Jobs for Whom? Employment Policy in the United States and Western Europe
Rose, Nancy E., Journal of Economic Issues
Policies to reduce unemployment have been an integral component of government programs in most developed capitalist countries since the end of World War II. Yet this "employment policy" sounds like an oxymoron of sorts in the United States. While the United States has pursued full employment policy only in fits and starts, the national governments of most Western European countries have elaborated explicit commitments to employment policies designed to decrease joblessness. These policies have encompassed the following range of programs: fiscal and monetary policy to stimulate aggregate demand; direct payments to the unemployed; job placement services; policies to reduce the labor force, including increasing job flexibility, reducing the workweek, and promoting early retirement; policies aimed at industrial mobility, primarily getting industries to locate in areas of high unemployment; and active labor market policy (ALMP), which includes programs to increase labor market mobility, training and retraining, sheltered training workshops and employer subsidies for harder-to-employ populations such as the disabled and older workers, and direct job creation in the public and nonprofit sectors.
In this paper, I compare employment policy in the United States and Western Europe since World War II. This history shows that the European policies were successful through the mid-1970s, as unemployment rates of 2-3 percent prevailed, but that since then there has been increased unemployment and a retreat from this commitment. Yet participation by labor in policy formulation and a basic level of policies designed to provide a safety net for workers are still taken for granted.
Employment Policy in the United States
The history of employment policy in the United States is one of sporadic commitment to reduce joblessness. The federal government provided no unemployment relief until the 1930s when massive unemployment and accompanying social dislocation and protest generated by the Great Depression necessitated action at the national level. Most important were government work programs, as the federal government provided monies to the states to create jobs for the unemployed. The Federal Emergency Relief Administration (FERA), from 1933 through 1935, the brief Civil Works Administration (CWA) during winter 1933-1934, and the Works Progress Administration (WPA), from 1935 through 1943, regularly provided work for 1.4-3.3 million people each month, and 4.4. million at the height of the CWA, at rates of pay approximating private sector wages. Continual criticisms that the programs were only "make-work" - i.e., the work was not necessary, but only developed to give the semblance of real work - were virtually assured by the mandate to create as much work as possible with the available funds without competing with the private sector [Rose 1994; 1995, chap. 2].(1)
President Roosevelt also appointed a National Resources Planning Board (NRPB) that developed planning reports throughout the 1930s and concluded with two major reports elaborating a progressive economic agenda for the postwar era.(2) In these reports, the NRPB argued for the "formal acceptance by the Federal Government of responsibility for insuring jobs at decent pay to all those able to work" and advocated a "New Bill of Rights" that would extend the political bill of rights in the U.S. Constitution to enumerated rights for economic security [NRPB 1942, 17; emphasis in original]. Policies to achieve these goals would include public investment to compensate for the shortfall in total investment needed to reach full employment, expanding and strengthening the social insurance and public assistance programs, and establishing a permanent public employment program along the lines of the WPA.
The gist of these recommendations was incorporated into the Full Employment bill of 1945. Declaring that "all Americans able to work and seeking work have the right to useful, remunerative, regular, and full-time employment," it would have committed the federal government to pursue policies to attain full employment. …