People Must Live by Work: Direct Job Creation in America, from FDR to Reagan

Published by EH.Net (April 2019)

Steven Attewell, People Must Live by Work: Direct Job Creation in America, from FDR to Reagan. Philadelphia: University of Pennsylvania Press, 2018. vii + 269 pp. $75 (cloth), ISBN: 978-0-8122-5043-5.

Reviewed for EH.Net by Donald R. Stabile, Professor of the College, St. Mary’s College of Maryland.

 
As the Roosevelt New Deal recedes further into the past, historians keep finding new approaches to analyze its policies and legacy. Steven Attewell, who teaches public policy at the Joseph S. Murphy Institute for Worker Education and Labor Studies at the City University of New York, offers an especially insightful history of New Deal thinking by focusing on its programs for direct job creation. By direct job creation, he means programs where to alleviate unemployment the federal government hired workers to perform the tasks needed for public works projects instead of having private firms contract for those projects and hire the workers they needed. Direct job creation is more effective, he argues, because the government can make sure that the jobs go to persons who are unemployed, while private contractors may use workers who are already on their payrolls. Attewell’s argument is that direct job creation was a key feature of the New Deal that has become a forgotten policy.

To be sure, direct job creation was not an original concept of the New Deal, and Attewell gives a history of the idea that dates back to sixteenth century England. Still, it was during the New Deal that the idea attained its broadest application. Historians of the New Deal, however, have missed its significance. They have done so by thinking of public works programs and direct job creation as comparable. Rather, as Attewell argues, they were distinct ideas with different intellectual backgrounds and contrasting justifications.

As a way of establishing the significance of direct job creation during the New Deal, Attewell begins with a revised history of the Social Security Act (SSA) of 1935. Most histories of the New Deal focus on the SSA as the product of a Committee of Economic Security (CES), established by executive order of President Roosevelt on June 29, 1934. Staffed by experts in the area of social insurance, the CES proposed the system of unemployment insurance and old-age pensions that still exists in the U.S. Lost in this history is that “a full analysis of the CES’s deliberations reveals the origin of direct job creation” in the New Deal (p. 21). A crucial element of that origin was the inclusion of social welfare experts from the Federal Emergency Relief Administration (FERA) in the deliberations of the CES. Those experts had already formulated the idea of direct job creation as the solution to the high levels of unemployment during the Great Depression. They argued that as long as many persons in the U.S. were without a job, there would be inadequate consumption to restore the economy. This lack of purchasing power argument was a popular explanation as a cause of the Great Depression. Because they believed that relief programs stigmatized the unemployed, these social welfare experts focused on direct job creation to boost consumption. Their first effort was to gain a hearing as part of the report the CES made to the president, arguing that persons not eligible for the social insurance of the SSA be given jobs directly by the federal government.

Roosevelt took the CES report and used it to propose two bills, the SSA and the Emergency Relief Appropriation Act (ERAA) of 1935. The SSA would take care of the social insurance programs and the ERAA would facilitate job creation with $4.88 billion in spending. The ERAA set off another debate over the merits of direct job creation. There was a struggle over the use of the ERAA funds between the Works Progress Administration (WPA), which wanted to use the funds for direct job creation, and the Public Works Administration (PWA), which wanted to use the funds to have private firms be given contracts for public works projects. As Attewell describes in great and fascinating detail, the WPA won out over the PWA and gained the bulk of the funds from the ERAA, which was renewed annually. As a result, Attewell concludes, “by the end of 1935 direct job creation was a commanding economic policy within the New Deal” (p. 88). The policy was very successful in reducing unemployment. Attewell uses revised estimates of the unemployment rate during the 1930s to argue that the Great Depression ended before World War II. The WPA was terminated in 1943, however, and the program of direct job creation fell out of favor.

For the rest of the book, Attewell analyzes efforts to revive direct job creation through the Employment Act of 1946, Lyndon Johnson’s Great Society and the Humphrey-Hawkins Act of 1978. Each effort failed, he argues, due to the political popularity of alternative programs such as Keynesian fiscal policy, job training programs, the negative income tax idea and traditional public works projects using private firms. Conservative counterattacks on direct job creation also took their toll, and liberals too readily gave up on the New Deal vision. As a result, during the 2007-2009 recession, direct job creation was not tried by the Obama administration. Still, the idea has not gone away, and Attewell ends with his own program for how to institute a direct job program.

There is much to admire in Attewell’s book and I hope I have made it clear that I do admire the book. Through my own research on the place the idea of a living wage held in the economic policies of the New Deal and in its legacy, I have reviewed much of the same information. My own work would have been greatly informed if Attewell’s book had been available to me.

At the same time, I must question Attewell’s attribution of direct job creation as “a commanding economic policy within the New Deal” (p. 88). Attewell gives many arguments in favor of direct job creation as an important policy. In one case, however, he inadvertently highlights the difficulty of assessing the degree of that importance by arguing that “FDR’s Second Bill of Rights, announced in 1944, put the right to a job first and foremost among the economic rights of all citizens in postwar America” (p. 126). Roosevelt’s Second Bill of Rights, set forth in his State of the Union Message to Congress in January 1944, gave the first right as “The right to a useful and remunerative job in the industries or shops or farms or mines of the nation.” To me this right was more complex than a guaranteed job by the government; it implied that workers were entitled to a job in the private sector at a living wage. Direct job creation might be important in reaching this goal but it would take cooperation from the private sector as well. Regardless of the complexity of Roosevelt’s goals for his economic policy, Attewell has added to our understanding of those goals.

 
Donald R. Stabile is Professor of the College at St. Mary’s College of Maryland and the author of two recent books, The Political Economy of a Living Wage: Progressives, the New Deal and Social Justice (Palgrave Macmillan, 2016) and Macroeconomic Policy and a Living Wage: The Employment Act as Redistributive Economics, 1944-1969 (Palgrave Macmillan, 2018).

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