People Must Live by Work. Steven Attewell
work more and public relief less.
What were the methods proposed for developing a system of government job creation? The ones under consideration borrowed from social insurance proposals developed by Witte and his fellow Wisconsinites, but they sharply constrained the importance of UI in the CES’s program. The first plan “involves the use of contributions for protections against unemployment for a work program—employment not restricted to those making the payments. This conception regards the funds collected as an additional source of revenue collected and is based on the belief that employees will willingly make payments in return for the protection offered them by a large work program when unemployed.”114 This language borrows directly from social insurance rhetoric. Establishing a contributory basis for direct job creation but not limiting funding or eligibility to those contributing, maximized direct job creation’s fiscal flexibility (and rendered it more open to disadvantaged groups) by giving it a source of funds free from congressional interference, while also keeping the door open to general funds. More important, this option diminished the relevance of UI by establishing an independent system that would be more generous in benefits and duration, in a form preferable to the partial wage replacement characteristic of social insurance, and open to more people than UI (especially agricultural and domestic workers). If such a system were to pass into law, UI experts would find it very difficult to justify an additional payroll tax and an additional bureaucracy designed to provide a less popular benefit. At best, UI would find itself a small, complementary program, if it passed Congress at all.
The second plan put forward by Ross was equally bold. It contemplated “wages on a work program as a means of paying all unemployment benefits.”115 (In other words, while a UI system would still exist for the purposes of collecting taxes and tracking benefits, the actual payoff of those benefits would be done through a work program.) As in the first option, work would become the dominant form of public provision against destitution, guaranteed as “a matter of contractual right to … wages paid for work performed.”116 Once again, one sees the combination of social insurance terminology with a focus on work as the primary mechanism—showing a willingness to appropriate the intellectual clothing of FERA’s rivals. The threat in this option was that, in addition to undermining the cash benefit basis of insurance, direct job creation officials would oust social insurance officials as the primary contact for beneficiaries. Direct job creation administrators would establish their own personnel as the primary contact with almost the entire workforce, ready to link up with clients and congressmen to protect the system politically. To hammer the final nail in the coffin, FERA agencies would maintain budgetary authority over the reserves. “The cost of the work program [for the individual worker] would first be supported by payroll contributions [made by all workers] and at the expiration of the benefit would be supported by public [general taxation] funds,” thus maintaining funding flexibility.117
The third option was something of an olive branch to UI advocates like Witte, especially compared to the previous two. Here UI and direct job creation would remain separate programs: one funded by payroll taxes, the other by “public funds,” thus eliminating any fiscal or programmatic overlap. However, the two programs would cooperate to provide longer and more generous provision of unemployment benefits by “delaying the employee’s eligibility for the work program until after the right to cash benefits under an unemployment insurance scheme becomes exhausted.”118 This setup offered certain advantages from Witte’s perspective. It moderated the UI system’s relatively stingy provision of benefits, while letting the system off the hook for long-term payouts. It counteracted the perception of social insurance as a dole by tying cash benefits to work. Finally, it provided for “workers not covered under unemployment insurance,” a priority for liberals within both the CES and Congress, without having to directly challenge the Southern congressional caucus on the issue of agricultural and domestic workers.
Taken together, these three options—wherein work programs could either replace UI entirely or work alongside it—thus served as ammunition for the battle surrounding the first round of reports by the Technical Board and the Executive Staff. Over at the Technical Board, Williams fought for a report to the CES that stressed the importance of direct job creation as a first step to securing its position within the economic security program and largely succeeded. The result was a document resoundingly in favor of direct job creation: “The first requisite of security is a useful job,” the board wrote. “[It] is recognized that extensive public employment will … be necessary.” Moreover, the board argued, in the event of political pressure regarding the cost of the economic security program, “employment … should receive first consideration. To the extent of the maximum funds which can be made available, public employment should be provided until the bulk of the people … are absorbed.”119
Indeed, the Technical Board essentially recommended in its first report the major provisions of the proposals advanced by Ross and Baker. “All unemployed who are at the same time employable and also in need … [or] not covered by unemployment insurance and also recipients … [whose] benefits have lapsed,” should be eligible for direct job creation, the report’s authors urged.120 A large direct job creation system funded by general taxation would complement a contributory social insurance system. The crowning glory was a recommendation for a yearly appropriation of $3–4 billion, which would go into effect immediately. Although social insurance and direct job creation would be separated into independent programs, both sides saw potential for collaboration and cooperation.
But moving up the policy chain was not a simple process, and Witte was not done with the debate. As the Technical Board passed on their work to the Executive Staff for refinement, he blocked the efforts of FERA advocates to place direct job creation at the center of the CES’s framework for reform. In their report, the Executive Staff largely sided with the UI crowd. Witte argued that “it would be equally unsound to ignore the 80% of all workers now employed in the concern for the 20% who are unemployed. The 80% are in need of protection as well as the 20%.”121 By phrasing the debate in terms of majority and minority, the Labor Department was able to elide the fact that UI would not cover half of the 80 percent because they were not eligible. The Executive Staff followed Witte in arguing that direct job creation for all would not help the aged, children, or the sick, and in any case it would be too expensive. The staff insisted that the committee recommend a broad system of UI and Old Age Insurance as the “first line of defense,” and that these programs should be put into place “on a nationwide basis at the earliest time possible.”122 Both direct job creation and UI advocates seemed to have understood that those acting first, claiming budgetary and conceptual space, would be much better positioned to move from plan to law. Witte had grabbed the largest share for himself.
Ross, Givens, Burns, and other FERA members of the Executive Staff fought hard to keep direct job creation on the agenda and had succeeded to a degree. Thus, the report stressed that “the only effective cure for unemployment is employment.”123 Although FERA members were unable to win jobs for all, they did make progress. Thus the CES report notes that, “as a permanent policy, the federal government, without guaranteeing full employment, should continuously interest itself in maintaining a high level of employment.”124 Building off agreement on purchasing power theory among the Executive Staff, the report recommended that “the government should undertake an extensive public employment program by next summer at the latest … financed from general federal funds” to boost the economy.125 (That would happen in 1935.) Thus, the basis of Williams’s draft from the Technical Board managed to pass through the process of revision by the Executive Staff without being eliminated outright.
Indeed, this first report suggests that the CES was coalescing around Ross’s third option of separate and complementary systems of direct job creation and UI. “[A] program for economic security may well be built around the concept that work is the greatest need of the wage earner,” the staff report argued, “but this does not preclude unemployment insurance.”126 Similarly, UI advocates conceded that “a program for personal economic security cannot be confined to social insurance alone, as this will not meet the problem of the unemployed and the people on relief.”127 By the end of the first round of reports, direct job creation advocates had succeeded in establishing their