Front Page Titles (by Subject) CHAPTER 23: OTHER PROTECTIVE LABOR AND SOCIAL LEGISLATION - Economics, vol. 2: Modern Economic Problems
The Online Library of Liberty
A project of Liberty Fund, Inc.
CHAPTER 23: OTHER PROTECTIVE LABOR AND SOCIAL LEGISLATION - Frank A. Fetter, Economics, vol. 2: Modern Economic Problems 
Economics, vol. 2: Modern Economic Problems, 2nd edition, revised (New York: The Century Co., 1923).
Part of: Economics, 2 vols.
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
OTHER PROTECTIVE LABOR AND SOCIAL LEGISLATION
§ 1. Evils of early factory conditions. § 2. Improvement of factory conditions. § 3. Limitations of the wage contract. § 4. Usury laws. § 5. Public inspection of standards and of foods. § 6. Charity, and control of vice. § 7. City growth and the housing problem. § 8. Good housing legislation. § 9. General grounds of this social legislation. § 10. Training in the trades. § 11. Definition of unemployment. § 12. Extent and evils of unemployment. § 13. Individual maladjustment of wages causing unemployment. § 15. Individual maladjustment in finding jobs. § 16. Public employment offices. § 17. Fluctuations of industry causing unemployment. § 18. Remedies for seasonal fluctuations. § 19. Reducing cyclical unemployment and its effects.
§ 1. Evils of early factory conditions. The time is but brief in the life of nations since the main manufacturing processes, now mostly conducted in great factories, were carried on in or near the homes of the workers. This change has been reflected in the meaning of “manufactures,” which first meant literally goods made by hand, but now conveys the thought of goods made by machinery. The craftsmen worked alone in their own homes or with the help of their wives and children. If the master craftsmen had other helpers, these were usually lodged and fed in the homes, and were taught by the side of the masters’ own families. The old English law of master and servant was the labor law of that time, as, to some extent, it is to-day in Great Britain and America. The living and working conditions of the wage-workers were in general the same as those of the master himself and of his own family; and this was the best possible guaranty that the conditions would be kept up to the best standards of that time. The same change in industrial relations that led to the rise of the organized labor movement1 revealed new and often horrible neglect and evil in and about the factories. They had been erected with no thought of sanitation, safety, and decency for the workers.
§ 2. Improvement of factory conditions. Legislation to remedy these evils began in England a century ago, and the English code of factory laws, regulating the construction and operation of factories and providing for their inspection, has become voluminous. It has been copied, and in some respects improved, by all of the great industrial nations. This is true in American states in which manufacturing is largely developed, though the states in which agriculture is the dominant industry still have very few such regulations. As a result of these measures, accompanying and stimulating an enlightenment of the employers’ self-interest, there has been a very remarkable improvement in such matters in recent years. In many American factories erected in the last quarter-century the conditions as to lighting, heating, ventilation, stairways, fire-escapes, protection of the workers against accidents, and lavatory and sanitary arrangements are better than the best conditions ever existing in domestic manufactures. A somewhat corresponding improvement has taken place on railroads, in mercantile establishments, and, perhaps less, in mining.
Factory legislation often has been opposed by employers because of the expense it causes; but if the regulations apply to all factories, the expense becomes a part of the cost of production and is shifted, like the other expenses of production, to the general body of consumers, of which the employers form only a small part. Much of the recent progress in some establishments has, however, gone far beyond the requirements of any existing laws. Many employers recognize that it is costly and unprofitable to themselves to allow their workmen to be in surroundings that reduce their vitality and efficiency.
§ 3. Limitation of the wage contract. In general the law does not attempt to interfere with the making, by individuals, of such contracts as they choose to make. Its main function is to interpret and enforce the contracts that are made. But there has been an increasing group of exceptions to this general statement. It was forbidden even by the English common law for wage workers under some conditions to sign away their right to claim damages in case of accident, and many recent statutes have added more specific limitations in this respect.2 Legislatures and courts have been particularly watchful of the interests of children, who are usually deemed incapable of entering into contracts binding them to their injury. Sailors, likewise, have been somewhat exceptionally treated, because, journeying far from home, they are under the often despotic control of their employers. The English courts may even change the contract if the sailors have been coerced by their masters.
Laws regulate the form, time, and methods of payment in manufactures and mining. Companies sometimes keep stores, and pay the workers in mines and factories in goods instead of money. Such a store in the hands of a philanthropic employer might easily be made, without expense to himself, a great boon to his workmen, giving them the benefits of consumers’ coöperation. But the usual result is told by the fact that such stores are often known as “truck stores” and “pluck-me-stores,” and heartily disliked by the wage workers. They are most often found where some one large corporation dominates in the community, as in a mining district, and the workers are in a very dependent condition. If the higher prices demanded practically lower real wages, it would seem that the worker had an immediate remedy in his power to demand higher money wages. Recognizing that this is for the most part an illusion—for it is in just such places that the conditions for free competition are least present—the law in many states prohibits these stores. It regulates also the measuring of work, fixing the size of screens and of cars used in coal-mining. The law is especially favorable to the hand-laborer in regard to the collection of his wages, requiring monthly or fortnightly or sometimes weekly payments. Mechanics’ liens give to workmen in the building trades the first claim upon the products of their labor.
§ 4. Usury laws. The limitation by law of the rate of interest that may be charged affects many persons outside the ranks of wage workers. Usury laws are found almost universally in civilized lands. By usury was formerly meant any payment for the loan of goods or money; now it means only excessive payments. In former times moralists and lawmakers were opposed to all usury or interest. The reason for this attitude is not hard to find.3 Most loans were made in times of distress. The sources of lendable capital and the chances of profitable investment were few. But for the last four centuries there has been on the question of usury a gradual change of opinion, beginning in the commercial centers and progressing most rapidly in the countries with the most developed industry. A moderate rate of interest is now everywhere permitted; but in all but a few communities the rate that can be collected is limited by law, and penalties more or less severe are imposed upon the usurious lender.
Usury laws are practically evaded in a number of ways within the letter of the law.4 Many persons maintain that they do more harm than good even to the borrower, whom they are designed to protect. In a developed credit economy, where a regular money market exists, they are superfluous, to say the least, as most loans are made below the legal rate. Such laws, however, have a partial justification. In a small loan market they to some extent protect the weak borrower at the moment of distress from the rapacity of the would-be usurer. There has been great need to check the rapacity of the “loan-shark” in cities. Usury laws are fruits of the social conscience, a recognition of the duty to protect the weaker citizen in the period of his direst need. Their utility is diminishing, and at best they are only negative in their action, preventing the needy borrower from borrowing when his need is acute. In many European countries a more positive remedy has been found in the provision of public pawnshops. In America a very little has yet been done in this way, and that mostly by private philanthropy.5
§ 5. Public inspection of standards and of foods. The determination and testing of standards of weights and measures has long been a function of government. English laws of the Middle Ages forbade false measures and the sale of defective goods, and provided for the inspection of markets in the cities. Usually, the self-interest of the purchaser is the best means of insuring the quality of goods; but personal inspection by each buyer frequently is difficult and time-consuming, requiring special and unusual knowledge of the products and special costly testing apparatus. The states and the nation undertake in some cases, therefore, to set minimum standards of quality, and to enforce them by governmental inspection. Government coinage had its origin in this need.
This policy is applied, however, mainly to commodities affecting health; its application to art products, except to protect the morality of the community, would be difficult or unwise. Recent legislation in many lands and in all of the American states has developed greatly the policy of insuring the purity or the safety of many articles consumed in the home; notable is the Federal Pure Food and Drug Act of 1906. The federal law levying a tax on oleomargarine, however, was designed as protective legislation in the interest of the farmer. Public regulation and inspection sometimes raises the price, but the cost is small compared with the convenience and the benefits resulting to the citizen.
§ 6. Charity, and control of vice. The public relief of the defective classes, insane, feeble-minded, and paupers, is a part of the social protective policy. The public interest undoubtedly is served by having these suffering classes systematically relieved, but the extent and nature of the provision are questions ever in debate. Still more debated is temperance legislation, both as to licensing and as to prohibiting the liquor traffic. Nowhere is the manufacture and sale of intoxicating liquor treated quite like the traffic in most other goods, because it is recognized that the public interest is affected in a different way. While it is beyond question that society should protect itself and its innocent members against the drunkard, it is more doubtful whether it owes to the man, for his sake, protection against his own blunders. Not even the gods can save the stupid. Temperance legislation is strongest in its social aspect. The opponent of it usually champions the individualist view; its partizans uphold, in varying degrees, the social view.
Similar questions arise regarding lotteries, gambling, betting, and horse-racing. When a man backs a worthless horse against the field, money probably is transferred from the stupider to the shrewder party. The philosopher may say that the sooner a prodigal and his money are parted the better; but the broken gambler remains a burden and a threat to honest society. Gambling, lotteries, and speculation cause embezzlement, crime, unhappy homes, and wrecked lives.6 Here are to be found with difficulty the true boundaries between ethics and expediency. A busybody despotism may protect the fool, but it thereby helps to perpetuate and multiply his folly; yet, if the fool is left alone, he too often is a plague to the wise and the virtuous.
§ 7. City growth and the housing problem. In 1790, of our population only 3 per cent lived in cities of more than 8000 inhabitants; in 1900 the percentage was 33. Then the largest city (Philadelphia) numbered 50,000; in 1910 the largest city (New York) numbered 5,500,000; that is, one hundred and ten times as large as the largest one hundred and twenty years before. The total number of persons living in cities of 8000 had increased in more than double that ratio. In 1920, for the first time, the population classed as urban (in places with 2500 population or more) exceeded that classed as rural, being 51.4 per cent of the total.
The rapid growth of urban communities brought many evils. Considered in their more material aspects, nearly all of these are summed up in the term, “housing problem.” As population grows denser in cities, land rises in value, yards and gardens narrow and then disappear, light, sun, and air are shut out, and cleanliness, decency, and home life become more difficult and, for many, impossible. The residents gradually group themselves in districts corresponding to their economic incomes, and the poorer parts of the population become tenement dwellers in the neighborhood of factories or become segregated in “slum” districts of unsanitary and dilapidated houses.
§ 8. Good housing legislation. Two policies are open under these conditions. The one, always followed for a time, is to leave individual self-interest unguided to solve the problem. If the tenant agrees to rent a disease-breeding house, he is the first to suffer. The interests of investors, it is said, will supply as good a house as each tenant can pay for. The other policy now adopted is to set a minimum standard of sanitation and comfort in respect to plans, lighting, materials, and proportion of lots to be covered, to which standard all builders and owners must attain. Complying with the legal requirements, they are left free to collect whatever rent they can get. As one bad building may bring down the rent of all on the street, such legislation may sometimes be in the interest of the body of landowners as against the selfish desires of some individuals. Mainly, however, the regulation is in the interest of the tenants and of society as a whole, and against the immediate interests of the landlords. The rents from slum property are threatened; hence the strong opposition always manifested against tenement-house legislation by some landlords, architects, and contractors, who fight it as an interference with their interests and as a confiscation of their property. It is not unlikely that good housing legislation has the effect of making rents too high for some poorer tenants and driving them into the country. But this result is not so undesirable. Moreover, the control and inspection of housing conditions has in a few states been made state-wide to reach even the “country slums,” which lately have been recognized to exist. Enlightened sentiment to-day favors efforts to destroy the breeding-places of disease, misery, and crime, no matter where they may be.
Property-owners are in many communities limited as to height of buildings, appearance, and, by the zoning system, even the uses for which houses may be erected in any district. American cities have still much to learn in this regard from the example of many European cities, which have developed the art of city planning with wonderful results in beauty of landscape and of architecture, in practical economy for business, and in the health and welfare of the mass of the people.
§ 9. General grounds of this social legislation. Why are not such matters as we have been discussing safely left to individuals? It is for the interest of every one that his back yard should not be a place of noisome smells and disagreeable sights. But men are at times strangely obstinate, selfish, and neglectful, and through one man’s fault a whole community may suffer. The refusal of one man to put a sewer in front of his house may block the improvement of a whole street. The heedlessness of one family may bring an epidemic upon an entire city. There must be a plan, and by law the will of the majority must be imposed upon the unsocial few. Where voluntary coöperation fails, compulsory coöperation often is necessary. Thus health laws, tax laws, and improvement laws regulate many of the acts of citizens, limit the use of property, and compel men to better social courses against their own wishes and judgments.
All such laws as these are protective legislation, in that they depart from the rule of free trade taken in its broadest sense. It does not follow, however, that all these laws stand or fall together. The justification of such measures is limited and relative, and therefore of varying strength. All protective measures are alike in that the free choice of one citizen is forbidden by law in the supposed interest of some other citizen who is to be “protected.” While the purpose of the tariff is economic and political, in a large majority of social laws the moral purpose is fundamental. It is the demand of humanity that competition be placed upon a higher plane. Most social legislation is to protect the weak from being forced into contracts or from living in conditions injurious to their welfare and happiness. The justification for these limitations upon the right of private property, upon the free choice of the individual, upon “free competition,” must be found in the social result secured. The best test of social protective laws is their contribution to a higher independence and to a freer competition on a higher, more worthy, and more humane plane.
§ 10. Training in the trades. Free elementary and secondary education has become the all but unquestioned public policy in American commonwealths. The main motive for it has been the belief that education in books is a necessity for good citizenship in a republic. At the same time it has been thought that the training of the school would help the child to earn a living. This appears to have been true as long and as far as it was combined with, or supplemented by, industrial training on the farm, in the home, and through apprenticeship in the manual trades, as once was so prevalent. But industrial conditions have changed. Most of the old-time education of the schools has now little relation to the industrial life of the great majority of the children, for few enter clerical or professional callings. Germany was the first nation to recognize the new educational need (in fact, never as urgent there as here) and to provide for systematic and efficient training in all the industrial arts. Since the beginning of the century the American public has been awaking to the needs of the situation. We appear to be on the eve of a great development in industrial training that will equip youth for more efficient life in business and in the home, either in rural or in urban conditions.
§ 11. Definition of unemployment. Unemployment is the state of a wage worker for the time out of a job. But this definition needs to be further explained and limited if it is to be useful in the discussion of unemployment as an evil calling for social remedy. There must be set aside the cases where the lack of a job is due to one rest-day in seven and to legal holidays, a total of nearly sixty-five days in most American states; to the worker’s being on strike; to temporary sickness; finally, and more difficult to distinguish, that due to continued disability, physical, mental, or moral, to do the work up to an acceptable standard and to retain a job in the occupation chosen by the applicant. The first cannot be called a problem, and the others constitute the problems of strikes, of industrial sickness, and of the unemployable respectively.
There still remain some unanswered questions, such, for example, as: whether in seasonal trades (e.g., teaching or the building trades) allowance should be made for normal vacations and for slack times, not to be counted as unemployment; and whether lack of work at one’s principal occupation is ever or always unemployment, when the person is actually employed or can get work at some lower paid employment. The more frequent answer to these questions is in the negative, but this in some cases is almost palpably absurd. Further study is necessary to work out a generally acceptable concept of unemployment.
§ 12. Extent and evils of unemployment. In every country and at all times where the wage system prevails, some wage workers, now more and now less, are “out of work” and unable to get it. The proportion that they constitute of all workers cannot, with the aid of any existing statistics, be exactly told, nor can exact comparisons be made between different countries. Of the magnitude, importance, and difficulty of this “problem of the unemployed” there is, however, no question. It is greatest, speaking generally, in manufacturing industries, though, among the various kinds, great differences in this respect appear. In 1900 the United States census reported that of all persons in gainful occupations 2.5 per cent had been unemployed more than half the year, 8.8 per cent from three to six months, and 11 per cent from one to three months, a total of 22.3 per cent more than one month.7 In 1911 in a large group (nearly all) of the manufacturing industries, the minimum number of wage-earners employed (in January) was 13 per cent below the maximum (in November). In some the difference was much greater (e. g., 24 per cent in the iron industry, 63 per cent in the brick-and-tile industry). Statistics of unemployment among trade-unions in New York and Massachusetts indicate that the annual average of unemployment is between 12 and 15 per cent. In some years upward of 10 per cent of all the working time of the wage earning population is lost by unemployment. A considerable part of the total in an ordinary year may be set aside as “normal” in the sense that it is allowed for in the wage-workers’ plans.8 And a part of it may even be desirable.
Yet there remains an inconceivable sum of suffering in the lives of the workers, and an enormous economic waste of productive energy not only for them but for the whole community. The irregularity, and occasionally the excessive duration, of these periods of unemployment too often makes unemployment not a beneficent vacation (comparable to shorter hours), but a period of tragic anxiety, demoralizing and unfitting for return to work. Irregular work is generally recognized to be a greater cause of poverty and of actual pauperism than is a low wage regularly received.
It is impossible for the industrially more fortunate persons and classes of the nation (excepting the few who have learned by personal adventures or by sympathetic study of the problem) to comprehend how inevitably unemployment and the fear of it shape the social theories as well as the industrial character of the propertyless workers. The educated and the prosperous denounce with contempt mingled with inquietude the vagaries of the Industrial Workers of the World and the destructive doctrines of Utopian communists. Such ideas are attributed to ignorance, to natural perversity, or, still more often, to the influence of ignorant and dangerous leaders. But, as an employer who lived for months as a manual laborer, has said: “To the worker the job is the axle of his entire world.” It is “impossible to overstate the way in which the having of the job affects the whole circle of a man’s life; all his thinkings, all his feelings, all his believings, all his attitudes and concepts and beliefs.” “When we see men thinking ‘queerly’ or feeling ‘queerly’ and embracing strange philosophies, . . . we ought to put our first question mark against the circumstances of their job.”9
§ 13. Individual maladjustments causing unemployment. The cause or causes of the evil must be ascertained before a remedy can be intelligently applied. At the outset the problem of unemployment must be clearly distinguished from that of over-population and low wages. It is essentially a problem of maladjustment of the labor supply. That is, there is, under static conditions, work for all to do at various rates of wages that would bring about a value equilibrium of services.10 The maladjustments are either of an individual or of a general character affecting numerous individuals.
Individual maladjustment may be due to a mistake in choosing an occupation (e.g., through the vain ambition of one unfitted to be an artist, actor, lawyer, or teacher); or to failure to acquire by adequate training the necessary skill; or to loss of capacity by accident, old age, or failure of mental or moral powers; in all of which cases the problem verges upon or becomes that of the unemployable. The “can’t-works” and the “wont-works” must be divided from the “want-works.” If there is any remedy in such cases, it must be through reëducation, personal reform, or change of occupation.
Many persons look upon this type of cases as almost wholly accounting for the problem of the unemployed. They are confirmed in this opinion by the fact that the out-of-work group in any trade at any time is, on the average, the least efficient group of workers in the trade. This results from selection by the employers. This selection is due to the relative, not to the absolute, efficiency or inefficiency of workers, and must result whenever there are any discoverable economic differences in the workers (all things considered) that are employed at the same wage. This would continue even though the poorest workers were to raise their efficiency above that of the best men now retained. “Personal inefficiency” may explain a chronic low wage or absolute unemployability in a particular case, but it does not explain intermittent lack of work for those willing and able to work. Unemployment is a social problem and not merely an individual problem.
§ 14. Maladjustment of wages causing unemployment. It seems highly probable that the artificial maintenance of a wage above the competitive, or value-equilibrium, rate of the individual, whether this be done by sympathy, by custom, or by the action of trade-unions, must cause some maladjustment of workers in relation to available jobs, and thus increase unemployment. To doubt this is again to maintain the absolute inelasticity of the demand for labor with changes in its price.11 If the true equilibrium wage in a certain industry were $3.00 a day, then a wage of $4.00 a day would attract to the trade more than enough workers to meet the demand for labor in normal periods (unless entry to the trade is controlled by monopoly power), and at length the losses from unemployment would balance the day-wages received in excess of the rate obtaining elsewhere for that quality of labor. Any artificial obstacles to change of occupation or to concessions in the kind of work done and in the rate of wages must operate to increase the maladjustment. This may, and doubtless often does, occur, and cause unemployment which neutralizes, in greater or less degree, the apparent gain of higher day-wages obtained by monopoly power. The very inertia of wages, however, in new price situations12 makes the wage workers resist vigorously wage reductions at times of unemployment. They know that if the wage rate is cut, it will not easily be raised again as times get better. Moreover, the difficulty here indicated is more particularly one occurring in static conditions, and is to be distinguished from the dynamic maladjustments next to be considered.
§ 15. Individual maladjustment in finding jobs. Another kind of individual maladjustment is the failure of the jobless man to connect with the manless job. A certain amount of this maladjustment must exist in the most stable industries and in the most settled industrial conditions. Fluctuations occur in the market demand for the products of various establishments, requiring the taking on or laying off of some men. Fluctuations occur in the plans both of employers and of wage workers as a result of age, of removal for reasons more or less non-economic, of desire to change occupations, of variations in health, and of countless other causes. The needs of the employer for a worker, and of the worker for a job, are mutual. To a large degree these various fluctuations are mutually compensatory, workers going and coming, orders increasing here and decreasing there. Total jobs and total workers capable of filling the jobs are at any moment in normal times equal quantities, if they can be brought together, the wage being adjusted, like any market price, so as to equilibrate demand for and supply of labor.13 But almost everywhere is lacking a real labor market. The substitutes for it are largely ineffective: trade-union action, employers’ associations, “want ads,” cards in shop-windows, weary walks from door to door, lines of waiting men outside of factories, private employment agencies. At their best the private employment agencies perform valuable services within limited fields, but they are uncoördinated and utterly inadequate to meet the chief need, and at their worst they are the instruments of great abuses against the unemployed.
§ 16. Public employment offices. Vigorous efforts to create local “free employment offices” or “labor exchanges” began in a number of countries about 1895. The movement gained headway in the next ten years and has since steadily grown. In Germany the chief exchanges have been founded and conducted by the municipalities (while others have been controlled by the unions and by groups of employers) and have remained largely decentralized, though coöperating to some extent through voluntary state conferences of officials of the exchanges, and after 1915 required to report to the imperial statistical office. The general results were remarkably good, although not completely satisfactory. In the revolution that marked the military collapse of Germany in November, 1918, the trade-unions got from the employers recognition of the principle of “parity” in the management of the offices of employment, along with recognition of the unions, the eight-hour day, and various other claims that they long had urged.
Every industrial country of Europe has done something to provide free labor markets. Great Britain, after some ex-experiment with a local system, established in 1909 the first national system of “labor exchanges.” In America the movement is developing in three directions—through municipal, state, and federal offices. These united, in 1913, in an “American Association of Public Employment Offices.” In 1915 there were known to be ninety-nine state and city employment offices distributed through thirty states, besides federal offices operated in eighteen cities in connection with the Bureau of Immigration. The federal service in the Department of Labor, the management of which had been much criticized, was brought to an end, just when most needed, in the midst of demobilization in 1919, by the failure of Congress to appropriate the necessary funds. The clearly recognized task is now to coöordinate these various agencies into an efficient national system, eliminating partizan politics and elevating the management of all branches to the plane of professional service. Through these agencies should be operated an industrial service analogous in function to the Weather Bureau, and reporting from day to day the pressure of demand and the prospects for labor in various parts of the country. The economic results of a complete, exclusive, and efficient service of this kind would far exceed its cost to the community.
§ 17. Fluctuations of industry causing unemployment. Any one of the maladjustments in employment thus far considered may occur at a given moment, in static conditions of industry. But there are also maladjustments resulting from more general industrial changes throughout a period of time. The two main types of these are seasonal and cyclical changes, the one occurring within a year, and the other occurring within the longer period of the business cycle. At the downward swing of these seasonal and cyclical changes the number of would-be workers exceeds the number of jobs,14 and the resulting unemployment is greatest when the minor and the major swings are both downward, about midwinter, in a period of industrial depression. Thus in 1893-94, and to a lessening degree in 1894-95, 1895-96, in 1907-08, and 1914-15. The unemployment beginning with the onset of the crisis in the summer of 1920 grew almost steadily worse, even after the return of spring in 1921, as prices tobogganed swiftly to lower and lower levels, and business of nearly all kinds was reduced in volume. The railroads alone, in desperate financial straits, discharged about 500,000 workers, and the total number of industrial unemployed in the nation was estimated to be from three to six millions.
Of course, employment offices alone are no remedy for the exceptional difficulties of such times, and the individual, whether he be an unfortunate “out-of-work” or a more fortunate well-wisher, feels helpless in the face of the overwhelming burden of distress. Such a situation is declared by the radical communists to spell the bankruptcy of the wage system; while the most conservative students of the subject confess that this periodic chaos in the labor market is the strongest indictment of, and involves the gravest dangers to, the existing economic and social order.
§ 18. Remedies for seasonal fluctuations. But of late there has been a growing hope that an answer may be found to this economic riddle of the Sphinx. A number of different measures are being experimentally tested and applied. Many years of effort will be required for the perfecting of these plans separately and collectively. Some of these plans may be here indicated, however, briefly. To remedy seasonal fluctuations within the establishments, (1) output may be regularized by taking orders in advance; (2) by producing various products successively in the same factory; (3) by overcoming weather conditions, as has been done successfully in brick- and tile-making, ditch-digging, and building operations; (4) by transferring workers from one department of an establishment to another; (5) by improving the employment departments so as to build up a more stable force, thus reducing the great expense of “hiring and firing” and the loss through training “green hands”; (6) by varying the length of the working-day while keeping the same working force throughout the year; (7) by coöperating with other industries to build up a regular working force and transferring it from one establishment to another with seasonal changes.
Of great aid in a number of these measures is a broader industrial training for the workers, making them more able to change from one occupation to another. For this purpose every period of unemployment and of temporary shortening of the working-day ought to be used as a time for trade education, by the recently devised and successfully applied “short-unit courses for wage-earners.”15
§ 19. Reducing cyclical unemployment and its effects. The maladjustments due to the movement of the business cycle are even more difficult to remedy completely, but will be diminished by every measure that helps to reduce the great financial fiuctuations.16 Further, many communities have already begun to plan large public works more systematically so that they may be carried on mainly when private business is more slack. A comparatively small amount of such emergency work would maintain the balance of employment for a large part of the less skilled workers. It has been estimated by Bowley, an English statistician, that in the United Kingdom it would be necessary to set aside only 3 per cent of the annual expenditure for public works to be used additionally in years of industrial depression, in order to balance the wage loss at such times. This well-nigh incredibly small proportion may be compared to that between the weight of the gyroscope and the car or ship to which it is applied. It is hardly to be doubted that hitherto, in America, public undertakings have been executed much more largely in periods of business prosperity, and have been diminished during “hard times,” thus greatly accentuating the harmful swing of the labor demand. Finally, unemployment insurance, which has already been applied by parliamentary legislation in Great Britain to a group of nearly three million wage-workers, is an indispensable and highly hopeful measure of relief. The place of this in a general system of industrial insurance will be indicated in the next chapter.
[1 ]See ch. 21, § 1.
[2 ]See ch. 24, §§ 5-7, on the old law of employer’s liability.
[3 ]See Vol. I, pp. 292-293.
[4 ]See Vol. I, p. 304.
[5 ]See Vol. I, pp. 293 and 303.
[6 ]See ch. 12, § 2.
[7 ]Great importance should not be attached to these figures for they contain errors resulting from the inexact notions of inexperienced enumerators as to what constitutes unemployment, and from the inclusion of all persons gainfully employed, whether self-employed or in professional, salaried, or wage-earning positions.
[8 ]See Vol. I, p. 207, on irregularity of employment as influencing wages, psychic income, and choice of employment.
[9 ]Mr. Whiting Williams, formerly vice-president of the Hydraulic Pressed Steel Company, in an address, “The Job and Utopia.” Bulletin of the American Association for Labor Legislation, March, 1921.
[10 ]On static, see Vol. I, ch. 32; on the scarcity of labor, see Vol. I, ch. 18, § 2 and references there; on value of services and wages see Vol. I, ch. 18, especially § 2, and ch. 19, especially § 7. See also, below, ch. 25, on pressure of population with immigration.
[11 ]See ch. 21, § 9, on the minimum wage.
[12 ]See Vol. I, p. 223, on friction in the adjustment of wages.
[13 ]See Vol. I, especially chs. 7, 19, and 28.
[14 ]See ch. 10, § 6 and § 7, on the industrial crisis.
[15 ]See Bulletin of the United States Bureau of Labor Statistics, No. 159 (April, 1915).
[16 ]See ch. 8, § 6, § 7; ch. 9, § 6, § 8; ch. 10, § 14, § 16; ch. 14 § 12.