UNEMPLOYMENT

The problem of unemployment appeared in the United States only in the nineteenth century. Although there had long been men and women who were involuntarily jobless and traditional rhythms of labor were unsteady in many trades, the modern phenomenon of unemployment was the child of industrial capitalism: only when large numbers of adults had become employees, dependent on their wages to survive, was the unsteadiness of economic activity translated into the chronic, and periodically widespread, presence of jobless individuals who needed and wanted to work. This phenomenon began to be visible in the urban centers of the Northeast during the trade depressions of the antebellum era, most notably those of 1837-1842 and 1857. The word unemployed acquired its modern definition between 1850 and 1880, and the term unemployment probably did not appear in print until 1887.

Once arrived, the problem proved to be tenacious and difficult to solve. Beginning in the 1870s, unemployment became a persistent feature of economic life in the Northeast and the Midwest, and it became a national phenomenon no later than the depression of the 1890s. From the Civil War until World War II, unemployment rates ranged from roughly 4 or 5 percent in good years to more than 15 percent during the troughs of the worst depressions. But such figures (which reveal only the percentage of labor force members simultaneously jobless) understate the breadth of the phenomenon. In all likelihood, between 20 and 25 percent of working Americans experienced some unemployment during the average year, and they tended to remain jobless for roughly three months. During depressions, up to 40 percent of the labor force was laid off in the course of each year for spells averaging more than four months. The problem was most severe during the downturns that began in 1893, 1907, and 1920, and it reached its nadir during the Great Depression of the 1930s—when roughly 25 percent of the labor force was simultaneously jobless, with many of the unemployed remaining out of work for a year or more.

But unemployment was not entirely, or even primarily, a depression experience. Even during prosperous years millions of workers experienced layoffs; only in wartime did the nation have "full employment" in the sense that every able-bodied and willing worker could find a job. The impact of unemployment was also shaped by chronic, yet shifting, variations in regional and local unemployment levels: unemployment, almost always, was high in some cities and states while low in others. During the national prosperity of the 1920s, for example, tens of thousands of workers struggled to cope with layoffs in the shoe and textile manufacturing cities of New England.

Despite its salience in the lives of working people, unemployment became a public policy issue only gradually. During the depressions of the late nineteenth century, labor unions and working-class political parties demanded public works programs, as well as relief, from municipal and state authorities; in 1894 the federal government received similar demands from protesting "armies" led by Jacob Coxey and others. But, with scattered and temporary exceptions, these demands met with little success: Coxey's army disbanded in failure, and in most locales, the only sources of aid for the unemployed remained private charities and traditional poor relief agencies. Similarly, workers and their organizations tried repeatedly to develop strategies to reduce unemployment levels, the most sustained of which was the drive for shorter hours. (It was widely, if erroneously, believed that the eight-hour day would eradicate "involuntary idleness.") But these efforts bore few fruits, and the major political parties adhered to the view that the government neither could nor should assume responsibility for solving the problem—except insofar as solutions resulted from traditional "sound" economic policies on such matters as the tariff and currency questions.

These views began to change early in the twentieth century, as pressure from the working class mounted, middle-class reformers focused on the problem, and precedents of economic regulation and social welfare legislation were established. Nonetheless, it took the crucible of the Great Depression to produce new national policies and institutions. Massive public works programs were created as a part of the New Deal, and a joint federal-state unemployment insurance system was established through the Social Security Act of 1935. In the course of the 1930s the federal government tacitly assumed responsibility for the problem of unemployment, a responsibility formalized in the Employment Act of 1946; at the same time, the economic theories of J. M. Keynes seemed to offer governments tools with which they could control unemployment.

Without question, the New Deal and the Great Depression constituted a watershed in the history of unemployment, the beginning of an era of "managed" rather than uncontrolled unemployment. After World War II, both major political parties presumed that it was the duty of the federal government to minimize unemployment, and in the 1950s and 1960s, it appeared to many analysts that the problem was close to being solved: the business cycle was being tamed through Keynesian techniques, durable unemployment rates of 2-3 percent looked feasible, and the insurance system seemed capable of tiding over the unfortunate victims of technological change or the small, yet incessant, shifts in labor market conditions that produced what was called frictional unemployment.

Since the early 1970s, however, the picture has looked less rosy. Unemployment levels crept upward in the 1970s, and in 1982 the rate exceeded 10 percent for the first time since the 1930s. Although it fell back to the 5-6 percent range by the late 1980s, it was apparent that the business cycle had not been tamed and that 3 percent unemployment was no longer on the horizon. Of equal importance, teenage unemployment rates remained high, as they had been (increasingly) since World War II, and joblessness among blacks continued to be an acute problem, as it had been, in all likelihood, since World War I. (Reliable statistics regarding black unemployment do not exist for the years before 1940; ironically, unemployment levels among blacks before World War I may have been relatively low because blacks had great difficulty obtaining jobs in manufacturing and construction, where work tended to be particularly unsteady.) This uneven distribution of unemployment posed a challenge to policymakers—since economic growth alone seemed incapable of eradicating black or teenage unemployment—and raised the possibility that the earlier postwar job security of adult white males had been achieved (through a mixture of seniority systems and discrimination) at the expense of blacks and the young. For most years of the 1950s and 1960s, for example, unemployment rates for black males and for all males under the age of twenty-five tended to be double or triple the rates for white males over the age of thirty.

The regional distribution of joblessness also remained uneven and shifting. In the 1970s the most dramatic job losses came in the "smokestack" industries of the Midwest, and the collapse of the oil economies of Texas and Louisiana in the late 1980s made clear that the growing Sunbelt was not immune to unemployment. To make matters worse, there was also a sharp drop in the proportion of the jobless covered by unemployment insurance. Indeed, by the end of the 1980s, the American track record (reinforced by the specter of European trends) suggested that the problem of unemployment might, in the long run, be growing more, rather than less, severe. A century after the term first appeared in print, unemployment remained a significant problem for American society.

John A. Garraty, Unemployment in History: Economic Thought and Public Policy (1978); Alexander Keyssar, Out of Work: The First Century of Unemployment in Massachusetts (1986).

Alexander Keyssar

See also Coxey's Army; Depressions; New Deal; Welfare and Public Relief.