[From the Congressional Digest, January 1931]

IS WAGNER PROPOSAL FOR FEDERAL EMPLOYMENT AGENCIES SOUND?

(PRO BY SENATOR WAGNER)

Entirely too much valuable time has been consumed by idle theorizover the question, Whose problem is unemployment?

I have been told by well-intentioned citizens that each worker should solve the problem for himself. I have been advised that business was under the duty to eliminate unemployment. Others have urged that the municipalities and States were responsible for it. Into this dispute I decline to enter. To me it seems plain that the responsibility of the Federal Government must not be shirked, for the prevention of unemployment is a distinctly national obligation.

Unemployment today is not produced by local causes. The forces which make for the shutdown of factories, the curtailment of activity in the mines and on the railroads are forces which operate on a national and worldwide scale. The individual workman, the individual business, the State, are helpless when an economic storm breaks upon the country. Only the coordinated strength of the entire Nation is competent to deal with such powerful economic forces.

The sooner the Federal Government does it share, the sooner will States, municipalities, and private industries be in a position to contribute theirs.

What portion of that task properly belongs to the Federal Government?

First. The Federal Government should collect accurate information of employment, unemployment, and part-time employment. Such information is fundamental. No intelligent effort to control unemployment can be exerted without it. Today we have no such information. The Federal Government is the agency best equipped to secure it.

Second. The Federal Government is always engaged in constructing highways, developing rivers and harbors, erecting flood control structures, and public buildings. It should plan these projects in advance and time them so as to make available opportunities for employment when private business slackens.

Third. The Federal Government should join with the States in the establishment of a nationwide system of public employment offices, so as to assist workers to find jobs and to assist employers to find workers with the least amount of delay and with the least amount of friction. Such a system will establish cooperative channels for the free flow of labor between States and between markets.

This is but a bare outline of what the Federal Government can do toward the prevention of unemployment. It is such a plan which is written into the three bills I introduced and which have been passed by the Senate.

If the Federal Government should begin to exercise these functions, certain definite results may be expected. We shall know where we stand from month to month. We shall no longer grope in the dark. The information will be useful to the Federal Government, to the States, and municipalities, and to each and every intelligent farmer and businessman in the country, who will be enabled to guide production by prospective consumption.

Public construction will be concentrated in periods of depression. If the Federal Government will set the example the States and municipalities will do likewise. A public works program which costs the Nation about $3 billion a year will be turned into a balance wheel to keep employment steady. We shall begin to know something about the unemployed. We shall learn what happens to the men displaced by machines and mergers; what is the fate of men who lose their employment after 40? If we know the facts, I believe we shall find solutions. As long as we remain in ignorance we never can find a remedy. Of course, carrying out this program will cost money. The longrange plan bill authorizes an appropriation of $150 million; the employment exchange bill, $4 million. These are big sums of money even for a country as large as the United States. But when you stop to compare these figures with the costs of unemployment, then you become competent to judge which way lies true economy. In one single month last winter factory workers alone lost in wages $200 million. In the first 3 months of 1930 it has been estimated that wage earners alone lost no less than a billion dollars in wages. If by a little expenditure of money and a big expenditure of thought and plan we can build a dam to shut off this Niagara of money losses arising out of unemployment, is it not sound economy to do so? Consider what it would have meant to the farmer, to the manufacturer, and in turn to the worker if this vast amount of purchasing power had not been withdrawn from the markets.

There are three forms of unemployment with which we are suffering. Two are characterized now as chronic. There is the technological unemployment which is of a chronic nature, the displacement of labor by machines. Then we have the seasonal unemployment, which has been regarded up to the present time as inevitable, although I think it can easily enough be solved if we address ourselves to the problem. The third is the cyclical unemployment, which is usually temporary in its nature.

The reason why we are suffering from this acute unemployment situation at the present time is that upon this chronic unemployment, technological and seasonal, is superimposed this cyclical unemployment which has brought us down so deeply. Strange though it may seem, while we are confronted with the seriousness of technological unemployment our Government has never even begun to study the question of technological unemployment.

In order to solve the problem, we must have available information. We must build the machinery of stabilization and we must create the channels for the free flow of labor from the place of surplus to the place of need. These three things we now utterly and absolutely

lack.

Since these three bills were introduced, the Committee on Commerce has held hearings on this legislation and it is the deliberate judgment

of that committee, expressed in its reports, that these bills should be passed.

The ideas embodied in the proposed legislation have met very little articulate opposition. Economists have unanimously given these bills the stamp of their approval as sound and feasible and well conceived to attain their stated objects. Employers have endorsed the bills. Labor has put behind them the full force of its organized opinion. Large industrialists all through the country have approved it. The newspapers of the country, without regard to political division, whether Republican or Democratic, whether conservative or liberal, have joined in a single expression that Congress should pass the bills. Let us turn to the bill (S. 3060), which seems to be the center of attack. Somebody suggested that there are no employment exchanges in England and none in Germany. They have any amount of employment exchange. That is the center, the crux, of their whole effort to solve unemployment-the employment exchanges. We have altogether 170 offices, and here is Great Britain, with a population of only 42 million as against our 120 million, and she has 1,162 public exchanges; Germany, with a population of 62 million, has 1,293 public exchanges-to bring the man to the job. They found it absolutely essential during their trying times to have these exchanges, first, to segregate the individual, to find out what he can do, what kind of a mechanic he is, and then to send him to the job that wants that type of man. We have no such analysis here.

And here is the way they are attacking the technological unemployment. A man has lost his craft; they find out just about what kind of work he can do and they have a vocational training school connected with the employment exchange. He is put in there for a week or two, readjusted, so that with his mechanical skill he can do some other type of work for which there is a demand and back he goes into the new employment and maintains his standard of living. That is what these employment exchanges are doing there.

Much of the opposition proceeds on the assumption that there are not any State public employment exchanges. Twenty-five States have employment exchanges today; but none of them is informed as to the economic condition of another State. Now New York State cooperates by a special arrangement with the State of New Jersey: the employment exchanges of the State of New Jersey cooperate with the employment exchanges of the State of New York. Where men of a certain type are wanted in New Jersey, a factory is starting up and there are no men available in the State, they communicate with the State of New York and find out whether or not there are men in the State of New York out of employment who would fit into a place of a particular kind that is available. And it is this cooperation between the States which everybody, who has dealt with this subject, has emphasized, and the purpose of this bill is to bring about that cooperation.

Although the National Association of Manufacturers opposes it, I have not heard from a single manufacturer in the State of New York against this legislation and we have a great many of them there we are a pretty large industrial State. The only opposition I have heard against this legislation is from private employment exchanges.

Now the private employment exchanges, according to their statement here, have an entire misconception of this bill. This bill does not attempt to regulate private employment exchanges; it has nothing to do with private employment exchanges. It deals only with Federal aid to the State employment exchanges in order that we may have cooperation between the States, this communication of economic conditions in one State so that another State may know, which all of the students of this question say is absolutely essential if we are to deal with the question of bringing the man to the job at all.

In this brief against this bill Mr. Emery, for the National Association of Manufacturers, said that this bill was coercion-coercion of the State. The States decide absolutely whether they will accept this Federal aid or not. Where is there any coercion? If the State says "No," that is the end of it.

We have an employment exchange today; the director can erect as many as he likes, and that is why I cannot see the logic of Mr. Emery's argument. He does not object to that, but he does object to the provision of the bill which says, in the event the State does not accept Federal aid then the Federal Government, in order to secure this cooperation (again between the States), may erect an exchange of its

own.

We have heard a good deal here about the handling of employment exchanges as a local State function and I want to preserve it as a State function; so, instead of creating these agencies throughout the States, exclusively under Federal Government supervision, I provide that the States shall do the whole thing with Federal aid. Under the bill the State conducts the entire employment exchange; it appoints the employees; it does all the work in connection with the employment exchange.

The only thing the State is required to do is to submit its plan to the Federal Government, so that the Federal Government may know how its money is to be spent and to comply with certain requirements, such as the collection of statistics.

Under the provisions of this bill the States are unfettered so far as the policy they desire to adopt in the appointment of the employees in the employment exchanges is concerned-absolutely. And it is to meet what I feared was an objection to national employment exchanges throughout the States rights objection-that I provided that this cooperation be secured by having the States do it all and to give Federal aid simply upon condition that certain things be complied with; namely, that we want the statistical information and, also, that the Federal Government take care of the placement between Statesthe clearing between States.

We are not creating the organization; the State is doing all of that. We are simply giving Federal aid, just as we give Federal aid in many other instances. If there is any constitutional objection to this, then all of your Federal aid is unconstitutional.

What about our Department of Agriculture-our appropriations for the Department of Agriculture? That comes under the general welfare provision of the Constitution. What about our Department of Labor? If this is unconstitutional, the appropriation we make for the Department of Labor is unconstitutional. If this is unconstitutional, the appropriation we make for the U.S. Public Health Service

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is unconstitutional. All of these appropriations are constitutional, or one-third of our Government would just collapse.

We have a Federal Employment Service today. Nobody has ever suggested that the money expended for the employment service is unconstitutional, or is not authorized by the Constitution.

we

The argument is made that we are giving the money to the State in return for a surrender of its police powers. The States do not give up anything; they exercise their police power by saying "All right; will take this money and we will collect these statistics for you; we will cooperate with the other States." It is no more than if I make a contract with you to buy your house for a certain sum of money. I do not give up my right to contract when I make that contract with you; I exercise my right to contract. So the State is not giving up anything; it exercises the right which it has. It may reject or accept, as it pleases. All of this talk about coercion of the State is untenable, to put it very mildly.

Everybody agrees, who has studied this subject, that these employment exchanges are essential. We must admit that State lines are no longer economic barriers. How are we going to get cooperation between the States; how can we ask the State to give us this information to transmit to other States, unless the Federal Government is in there somewhere between the States? You can have Federal employment exchanges in every State in the Union, who will do this communicating between them and so have the clearance between the States, or you can let the States operate the offices. There is the only alternative. Now I took what regarded as the alternative which preserved States rights as against the alternative of having the Federal Government do it exclusively. The States are responsible for the entire administration of those offices. The aid that they get is because of the help which they give the Federal Government in helping the clearing of labor, the placement between States, and collecting this accurate information. It is a thing which can only be solved by cooperation between the States. A public works started here in Washington affects the shoe factory in Massachusetts, textiles in the South and in the New England States, factories in my State. It is so widespread that it requires cooperation in order intelligently to deal with this subject. And this cooperation being absolutely an essential part of the program, I thought this would preserve State rights and yet give us that cooperation. The only alternative is to forget the States entirely and do it all by the Federal Government.

Year after year, decade after decade, we have yearned and hoped and prayed to be relieved of the recurrent onslaught of unemployment. Here is a program of action, not perfect but the best that the present state of our knowledge makes possible; not complete but having within it the seeds of further development; not a panacea for all our ailments but bound to contribute to the solution of unemployment. Here is the program: Three bills, constituting the first three steps on the road to stabilized prosperity.

PRO BY REPRESENTATIVE DYER

This bill, in a word, sets up a national employment system in cooperation with the various States and endeavors to promote the establishment and maintenance of a national system of public employment