariff on particular commodities in many cases has subjected the producers to a degree of competition which made large inroads on their home market and cut down their production. Besides, universal reductions in tariffs have frequently re- sulted in a general slowing down of the productive process. In some instances lower tariffs have been considered an important factor in the development of crises, panics, busi- ness depressions and price deflations. No dependable basis for estimating the extent of the importance of this factor at 59 Digitized by Microsoft® such times, as contrasted with other related factors, has ever been established. Probably the most that can be said is that sudden and extensive lowering of tariffs on particular commodities or on commodities in general, which may result in the dumping of foreign goods on the American market, occasions fundamental adjustments in costs, wages and prices. These circumstances, in turn, may retard or cut oiF production and throw workers out of employment. International Relations as a Factor in Unemployment: Regu- larity and continuity of production in industrial nations is dependent upon world peace. Modern war cannot be con- ducted without making extreme demands upon industry. It involves the destruction of goods and men at a rate which throws the industrial mechanism out of balance. To regain the balance and establish normal relations between national industrial systems and within the industrial organism of each nation affected by war is a slow process, involving severe readjustments, retardation of production, and unemployment. International policies which involve large expenditures for armament have something of the same aspects and effects upon industry as government waste and extravagance. While certain industries may be called upon for the produc- tion of armament, the fighting equipment, when once it is made, stands as an unproductive investment of wealth. Expenditure for such purposes beyond what is needed for actual protection, considering the state of world politics and the degree of understanding and cooperation among nations, is sheer waste and an unwarranted deduction from the na- tional income. Whatever can be saved by limitation and abolition of armaments can be used more productively. It will leave nations with more useful wealth for a better standard of living and it will not divert surplus funds from their normal investment in industry. The diversion of increasing amounts for such purposes from industry can only retard its normal development and introduce an element of uncertainty and irregularity. The analysis of the causes of unemployment naturally leads not only to the consideration of ways and means to cope with the present condition of unemployment, but also points to the importance of inaugurating long-time measures which will encourage better coordination between the demand for and the supply of labor. 60 Digitized by Microsoft® IV SUGGESTED REMEDIES FOR UNEMPLOYMENT In considering effective means of reducing unemployment or alleviating its effects, the general thought must be borne in mind that complete absence of unemployment implies per- fect business adjustment. Suggestions for remedying un- employment conditions must consequently be qualified by the general economic, political, and social situation within which they are to be applied. Moreover, the experience of industrialists and of business men generally, as well as of official bodies, in working out effective means of reducing or alleviating unemployment is in most instances applicable only to special circumstances and local conditions. With regard to the unemployment problem there exists no body of data, derived from extensive knowledge and experience of American industry generally, which is directly applicable either to ordinary conditions or to a special situation such as the prevailing one. There is, therefore, ample scope and increasing need for the application of scientific study, intelligent foresight and improved organization to gain mastery over the forces which make for industrial depressions and unemployment. The immediate unemployment situation is of a special character and owes its extent, intensity and peculiar character- istics largely to the world war. It was inevitable that a political and social upheaval of this magnitude, producing an unprecedented mobilization of national productive capacity and an over-expansion in some industries far beyond the need of normal conditions, should carry with it a correspondingly extraordinary need of effort for readjustment after the struggle was over. The difficulties of the present situation strikingly indicate a failure to apply scientific knowledge and intelligent foresight to anticipate its occurrence and to recommend policies, procedure, and organization which would mitigate its effects. They indicate also the need of a public opinion that is preval- ent, intelligent and forceful enough to demand and to support measures for carrying on such preparation. 61 Digitized by Microsoft® Periods of extensive unemployment are, however, a recur- ring phenomenon, and the volume of unemployment more or less continuous in all periods is large enough to warrant application of concerted effort and scientific study at all times. All means which will furnish reliable data as to causes and as to results of experience will help prepare the way for the con- trol of the factors underlying the general unemployment problem. A concise survey of methods and broad principles which have been suggested for control of the factors underlying the un- employment problem is, therefore, timely and helpful. The consideration of these methods falls naturally into alignment with the description of causes herein made, and divides itself into remedies for causes of unemployment arising within the factory or industry and remedies for those external thereto. (1) Reducing Unemployment Due to Causes Arising Within tiie Factory (a) Personal Factors Strikes, Lockouts and Disability, which have been called the Personal Factors in unemployment, cause only about 5 per cent of all loss of work time, as already pointed out, but are of such immediate prominence in the unemployment problem as to deserve at least brief notice. Strikes and lockouts indicate a breakdown in the good-will which should exist between management and men. There- fore, whatever measures promote the development of good-will between management and men, tend to lessen the number and severity of labor disputes. These include provision of ade- quate means within the plant for receiving and settling com- plaints regarding wages, hours, or working conditions before they threaten to interrupt production, such as Works Councils or Shop Committees^, and other means whereby managers or other officials become readily accessible to the workers. Con- siderable experimentation as to type of organization and pro- cedure best suited to this end is being carried on by industry in this country at the present time. While the results of such efforts may not permit as yet of the endorsement of particular schemes, the indications are that this development 1 See National Industrial Conference Board. Research Reports Nos. 21 and 26; also forthcoming Research Report on Works Councils. 62 Digitized by Microsoft® of orderly and systematic contacts between workers and em- ployers may lead to better understanding and to greater steadiness of production and employment. In addition to such working arrangements, the establish- ment of definite principles which shall govern the employment relation and on the basis of which labor differences may be adjusted is an important factor in lessening the number of labor disputes. In the case of railway wages and working conditions, for example, the Transportation Act of 1920 pro- vides that the following factors shall be taken into considera- tion: (1) The scale of wages paid for similar kinds of work in other industries; (2) Tke relation between wages and the cost of living; (3) The hazards of the employment; (4) The training and skill required; (5) The degree of responsibility; (6) The character and regularity of the employment; and (7) Inequalities of increases in wages or of treatment, the result of previous wage orders or adjustments.' To assist in building up confidence, loyalty and co-operation between employers and employees, scientific study and deter- mination of what shall constitute a fair day's production is being used in several industries, and should be applied in all industries. Under the classification outlined in the beginning of this Report, sickness should not be considered a part of the un- employment problem as such, but rather a cause of idleness. It is, nevertheless, an important factor interfering with the steady operation of industry and, from that standpoint, must here receive attention. It deprives a plant not only of the full or partial productive contribution of the sick employee, but because of the interrelation of work processes, sometimes interferes with the work of healthy wage-earners as well. The amount of sickness may be lessened by better public health service, clean streets, pure water, clean milk, and better housing, all of which are mainly the responsibility of the com- munity; by personal attention to their health and living condi- tions on the part of the employees; by more attention to health service and plant sanitation by the employer. Em- ployers are taking an increasing interest in the medical care ' United States. Laws of the Sixty-Fifth and Sixty-Sixth Congresses Relat- ing to Interstate and Foreign Commerce. House of Representatives, 1920, p. 89. 63 Digitized by Microsoft® of employees in order to insure a more steady labor supply. Through experiments in prevention of sickness and accidents, by first-aid to the injured, by physical examination of em- ployees, by keeping of health records, and by increased atten- tion to ventilation, dust and fume removal, lighting, safety and washing and dressing facilities, it has been found possible considerably to reduce lost time and to increase plant effi- ciency. A recent report of the National Industrial Conference Board on this subject contains the following statement:' ". . . Moreover, experience showed that . . . condi- tions inimical to the health of the workers could be removed with positive assurance that the general physical and mental health would be benefited thereby, resulting, in turn, in in- creased .production and lessened labor turnover. "Competent physicians in industry thus became gradually cognizant of the fact that the greatest value of industrial medical work lay in keeping the worker well rather than in curing his disability; for a person of healthy mind and body views his surroundings and associations differently from one affected by illness or dissatisfaction, and a contented and healthy worker can produce more and better than a dis- satisfied and sick employee." The possibility of utilizing the handicapped or defective worker to the advantage of industry and the worker himself is also made clear:^ "It has been found that where the physical examination is properly employed the handicapped worker is assured fair treatment. His defects and limitations are determined and his job assignment made accordingly. Previous to the in- troduction of physical examinations, such workers were un- able to secure permanent employment because their handicap was never studied with the idea of fitting the employment to the worker. ... By keeping in mind the three reasons for rejecting an applicant for employment, viz., the danger to himself, to others, or to property, it has been found neces- sary to deny employment to only a very small percentage of workers." {b) Impersonal Factors All adjustments within the plant which will result in lower production costs, improved factory methods, better personnel administration and reduced labor turnover are calculated ' National Industrial Conference Board. "Health Service in Industry." Research Report No. 34, pp. 3-4. ' National Industrial Conference Board. "Health Service in Industry." Re- search Report No. 34, p. 39. 64 Digitized by Microsoft® to promote continuity of production and to reduce unemploy- ment. Lower Production Costs and Improved Factory Methods: The one effective remedy for business depression and the unemploy- ment situation is the development of a better market for goods. One method of widening the market is through selling at lower prices. These are dependent mainly on production at lower costs which will work their way down through retail trade and stimulate buying. Lower production costs in turn depend upon lower wage costs per unit of product, reduced prices of raw materials, better management methods, and smaller profits. Since labor costs are a large and important costelement, there must be a more earnest effort on the part of workmen and managements to decrease such costs. The wage worker ought to be primarily concerned about real wages as distinct from money wages. What he can buy with his money is the real test of his economic welfare. In a period of falling prices the same or even lower money wages may buy more goods for the worker, and on the other hand, increased production and lower unit costs may permit low prices and fair profits without material reduction in money wages. The reduction of costs of raw materials depends in part on the abundance of natural resources, in part on reduction of wages in agriculture and in the extractive industries, and in part upon world economic conditions, where the prices of raw materials are determined in a world market. Costs may also be reduced by adopting improved methods of factory management and by enforcing strict economies throughout the plant. Study of the routing of the product through the factory, planning production ahead, forecasting the market, anticipating the amount of supplies needed from week to week, instituting efficient means of reducing wastes, devising the best arrangement of machinery, introducing im- proved plans of wage payment, have been and are being used in many plants to achieve more economical production. The details of these will differ according to the product and the situation of the establishment. Personnel Administration; Reduction of Labor Turnover: Maladjustment of the man to the job is a factor contributing to high labor turnover and unemployment. This may result 65 Digitized by Microsoft® from insufficient general education, lack of training, natural inaptitude for the particular job, weak will power, low vitality or poor health on the part of the worker. The responsibility for these defects rests partly on the worker himself, partly on the schools of the community, and partly on the employer. Earnest and determined effort to do a fair day's work and to familiarize himself with the job, to advance and become more useful to the establishment, are the contributions which the employee may make toward more steady employment. The employer should exercise care in first selection of employees, provide adequate instruction of men in their work, insure comfortable working conditions, establish a satis- factory plan of wage payment, and provide for advancement as merited. The development of intelligent co-operation be- tween men and management in these and other relations is a most important factor in stabilizing employment in individual plants. A summary of the methods which the employer can utilize to advantage is found in a special study of the prevention of waste in hiring and firing, made before the abnormal condi- tions of war times arose, but applying as well today. These are:^ "First, a thorough study of current employment statistics with a careful analysis of the reasons for the discharge of em- ployees is needed in order to furnish a fact basis of local as well as general conditions on which to predicate future actions;' "Second, high-grade men must be placed in charge of hiring departments and must be given adequate authority; "Third, proper methods must be devised for taking care of new employees, not only in respect to their technical train- ing and work, but also in reference to their personal char- acteristics; "Fourth, effective systems of apprenticeship for boys and girls and of specialized training courses for adult employees must be maintained; and "Fifth, well-directed efforts should be made to regulate commercial requirements so as to secure a fairly uniform production throughout the year." The reduction of fluctuations of employment within the plant can be considerably effected in some instances by trans- ferring workers between departments and plants, and by planning promotions in connection with such transfers. By taking cognizance of, and in these various ways meeting, the factors of personal or impersonal origin within the indus- 1 Alexander, Magnus W., "Hiring and Firing," pp. 13, IS, 16. 66 Digitized by Microsoft® trial plant which make for frequent shifting of'personnel, for ill health, discontent or lack of working incentive among em- ployees, as well as for undue production costs, management may foster the economic and continuous operation of industry and obviate some of the less outstanding but constant causes of unemployment. 2. Reducing Unemployment Due to Influences Operating Outside of the Plant (a) Causes of Economic Origin Suggestions for dealing with causes of unemployment of economic origin arising outside the plant involve methods of reducing seasonal unemployment and stabilizing output, estab- lishing stable lines of trade, manufacturing for stock, improv- ing sales methods, seeking more diversified markets and mak- ing more diversified products, introducing equipment to counteract climatic changes, establishing a local central source of labor supply, developing more diversified industries in communities, and standarizing products. The reduction of unemployment due to cycles of business involves the establishment of a basis of control through in- formation obtained from standardized reports on industrial conditions, the co-ordination of costs in transportation and other industries, the promotion of foreign trade through extension of credits, stabilization of exchange and deflation of prices, and the improvement of labor-placement facilities. The immediate problem of relieving the present depression leads to consideration of emergency measures such as tempor- ary relief funds, special measures within plants, shifting of price reductions of manufacturers through retailers to con- sumers, revival of the building industry, and the undertaking of public construction work. A survey of these various ways of approaching the problem of unemployment indicates that between the broad under- lying factors over which industrial management has no con- trol, and the minute adjustments within the plant, previously discussed, there is a region of considerable latitude in which the management, through scientific study and concerted action, can materially aid in reducing and alleviating the extremes of unemployment. 67 Digitized by Microsoft® keducing Seasonal Unemployment: Although seasonal fluctua- tions are recognized as due to causes arising outside particular plants, many employers have found from experience that means can be devised to lessen their effects on production in their individual establishments. If similar methods of dealing with seasonal fluctuations were extended throughout industries greatly aff"ected by them, employers in these indus- tries would be in a position to introduce an important factor of control. Consumers also should be educated more widely to give the necessary co-operation to producers in mitigating the effects of exceptional demands on certain industries at particular times. One of the principal means of lessening seasonal un- employment and, to a limited extent, unemployment due to depressions is, as already suggested, to stabilize output. This stabilizing or regularizing may be accomplished in several ways: (a) By standardizing products, concentrating on those in most constant demand; (b) By manufacturing such standard products for stock and storing the surplus during periods of slow demand; (c) By inducing customers to place orders as far as prac- ticable in advance of their immediate needs, in order to insure more continuous operation of industry. In a concisely formulated statement these points are de- veloped thus: "Finally, as to the last suggested remedy, that of a fairly evenly distributed production throughout the year, the prob- lem looks somewhat simple although it is fraught with many difficulties that arise from the fact that, after all, the buying public is the real master of this situation. The employer can, however, influence the public in many ways, by educa- tional propaganda or by the offer of advantageous trade prices, to help him in his effort for a standardization of his products, so that he may be able to manufacture for stock for future need as well as for immediate delivery, and through it to maintain fairly steady work throughout the whole year. He may well share with the public and with his employees the advantages accruing to him from a wholesale production and the resulting steady work for his employees."^ Any emphasis which employers may put upon developing steady business rather than speculative business will be a further stabilizing factor. Such steady business, it may be noted, is more likely to be derived from broad markets than 1 Alexander, Magnus W., "Hiring and Firing," pp. 13-16,. 68 Digitized by Microsoft® from a local market. A broad market usually results in the acquisition of a diversity of customers and a steadiness of demand superior to that furnished by a few large buyers. Complementary to the seeking of broader and more diversified markets is a diversification of production by the establishment. This may not only provide a larger total volume of production, but, with some firms, may permit a change in emphasis on different products according to seasonal demand. To attain regularity of production in industries in which the processes of manufacture are greatly affected by climatic changes, it may be necessary to construct apparatus or build- ings which will provide evenness of temperature or moisture. In some lines of business, emphasis on inventiveness and investment along these lines has resulted in a regularity for- merly regarded as unattainable. A further means of stabilizing industry within the control of producers would be for local groups of employers to co- operate through a central source of labor supply. This would mean, in effect, an extension of the system of transfer usually practiced only within plants and between departments. The different establishments entering into such an arrange- ment could thus distribute their labor forces according to the fluctuations in the respective plants, thereby mitigating to a considerable extent the waste involved in the prevailing sys- tem of maintaining a separate labor reserve for each concern. This method has been used sufficiently by the employers in the building trades to demonstrate its effectiveness. Another way in which manufacturers and merchants may co-operate more broadly toward continuity of business is by giving special consideration to developing a diversity of industries in their particular communities. To the extent that their slack seasons come at different times, men who would otherwise be out of employment would be enabled to obtain work. Again, employers can co-operate to a larger degree than they have in the past, by more complete standardization of styles and products applicable to whole industries. The exigencies of the war and the consequent demand for more intensive production necessitated a new emphasis upon simplification and standardization. The results of this ex- perience should be turned to good account in times of ordinary 69 Digitized by Microsoft® business activity. On the other hand, it is obvious that there are certain industries where such standardization is not only impracticable but even undesirable because it interferes with the creation and satisfaction of new social demands. If we may judge from the favorable experience that society has had in developing standardization in language, coinage, weights and measures as stabilizing factors, it is reasonable to expect that we shall in time learn the importance of extending the principle to commodities. It can be applied best by comprehensive co-operation, and if the efforts of producers to utilize the principle are to be effective it must be established widely in related industries as well as in particular industries and plants. That these are practical methods of stabilizing employment is shown by the many plans which are actually being used by American manufacturers to this end. Unemployment Accompanying Business Depressions: The study of remedies for the unemployment which accompanies the recurring periods of business depression in modern indus- trial society involves consideration of certain broad economic and political problems. The immediate unemployment situation is in large part one of this character and, though greatly intensified and made world-wide by the recent war, the fundamental factors in it and the broad remedies sug- gested for it may be considered as pertinent to the unemploy- ment phenomenon in depressions generally. The war led to an enormous increase of productive capacity in American industries, and the post-war boom tended to keep this expanded capacity fully utilized or stimulated further expansion. A corresponding over-manning of many factories resulted, and during and immediately after the war some industries were subject to unusual demands which could not be permanently sustained. With the decline of demand and the cancelling of contracts, many concerns were com- pelled to lay off men and reduce their overhead charges to the minimum. In such plants and industries the falling off of demand and the decline in prices compelled drastic reduc- tion in wages as an alternative to losses or complete shut- down. In many instances these concerns and their employees 70 Digitized by Microsoft® suffered unduly because, in other lines of business, prices of materials, wages and profits did not decline proportionately. Since what is a finished product for one concern or industry is frequently a raw material for others, the cost of materials, wages, and profits entered into the prices of raw materials to concerns whose demand had fallen off. Furthermore, a similar relationship existed between the cost of materials, wages, and profits which entered into the prices of commodi- ties that made up the cost of living for the wage workers of concerns whose demand had decreased. In this way the balance which exists between industries during normal periods was overthrown. Reductions in wages and partial or complete shut-downs may have been the only way out for concerns adversely affected by the sudden changes, but wage reductions and un- employment immediately lessen the purchasing power of employees and employers in industries whose demand has dropped off. This in turn lessens the demand for the commod- ities of industries more favorably situated. With the falling off of demand for the products of these industries, reduction in wages, part-time employment and unemployment must follow in them as a natural sequence. Thus the slowing- down process ramifies through the whole industrial structure with varying degrees of severity. Once the industrial system has slipped into the trough of depression, those who find themselves in a relatively pros- perous position, whether employers or employees, are usually unwilling to accept the reduction in profits and wages which may be necessary before the whole industrial structure can begin to strike a new relationship of prices and wages. In this situation five general lines of approach suggest them- selves, aside from that of reduced prices based on lessened production cost through diminished profits, wages and over- head expense: First, the securing of more accurate, extensive, and systematic information regarding the industrial situation; second, the stimulation of industry by reduced transportation costs; third, the opening of improved markets for goods through the stimulation of foreign trade; fourth, the develop- ment of improved employment facilities; and fifth, the pro- visions of means for distributing the shock of unemployment through forms of unemployment insurance. 71 Digitized by Microsoft® Standardized Reports: The development of a system of stan- dardized industrial reports furnishing more dependable in- formation on economic and industrial conditions will aiFord an aid against the tendency to drift into severe conditions of depression and assist in working out new relationships be- tween the industrial and business factors during the upward swing of business. Systematizing of industrial and business records on a more extensive scale will help to reveal dis- proportionate costs, unwarranted capital investments, over- expansion of credit and not only furnish the individual manage- ment with a more exact statement of the condition of its busi- ness, but aid also in comparing conditions of concerns within industries and in making general business policies. A special advantage of such records pertinent to periods of depression is that they may afford an index for the increase or decrease of capital investment within manufacturing establishments in industries and as between industries. The directors of a particular business could more surely estimate the wisdom of further investment and expansion in their own plants, in- vestors would be furnished with a more reliable guide to investments in different industries, and banks would be in a better position to judge the merits of the various applications for loans from specific firms and to compare the relative needs for capital in different industries. Such standardized records would point to the need for the elimination of waste or un- necessary duplication of equipment; they would show the relation of market demand to the existing facilities of produc- tion in various industries and suggest methods of better stabilizing materials, shortening processes and improving production. The development of improved information along these lines in normal periods would be of assistance in establishing indexes which could be described as clinical thermometers of industry, aiding in the diagnosis of present conditions and future outlook and helping to lessen the ten- dency to over-expansion and consequent depression. Improved knowledge of industrial conditions would also be of assistance in stabilizing the consumption of goods. If greater stabilization of production is to be accomplished, con- sumers must be educated as to the part which they play in industrial depressions. The use of comprehensive and dependable statistics to show them the effects of their de- mands on seasonal fluctuation would lay a foundation for 72 Digitized by Microsoft® better co-peration with producers and wiser distribution of buying. A knowledge of the unduly stimulating effects of extra buying in periods of prosperity would help to establish a realization that over-expansion along certain lines has its penalties in crises and forced liquidation. Buyers would be led to see that the alternate overworking and underwork- ing of capital and labor due to wide fluctuations in demand , result in general inefficiency and high prices and unemploy- ment. If the public has better information about the diffi- culties confronting industry it can mitigate the sufi^ering and friction they cause and co-operate in their solution. The possibilities in standardized reports and comprehensive data have been stated in the following words by one of the leading authorities on business cycles: "Among the most needed additions to the list of business barometers are the following: "Most to be desired are statistics which would show the relative fluctuations of costs and prices. "A general index number of the physical volume of trade could be made from data showing the production of certain staples, the shipment or receipts of others, the records of foreign commerce, etc. . . "The proposed plan for obtaining reports concerning the volume of contracts let for construction work and the per- centage of work performed on old contracts merits careful consideration. Few sets of figures would give more insight into business conditions when prosperity was verging toward a crisis or when depression was endangering prosperity. "An index number of the relative prices of bonds and cor- responding figures showing changes in interest rates upon long-time loans would not be difficult to prepare. Even if standing alone these two series would possess great value as reflecting the attitude of investors; but they would be still more useful if accompanied by data concerning the amounts of bonds and short-term notes put upon the market by busi- ness enterprises and by governments. "The old barometers of business could also be considerably improved . The index numbers of commodity prices at whole- sale would be more useful if separate series were computed for raw materials and for the articles manufactured from them, and if the raw materials were subdivided into farm, animal, forest, and mineral products. The differences between the fluctuations of these several groups would be of assistance in determining the causes and therefore the significance of changes in the grand total. "Stock prices should be computed upon the index number plan instead of in the current form of averaging actual prices of shares. To facilitate comparisons the basis chosen should agree with that chosen for commodity prices. The distinc- tively investment stocks should be separated from the specu- 73 Digitized by Microsoft® lative favorites, and separate averages should be struck for railways, public utilities, and industrials. By proper selec- tion, fluctuations in the prices of industrial stocks might be made to reflect the fortunes of enterprises especially concerned with providing industrial equipment. "Reports of clearings would be more useful if accompanied by index numbers showing the relative magnitude of the changes in the actual amounts. Separate averages for these figures should be provided for the centres in which financial operations, industrial activity, and agricultural conditions are the dominant factors. Finally, one of the darkest points of current business conditions in America could be cleared up if the rates these various ^ of discount upon first-class commercial paper in us centres could be regularly ascertained, 'i Reduction of Transportation Costs: All industries are dependent upon transportation but they have no control over the fixing of rates. These rates are part of the cost of placing goods in the hands of consumers and enter definitely into the prices of commodities. Goods will be greatly limited as to the number of places in which they can be marketed if freight rates and price levels in different markets do not stand in a sound eco- nomic relation. The lowering of transportation rates, however, is dependent upon transportation costs. The prices which the railways pay for raw materials, supplies, wages and over- head costs are established in markets over which railroad management has little or no control. Moreover, when industrial stagnation is affecting many of the principal in- dustries, the demand for transportation falls off and the costs of operation are relatively increased unless radical economies of management are put into effect. Finally, the railroads are large buyers of commodities furnished by the producing in- dustries. To the extent that the carriers can obtain their supplies at prices which they can afford to pay, they provide a broad market for these industries. Any adjustments, therefore, which permit railroad operation at lower cost and still leave the transportation companies with funds available for purchasing needed equipment and supplies, are likely to help sustain the level of business activity and prevent the spread of unemployment through industry generally. Encouragement of Foreign Trade: Another difficulty with which industry has to contend in periods of depression, and in the present instance most markedly, is the maintenance of 1 Quoted as an adaptation from Mitchell, W. C, "Business Cycles,'' pp. 591-595, in Hamilton, W. H., "Current Kconomic Problems," Chicago, 1917, pp, 263-265. 74 Digitized by Microsoft® an adequate export market for its goods. The decline in the figures for exports from the United States, from $697,000,000 in November, 1920 to $294,000,000 in November, 1921, while partly due to a decline in money values of commodities, repre- sents chiefly a lessened demand for the goods of American manufacturers and is an additional factor in unemployment. The resumption and expansion of foreign trade will help to lessen the idleness of men and machinery in the United States. Expansion of facilities for furnishing short-time credit will permit foreign purchasers to obtain from the United States goods needed for relief and for consumption purposes. Long- time credits will enable them to purchase (beside consumption goods) machinery and other capital needs for reconstruction and production purposes. Both forms of credit will assist in restoring more normal industrial conditions abroad and be conducive to the stabilization of exchange rates. In looking to the foreign market to relieve our unemploy- ment, however, we are again faced with the conditions of production in our own country. Regardless of financial arrangements, American firms cannot sell goods to Europeans if the prices of our commodities are so high that Europe can- not afford to pay them, or if goods of equal quality can be obtained elsewhere more cheaply. Under normal conditions, when the adverse exchange factor does not operate, American goods must be made under conditions where the cost of mater- ials, profits, wages, and overhead charges are such as to make America a good market in which to buy. Th& general pro- cess of cost deflation must go on until we reach a point where, with increased efficiency in management and labor and increased production, we can manufacture goods at unit costs that will permit exporting in large volume. Improvement of Employment Facilities: The decentralized labor market has been described as one of the causes of unemploy- ment. The inadequacy of the old methods of distributing labor supply was thoroughly demonstrated during the war. All parties concerned in industry were compelled to resort to methods of centralizing and co-ordinating the demand for and supply of labor. In ordinary times as well, ways must be found to render better service to employers and employees in this respect, and the methods used must be able to stand the strain of emergency periods. We have proceeded too 75 Digitized by Microsoft® long on the assumption that if a man has not a job it is his own fault. The individual worker cannot be expected to cope alone with factors in industry over which he has no control. The same applies to the individual employer during periods of great demand for labor. He needs to obtain his share of properly trained men for the positions he has open. Labor- placement services, however, cannot create jobs. Their business is to bring together jobs and the men who need employment, and for this reason, little relief can be expected from such facilities during an acute crisis like the present, when there are not enough jobs to go around. One important way in which the employer may be assisted in his efforts to obtain a satisfactory and stable labor force, however, is through the formulation of careful specifications which apply to the job open, and to the kind of man needed to fill it. The employer is also finding it increasingly to the advantage of himself and employees to provide systems of training and tests of workmanship. This should be compli- mentary to any effort to specify and classify his working force. Employers, moreover, could by agreement centralize the local labor market. This would lessen the need for, or ulti- mately dispense with, the separate labor reserve for each concern. Beside serving better to bring workers and em- ployers together, it would permit the dovetailing of jobs in the various plants at different times and tend to stabilize produc- tion. Whatever organization is set up for this purpose would have to assist in the classification of workers according to the requirements established by job analysis. In the development of any labor-placement facilities it is highly important that the uprooting of workers from their occupations and community life be reduced to a minimum, but where the choice is between work and no work it becomes a matter of accepting the lesser of two evils. With more per- fect co-ordination of the demand and supply of labor between communities and industries there will be less shifting of the labor supply than there is under the present methods of employment. If greater co-ordination and stabilization can be effected in the production processes, the need for labor- placement facilities will be largely reduced. To the extent that there still remains a problem of distributing the necessary 76 Digitized by Microsoft® labor supply, means must be sought to accomplish that end with the minimum expense and the greatest efficiency. Unemployment Insurance Plans: Among the projects for coping with severe unemployment accompanying depression is one which seeks to mitigate the effects of unemployment upon the jobless worker by some form of insurance against unemployment. Such projects are now receiving wider con- sideration and several methods of unemployment insurance are at present in use. Some industrial concerns have set up a reserve or unemploy- ment fund out of which to pay wages to their employees during hard times, when they would otherwise be idle and without money. One or two companies are paying to their unemploy- ed workmen under this plan one-half to three-fourths of the regular wages paid when working. An English company claims that by instituting a private unemployment insurance scheme it reduced labor turnover to less than one per cent per annum. This company finds that security against unemploy- ment makes for greater production on the part of the employees and a greater willingness to accept new methods of manu- facture. Another form of voluntary insurance instituted by several employers is a guaranteed yearly earning on a salary basis. Whether these companies are closed down or working only on part-time, the employees' salaries go on either at the full rate of pay or at the rate of 25 to 50 per cent of earnings. In one case a concern helps employees who are out of work through no fault of their own, by paying for merchandise needed by the employee for everyday use. The company gives a local order to merchants and the whole transaction is put on a business basis. The unemployed man is asked to sign a memorandum in which he agrees that the cost of any assistance given him is an advance on future earnings, and promises to pay back the amount of money in installments on each pay day without any interest being charged. Union out-of-work benefits is another form of unemploy- ment insurance, but one which has not as yet been taken very seriously in this country. It has assumed three forms: (a) Insurance out-of-work benefit. (b) Exemption of dues during unemployment. (c) Travelling loan to members seeking work. 77 Digitized by Microsoft® All of these beneficiary measures in American trade unions have been far slower of development than in European unions. This is especially true as regards out-of-work benefits. Less than one per cent of all expenditures of American national unions for beneficiary purposes was paid for out-of-work benefits up to 1908, whereas in the hundred principal trade unions of England during the years 1908 to 1910, 31 per cent of all expenditures was for such benefits. In 1916, of the 111 national unions affiliated with the American Federation of Labor, sixty-nine were reported as paying benefits of some kind, of which only nine made payments for the support of their unemployed. This relief amounted to $120,770 or only 3 per cent of the total expenditures for beneficiary features. The three American national unions paying out-of-work benefits in 1916 were the Cigar Makers, the Deutsch-Ameri- kanishen Typographia, and the Diamond Workers. Bene- fits are limited to a fixed number of weeks in any one year. Members who refuse to accept a position forfeit their right to the benefit. In addition to the national unions, a considerable number of local unions have some system of out-of-work benefits. Some of these unions with well-established systems paying from |3 to $7 per week benefit, comprise locals of the Boot and Shoe Workers, the Lithographers, the Bakery and Confectionery Workers, Pattern Makers, and Photo- Engravers. The exemption from dues of those out of work is an indirect form of unemployment benefit which has been adopted by a large number of local unions and twenty national unions. This provision enables a member to remain in good standing and to receive the various benefits during the period when he finds it most difficult to maintain his membership. The third form of union out-of-work relief, the traveling loan, has not proved a success in those unions instituting it, because of administrative inefficiency and lack of adequate safeguards against abuse of the system. Loans were made without proper investigation and the funds of the union were squandered. The American Federation of Labor had expended $719,991.20 on this form of benefit up to the year 1919. National systems of unemployment insurance constitute the third form of this kind of insurance that has become quite 78 Digitized by Microsoft® general throughout Europe but has not as yet been enacted in any form in this country. Since the signing of the armis- tice in 1918 unemployment insurance has floated upon a strong tide of legislative favor abroad, provision having been made for either new legislation or great extension of old legislation in Great Britain, Italy, Switzerland, Austria, Denmark, and Soviet Russia. These various national schemes are of both compulsory and voluntary types. That there is some agitation in this country for unemploy- ment insurance of a compulsory type is evidenced by the fact that bills for this type of insurance have been introduced recently in the legislatures of Wisconsin, New York, and Pennsylvania. As a matter of principle it may be said that unemployment insurance, as a remedy for unemployment, should not be applied until a fair chance has been given management to reduce unemployment to the minimum through stabilization of industry and efficient distribution of the labor supply. To the extent that unemployment insurance is advocated and used as a remedy for conditions which need more far-reaching treatment, industry will only be confronted with a cumulative problem. Moreover, the result will be an increasing bill of costs upon producers and consumers as the price of inefficiency in the co-ordination of the industrial system.' {b) Causes of Political Origin The influence on unemployment of political policies, in relation to limitation of immigration, government financial methods, and international relationships, cannot so readily be approached with definite remedies as the more strictly economic causes just dealt with. Certain general suggestions may be made, but if the adverse results of unwise political policies are to be eliminated, a proper understanding of the effects of such policies upon industry must be established. Control 0} Immigration: The most important problem in con- nection with immigration is how to strike a proper balance between the needs of American industry in connection with its legitimate expansion on the one hand, and the proper 1 For a consideration of the subject of unemployment insurance in its broader social aspects see the report soon to be issued by the National Industrial Con- ference Board. 79 Digitized by Microsoft® aspirations of the American worker for a better standard of living on the other. If the growth of population in the United States does not furnish a supply of labor sufficient to permit expansion of production in certain industries to meet the demand, other sources of labor supply should be drawn upon. Of course, no dependable estimate of the needs of industry can be made unless trustworthy data are collected. These must be of such a nature that comparisons can be made of the relative need for labor at different times and the extent of the demand in the various industries. Such data would also serve as one criterion for classification of the occupational types of labor to be admitted. A classification of this kind would give a closer approximation to the actual needs of industry for new immigrants than admission according to percentages of nationalities. It would also lessen the competition with American workers in certain trades and industries, which occurs when an oversupply of skilled or unskilled in these lines is admitted. Moreover, a system of classification ac- cording to need is fairer to the immigrant than promiscuous admission. Oversupply of labor in the trade or occupation in which the immigrant is skilled or has worked may neces- sitate a change in his social status and occasion much suffer- ing for himself and his family before he is properly placed. Thus, systematic efforts to know the needs of industry and protect the standard of living of American workers would be of assistance in connection with a national policy which sought to limit the stream of immigration and prevent it from becoming an aggravating factor in a period of un- employment. Government Fiscal Policies: It is generally agreed that more scientific consideration should be given to the amounts taken from the yearly income of producers in order to liquidate national debts and support government needs. The funding and refunding of the national debt should be carefully planned out and the form of taxation necessary to liquidate it should be so fixed that industry shall not be hampered. Extravagance and waste in government expenditures should be reduced through the extension of scientific budget systems. Careful estimates of government needs, under the supervision and control of heads of departments, is a primary requirement 80 Digitized by Microsoft® in this connection. Such estimates would indicate the real work program of departments. Allocation and centralization of responsibility for estimates over a period of years would establish comparable data of past accomplishments and present needs. The co-ordination of these estimates into a budget for the government as a whole would place the legis- lative body in a position to bring about a closer correspond- ence between revenues and expenditures. Under more efficient and business-like control of govern- ment finances in these and other ways, less of the national income will be diverted for wasteful purposes and industry will be able to adjust its operations with greater surety and regularity. Tariff Policy: Similar counsels of the need of non-partisan scientific inquiry and sound economic adjustment apply to the formulation of tariff policies. If such policies are not to have a drastic influence on industry and employment they must be founded on more comprehensive considerations than heretofore. When large investment has been made in in- dustries, when labor has been trained in special activities and community life has become dependent upon the stability of enterprises, inconsistent and vacillating policies may disturb the whole industrial structure. Scientific study of conditions abroad and at home is needed before such policies can be wisely formulated. In relation to employment, tariff policies should be made as far as possible stabilizing rather than disrupting factors. International Relations: The interdependence of the produc- tive processes of modern nations and the continuous flow of surplus goods between highly developed countries, as well as between such nations and the undeveloped sections of the earth, point to a pressing need for an order and control be- tween nations similar to that within them. During the war nations learned the advantages of using their resources so as to maintain the largest general effectiveness. More enlight- ened international policies and organizations must be estab- lished in correspondence to the actual conditions of economic life upon which the prosperity of all peoples is dependent. Efforts now under way to ease the burden of armaments, with which international relationships have weighed down the nations since the war, bear promise of removing, in the 81 Digitized by Microsoft® long run, the sources of industrial stagnation and unemploy- ment which lie in international maladjustments. (c) The Present Depression and Emergency Measures Some of the methods already discussed, which may be util- ized within and without the plant to lessen unemployment, bear the aspect of immediate relief measures, and if continued may be effective in minimizing unemployment over long periods. Where they are not in use their early inauguration may bring immediate relief, and where they are in operation they tend to stimulate employment. Such methods include arrangements for adjustment of labor disputes, installation of health and safety equipment, measures for improving efficiency and reducing costs, methods of standardizing pro- duction to offset seasonal fluctuations, the stimulation of railway buying and lowering of railway rates, extension of short-and long-time credits in foreign trade, and the better classification and distribution of workers among available jobs. In addition the following specific emergency measures may be considered. Temporary Relief Funds: A determination of the actual extent of distress and suffering among capable people willing to work and unable to find employment will in all probability point to the need of funds to meet these circumstances. In many cases workers who have been earning good wages or salaries, and whose sayings have been exhausted by months of unem- ployment will be found in need of assistance. Systematic provision for such relief will discourage the growth of pauper- ism and crime. Promiscuous solicitation of money should be prohibited, the supervision of the funds provided should be centralized, and their distribution should be systematized. Rotation of Employment: It has been suggested that manu- facturers should employ their workers as far as feasible in rotation under part-time shifts. This may prove possible in some plants or industries and not in others. Where the demand for a particular commodity has greatly decreased it has been necessary not only to reduce the total working time of a plant, but to inaugurate severe wage cuts. Under such circumstances, and where the cost of living has not decreased proportionately, part wages under a general part-time opera- tion of a plant offer a poor livelihood. It then becomes a 82 Digitized by Microsoft® pertinent question whether it is not wiser to give a certain percentage of the workers fair earnings and allow the others to find work elsewhere. Some plants which have tried part- time employment in shifts have reversed their policy in conformity with the latter alternative for reasons of efficiency, However, if part-time employment of workers in shifts could be widely and generally applied, better results might be ex- pected. Then the workers of certain plants would not be left to bear the brunt of a falling demand for their particular product and at the same time meet a general cost of living decreasing but slowly. Plant Extensions , Repairs and Rearrangements.: It is possible in many industries to use periods of business depression to carry on plant construction and readaptation of facilities and repairs. In this way a part of the ordinary working force may be diverted to such work. In so far as these meas- ures imply construction of new plants, etc., they belong more properly to the consideration of the revival and expansion of the building industry, treated below. Reduction of Prices: If manufacturers reduce their production costs and, in turn, their prices to wholesalers and retailers, the consumers should get the benefit of reduction of the prices of goods the middlemen hold in stock. Some middle- men who have taken their losses on stock on hand have found that increased sales at lower prices have more than compensated their losses. Revival oj the Building Industry: Any measures to stimulate building and construction work will create a demand foi labor and materials, but such a revival of building is de- pendent upon conditions in other industries. Manufacturers who wish to carry on construction work and repairs, and those who might undertake to build homes, apartments or hotels have to take into consideration the present cost of materials and the wages and profits demanded by those con- cerned in the building industry. The same problem arises in connection with the expenditure of public funds for build- ing purposes. Insofar as the cost of building materials is dependent upon costs in such basic industries as lumber, steel, cement and quarrying industries, readjustment of wages, profits and prices in these industries may serve to make more 83 Digitized by Microsoft® extensive building operations possible. Reductions in wages and profits in the building industry itself will also be necessary. Wherever artificial restraints affect wages and profits in the basic industries and in the building industry itself, meas- ures would have to be taken to remove such restraints. If the influence of building trade unions and like factors is eliminated, the reduction of wages and profits in the basic industries and the building trades will still be limited by the extent to which the cost of living and the prices of commodi- ties which they obtain from other industries are reduced. Another limiting factor in this connection is the amount of funds available for building purposes as compared with other industries, and the rate of interest demanded. Those who build for investment purposes will demand satisfactory con- ditions in this respect or they will place their money where more attractive returns may be secured. Local, state or federal governments which have obtained loans at low rates because of the relatively high security offered or the tax exemption on the income from such loans, are in the most favorable position to start the demand for building. Public Construction Work: In considering the undertaking by governmental bodies of extensive construction work during the slack periods of business as a means of reducing unem- ployment, a distinction should be made between public works which may be inaugurated as mere "relief '" employment, and those which may be part of a well-planned program of public improvements over a long period of years. The construction of public works on a scale extensive enough to provide jobs which will materially reduce unem- ployment involves definite financial planning. Special reserve funds must be accumulated by setting aside a yearly appro- priation, if taxes are not to be increased during the depressional period, when they are most difficult to bear. Successive administrations must therefore follow a consistent policy in carrying out such projects. The undertaking of public works with special reference to periods of depression and unemployment, however, in- volves special considerations. In depressional periods, governments have the advantage of low cost of materials, low wages and relatively low interest rates for such work. Governments will, however, need to dovetail their activities 84 Digitized by Microsoft® with those of industry at such times. Otherwise, when industrial activity increases, industry will enter into competi- tion with governments for workers, and more attractive wages will have to be offered or else a halt called in the con- struction work. Governments have, moreover, to take into consideration the urgency of the project and their financial condition during the depressional period. Municipalities are subject to limitations as to the nature of the debts they may incur, while state and federal governments are freer to utilize construction work as a remedy for unemployment. At all times public construction work should be so administered as to assure its being done properly and at a reasonable cost, or such work may open up the door to political corruption on a large scale. In short, in order that this remedy may prove a practical contribution to the problem of relieving unemployment, well-formulated policies must be established and the financing and administrative phases satisfactorily worked out. The saving up of private construction work for dull periods when labor costs are low, has also been advocated and in- volves considerations similar to those connected with pro- posals for public construction. To make this remedy eflFective, methods must be devised for making it advantageous for those needing new buildings to postpone their projects until periods of dull business. During busy seasons everybody is eager to carry out new plans, and during dull seasons every class of business tends to wait for better times. In connection with the use of temporary relief work, either public or private, as a remedy for unemployment, applicants for such work should be properly and rapidly classified and intelligently handled. Skilled and unskilled casual workers, seasonal laborers, and other workmen usually having irreg- ular employment, and those who are normally non-wage earners, all need different treatment if the inevitable con- sequences of shifting a large working population are to be reduced to a minimum. As has been said: "Employment of unemployed workers on account of their need, without the usual selection for competency for the job, must of necessity be socially wasteful by making production more costly. In an emergency, of course, this form of waste, though it should not be ignored, may be thoroughly justified, (but it should be recognized that) temporary relief work is necessarily charitable in aim and character."' 1 Report of the Mayor's Committee on Unemployment, New York City, January, 1917, p. 35. 85 Digitized by Microsoft® V GENERAL SUMMARY AND CONCLUSIONS The foregoing survey has shown the importance of careful consideration of the different types of idleness and the neces- sity for concentration upon underlying causes. The data on the extent of unemployment in past periods and during the present time indicate not only that it is a pressing problem in times of industrial depression, but that a consider- able percentage of unemployment is present in periods of pros- perity. During normal times it is estimated that about 1,800,000 are out of work, since on the average about forty- two days per year or 14 per cent of his total working time is lost by each industrial wage-earner. Deduction of seven days due to sickness reduces the total to about thirty-five days caused by unemployment. This does not include loss from part-time employment, for which no reliable figures are to be had. The average of thirty-five days, it must be borne in mind, does not apply to every industry, for the workers in many industries are subject to much longer periods of un- employment, while in others the average is low. Our survey has shown that if we are to know more about the extent of unemployment and be in a position to deal with the causes, we shall need more adequate data. The methods of collection and classification of such data by the states and the Federal Government do not yield returns sufficiently com- prehensive and reliable to establish a proper statistical foundation to determine the actual extent of unemployment. Only four states out of forty-eight have records either of unemployment or of employment which go back as far as five years. The Federal Government surveys are frankly estimates based on samples from different industries and vari- ous localities. In any attempt to cope with unemployment in a comprehensive way this deficiency of information must be corrected. The causes of unemployment are found both in the internal arrangements within plants which result in maladjustments, and in the economic and political circumstances which are 86 Digitized by Microsoft® external to particular firms and industries. The causes arising from conditions within individual manufacturing plants are grouped about personal and impersonal factors. The personal factors such as strikes and lockouts and dis- ability demand different methods of treatment than are usu- ally considered applicable to unemployment as such. Better methods and more thorough organization to reduce friction and develop industrial co-operation between employers and employees are being tested by experiment in many industries in most of the modern nations. From these experiments there may result principles and forms of organization which will call out of employers and employees the co-operation necessary in a system of production based, as is the existing one, upon the principle of division of labor. Management will be under the necessity of furnishing constructive leader- ship and of being increasingly inventive in such matters as labor becomes increasingly responsive. Moreover, relief from stoppages of industry due to industrial disputes will be beneficial in many other ways besides lessening the small per- centage (one to two per cent) of unemployment ascribable to this cause. The average of seven days of idleness due to sickness among industrial wage earners indicates that about 2}4, per cent of their total time is lost for this reason. The elimination of the causes within the individual concern and in the community requires medical attention and methods of sanitation which are being increasingly recognized as the joint responsibility of industrial management and public ofiicials. The causes of unemployment due to impersonal factors within the plant center around faulty factory organization, high production costs, ineffective sales methods, lack of proper materials and equipment, high labor turnover due to improper personnel administration and personal character- istics of employees, inefficiency of employees and the displace- ment of hand labor by machinery. Many concerns are inventing means to better arrangements within their plants affecting these factors. The functions of management are bound to increase in scope as efforts are made to bring closer co-ordination and regularity within plants and industries, between establishments in localities, and within the nation. This functioning will apply not only 87 Digitized by Microsoft® to providing greater regularity in the supply of raw materials, standardizing products, co-ordinating the activities of sales and production departments, and reducing labor turnover, but it will be extended to encouraging diversity of local industries, centralizing local labor markets, dovetailing em- ployments, and developing systems of transfer and pro- motion. Ultimately the process of co-ordination must be extended between nations in order that the economic systems among modern peoples may function with greater steadiness. The term management, thus used, applies not only to the productive process, but to the functioning of the middlemen and financiers. The causes of unemployment due to influences operating outside of the plant are classified as of economic origin and as of political origin. The factors of economic origin arise out of over-expansion of industry, poor co-ordination of wages, profits and prices in the whole industrial system, seasonal variations, wasteful systems of commodity distribution, and deficient labor-placement facilities. Up to this time whatever co-operation and co-ordination has been present in business under the system of division of labor has been too dependent upon price levels and upon an inadequate system for collecting and disseminating informa- tion showing the trend of prices. This is an important service which must be continued and elaborated, but those in direction of industry need also more comprehensive and accurate reports of the actual costs of operation and of the revenues from industry, to establish reliable bases of comparison within plants at different times, and between the individual plants and the industry as a whole. The application of such methods to all industries will provide a more trustworthy guide for judging future needs and prospects in the industrial system. The more the future situation can be anticipated, the more it will be possible to establish a basis of control over normal production, distribution and consumption and over the fluctuations from prosperity to depression. Furthermore, the principle of co-ordination between trans- portation and other forms of industry must receive greater emphasis. The transportation business cannot prosper unless agriculture, mining, and manufacture furnish it with a sufli- cient volume of traffic and favorable prices for supplies and Digitized by Microsoft® equipment. On the other hand all forms of productive enter- prise will be handicapped unless transportation rates allow the marketing of the maximum amount of goods. To the extent that there is a failure to make these adjustments the industrial system will be thrown out of balance, production will be retarded, and unemployment will be increased. The interdependence between nations also requires arrange- ments to keep up the maximum flow of trade. The adjust- ment of price levels and improvement of credit facilities are quite as important between nations as within nations. Fail- ure to extend the principle of co-ordination in this respect between nations retards or cuts off productivity. They become poor customers for each other's products and un- employment is accentuated. Attempts to centralize the labor market and to distribute more efiiciently the available labor supply increase produc- tivity and furnish the workers with larger purchasing power, which in turn augments the demand for goods and stimulates production. While jobs are created only by regular and expanding operation of industry, a method of labor place- ment which encourages maximum productivity and earnings reacts favorably on the whole system. This is due to the fact that the great majority of the purchasing population is made up of wage-earners and their dependents. In the defi-ciency of effective preventive measures such as those outlined, the principle of insurance may be applied for protection against the risk of unemployment, but it would seem to be more important, before attempting to use such a remedy, to seek to eliminate the causes of unemployment and reduce the risk to the minimum. To start the industrial system on the upward road to pros- perity resort may be had to certain emergency measures. These are applicable both within particular plants and for the purpose of effecting a change in general conditions. Part- time work for shifts of workers within plants may alleviate the present distress of many unemployed, if the system be applied widely. Construction work and repairs may also be of con- siderable assistance as a relief measure. Reduction in prices of present stocks of goods held by middlemen, in anticipation of lower prices by manufacturers, will encourage buying. But reduction in prices by manu- Digitized by Microsoft® facturers is dependent upon their ability to lower costs. The prices which manufacturers have to pay for materials, sup- plies and labor are dependent in turn upon the prices which related industries charge and upon the degree of the effective- ness of the control of labor supply by the various labor organi- zations and their attitude toward wage reductions. The initiative in the reduction in manufacturers'^ prices should come through the reduction of profits and wages of employers and employees in the industries most favorably situated. Thus the interrelated industries of the whole system may strike a balance at new price levels which will permit all parts of the system to carry on their normal functions. The revival of the building industry is another point of approach which will affect the interrelations of the whole productive system. The call for men and materials for con- struction purposes within industrial plants, for dwellings, and for public buildings will not only furnish employment for those immediately engaged in such activities but will affect indus- tries providing the building industry with materials, and sup- plies. The earnings of all workers thus employed will in turn enter into the demand for consumption goods from industry in general. Public construction works which may be started at this time will have effects similar to those due to the revival of the building industry. Moreover, local and state governments and the Federal Government may benefit by loans on favorable terms which may be used for such works, if men and materials can be obtained at prices which warrant expenditure for this purpose at the present time. The effectiveness of this factor as encouraging revival of business will be dependent upon the accumulation of public and private funds for carrying out building in dull periods. Finally, we have seen that political policies in connection with immigration, fiscal procedure, tariff, and international relations have an effect upon general conditions in industry. Immigration may be encouraged or restricted to such a degree as to increase or relieve unemployment. Government fiscal policy and procedure may place a disproportionate present burden upon industry or liquidate the national debt gradually. The forms of taxation applied may result in either equitable or inequitable distribution of the burden of government 90 Digitized by Microsoft® needs. The fiscal procedure in connection with appropria- tion and taxation may either be regulated by scientific budgetary methods or continue under a decentralized system permitting "log-rolling," wasteful expenditure, and a dis- proportionate drain upon industry. Tariff rates may be applied or changed so as to be conducive to stability or uncertainty in industry. International relations may either hinder or encourage international trade and thus affect the continuity of production within nations. In relation to all these matters wiser policies may be carried out so as to bring greater stability in the industrial system. In conclusion it should be emphasized that the magnitude of prevailing unemployment and the economic circumstances in which not only the United States but all modern industrial nations now find themselves, point to the need for scientific study of the problem of unemployment and for organization and action looking toward its solution. 91 Digitized by Microsoft® Digitized by Microsoft® PUBLICATIONS OF THE NATIONAL INDUSTRIAL CONFERENCE BOARD {Prices given are for paper-bound copies; cloth binding fifty cents additional) Research Reports Research Report No. I. Workmen's Compensation Acts in the United States — The Legal Phase. 6o pages. April, 1917. Revised, August, 1919. $1.00. Research Report No. 2. Analysis of British Wartime Reports on Hours of Work as Related to Output AND Fatioue. 58 pages. November, 1917. Ji.co. Research Report No. 3. Strikes in American Industry in Wartime. 20 pages. March, 1918. 50 cents. Research Report No, /f. Hours of Work as Related to Output and Health of Workers^ Cotton Manufacturing. 64 pages. March, 1918. ^i.oo. Research Report No. 5. The Canadian Industrial Disputes Investigation Act. 28 pages, April, 1918. 50 cents. Research Report No. 6. Sickness Insurance or Sickness Prevention. 24 pages. May, 1918. 50 cents. Research Report No, 7. Hours of Work as Related to Output and Health of Workers — Boot AND Shoe Industry. 76 pages. June, 1918. $1.00. Research Report No. 8. Wartime Employment of Women in the Metal Trades. 80 pages. July, 1 91 8. $1.00. Research Report No. g. Wartime Changes in the Cost of Living: July, 1914 — ^June, 1918. 82 pages. August, I918. ^i.oo. Research Report No. 10. Arbitration and Wage-Fixing IN Australia. 52 pages. October, 1918. $1.00. ResearchReportNo.il. The Eight-Hour Day Defined. 12 pages. December, 1918. 50 cents. Research Report No. 12. Hours of Work as Related to Output and Health of Workers — Wool Manufacturing. 69 pages. December, 1918. $1.00. Research Report No. 13. Rest Periods for Industrial Workers. 55 pages. January, 1919. $1.00. Research Report No. 14. Wartime Changes in the Cost of Living: July, 1914 — November, 1918. 33 pages. February, 1919. 75 cents. Research Report No. I^. Problems of Industrial Readjustment in the United States. 58 pages. February, 1919. Jl.oo. Research Report No. 16. Hours of Work as Related to Output and Health of Workers — Silk Manufacturing. 54 pages. March, 1919. $1.00. Research Report No. 17, Wartime Changes in the Cost of Living: July, 1914 — March, 1919. 31 pages. May, 1919. 75 cents. Research Report No. 18. Hours of Work as Related to Output and Health of Workers — Metal Manufacturing Industries. 62 pages. July, 1919. $i.oo. Research Report No, Ig. Changes in the Cost of Living: July, 1914 — July, 1919. 31 pages. September, 1919. 75 cents. Research Report No. 20. Wartime Changes in Wages: September, 1914 — March, 1919. 128 pages. September, 1919. Ji-jo. Research Report No. 21. Works Councils in the United States. 135 pages. October, 1919. %i.c,o. Research Report No. 22. The Cost of Living Among Wage Earners — Fall River, Massachu- setts, October, 1919. 18 pages. November, 1919. 50 cents. Research Report No. 23. Conciliation and Arbitration in New Zealand. 46 pages. December, 1919. ^i.oo. Research Report No. 24. The Cost of Living Among Wage Earners — Lawrence, Massachu- setts, November, 1919. 21 pages. December, 1919. 50 cents. Research Report No. 2^. Changes in the Cost of Living: July, 1914 — November, 1919. 24 pages. December, 1919. 75 cents. Research Report No, 26, A Works Council Manual. 32 pages. February, 1920. $1,00. Research Report No. 27. The Hours of Work Problem in Five Major Industries. 91 pages. March, 1920. |i.oo. Research Report No. 28. Changes in the Cost of Living: July, 1914 — March, 1920. 24 pages. May, 1920. 75 cents. Research Report No. 2p. Practical Experience with Profit-Sharing in Industrial Establish- ments. 86 pages. June, 1920. $1.00. Research Report No. 30. Changes in the Cost of Living: July, 1914 — July, 1920. 28 pages. September, 1920. 75 cents. Research Report No. 31. Changes in Wages During and Since the War: September, 1914 — March, 1920. 54 pages. September, 1920. $1.00. Research Report No. 32. Practical Experience with the Work Week of Forty-eight Hours or Less. 96 pages. December, 1920. |i.oo. Digitized by Microsoft® PUBLICATIONS— continued Research Report No. 33. Changes in the Cost of Living: July, 1914 — November, 1920. 29 pages. December, 1920. 75 cents. Research Report No. 34. Health Service in Industry. 64 pages. January, 1921. $1.00. Research Report No. 35. Wage Changes in Industry: September, 1914 — December, 1920. 50 pages. March, 1921. ^i.oo. Research Report No. 36. Changes in the Cost of Living: July, 1914 — March, 1921. 28 pages. April, 1921. 75 cents. Research Report No. 37. Cost of Health Service in Industry. 36 pages. May, 1921. }i.oo. Research Report No. 38. Experience With Trade Union Agreements — Clothing Industries. 13J pages. June, ig2i. $1.50. Research Report No. 3g. Changes in the Cost of Living: July, 1914 — ^July, 1921. 25 pages. August, 1921. 75 cents. Research Report No. 40. Wages in Great Britain, France and Germany. 113 pages. Au- gust, 1921. I1.50. Research Report No. 41. Family Budgets of American Wage Earners: A Critical Analysis. 103 pages. September, I921. |i.oo. Research Report No. 42. The Metric versus the English System of Weights and Measures. 250 pages. October, 1 921. I2.50. Research Report No. 43. The Unemployment Problem, gi pages. November, 1921. ^i.oo. Research Report No. 44. Changes in the Cost of Living: July, 1914 — November, 1921. 32 pages. December, 1921. 75 cents. Special Reports special Report No. I. A Case of Federal Propaganda in Our Public Schools. 13 pages. February, 1919. 50 cents. Special Report No. 2. War Revenue Act of 1918 (A Brief Analysis). 18 pages. March, 1919. 50 cents. Special Report No. 3. Interim Report of the European Commission of the National Indus- trial Conference Board. 34 pages. July, 1919. 50 cents. Special Report No. 4. Is Compulsory Health Insurance Desirable? 12 pages. October, 1919. 50 cents. Special Report No. 5. Vital Issues in the Industrial Conference at Washington, D. C. 15 pages. November, 1919. 50 cents. Special Report No. 6. Problems of Labor and Industry in Great Britain, France, and Italy. Report of the European Commission. 406 pages. November, 1919. ^2.50. Special Report No. 7. The Cost of Living Among Wage Earners — North Hudson County New Jersey, January, 1920. 20 pages. March, 1920. 50 cents. Special Report No. 8. The Cost of Living Among Wage Earners — Greenville and Pelzer, South Carolina, and Charlotte, North Carolina, January and February, 1920. 25 pages. May, 1920. 50 cents. Special Report No. g. Proceedings of the National Industrial Tax Conference at Chicago, Illinois, April 16, i9'2o. 113 pages. May, 1920. $1.00. Special Report No. 10. Should Trade Unions and Employers' Associations Be Made Legally Responsible? 35 pages. June, 1920. 75 cents. Special JReport No. II. The Closed Union Shop Versus the Open Shop: Their Social and Economic Value Compared. 27 pages. July, 1920. 75 cents. Special Report No. 12. Should the State Interfere in the Determination of Wage Rates? 150 pages. August, 1920. |l,5o. Special Report No. 13. The Cost of Living Among Wage Earners — Cincinnati, Ohio, May, 1920. 18 pages. July, 1920. 50 cents. Special Report No. 14. Unwarranted Conclusions Regarding the Eight-Hour and Ten-Hour Workday. 21 pages. August, 1920. 50 cents. Special Report No. 1$. Problems of Labor and Industry in Germany. 65 pages. September, 1920. ^i.oo. Special Report No. l6. The Cost of Living Among Wage Earners — ^Worcester, Massachu- setts, June, 1920. 20 pages. October, 1920. 50 cents. Special Report No. ly. Proceedings of the Second National Industrial Tax Conference, New York, October 22 and 23, 1920. 200 pages. November, 1920. $1.50. Special Report No. 18. Report of the Tax Committee of the National Industrial Conference Board, on the Federal Tax Problem. 58 pages. December, 1920. 75 cents. Special Report No. Ig. The Cost of Living Among Wage Earners — Detroit, Michigan, Septem- TER, 1921. 22 pages. October, 1 92 1. 50 cents. Special Report No. 20. A Digest of "The Metric versus the English System of Weights and Measures," (Research Report No. 42). 12 pages. December, 1921. 25 cents. INDUSTRIAL NEWS SURVEY Important industrial news in concise form. A digest of Industrial News and Comment as Published in Reliable New^-g^^^^ jMa^asfinegg^eviews, Special Articles, ^nd Government Documents. Weekly. $2.00 per year. Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Date Due 1 ■v ■ , f Cornell University Library HD 5724.N3 The unemployment problem ...National ind 3 1924 002 717 852 Digitized by Microsoft® PROPERTY OF LIBRARY - nO 'J CQfiJMELL UNJVERSITY Digitized by Microsoft®