All Commentary
Saturday, August 1, 1959

Pernicious Unemployment

The late Mr. Chodorov was well known as a preacher and practitioner of individualism. The Rise and Fall of Society (Devin Adair) was his book-length treatment of the subject.

It was an “accident.” The young couple had decided not to start raising a family until they had paid off some of the debts incurred in setting up housekeeping and had acquired other things so much more necessary than children. But nature had decreed otherwise, and the lady was obliged to give up her $70-a-week secretary ship.

The inconvenience was consider­able; she would have to forego that spring outfit she had set her heart on, but there were mitigat­ing circumstances. The husband had a good job. In addition, by registering herself as unemployed, she could draw $36.00 a week for 26 weeks at the unemployment “in­surance” office (New YorkState). Considering that she would have no state and federal income, social security, and unemployment taxes to pay, the loss of income would be slight. Indeed, taking into account the saving in carfare and lunches, plus the wear and tear on her clothes, she might be better off.

No, the expectant mother was not destitute. When we read in the papers that some four million Americans are unemployed, the picture in our mind’s eye is one of widespread destitution, of what used to be known as “hard times.” We equate the word “unemploy­ment” with dire want, of children going hungry, of women making old flour bags do for clothes, and so on. And we lend a ready ear to the heart-wringing speeches of the politician bent on “doing some­thing about it.”

Looking Behind the Facts

Let’s examine how the govern­ment’s figures are arrived at and question the facts behind them. How many of the unemployed really want work, work of any kind that may be available? How many are voluntarily unemployed? How many are “in between” jobs, and therefore not available for any other work that may be needed? Are they the only breadwinners in the family, and is their unemploy­ment reflected in a diminished table fare? Did they, during their em­ployment, set up a reserve for just such a contingency? The govern­ment’s figures do not answer these questions.

Here and there a case of real hardship results from unemploy­ment, and this is to be regretted, of course. Also to be regretted is the fact that the unemployed work­er does not add to the nation’s fund of wealth. But, on the whole, are conditions quite as bad as the picture often read into the unem­ployment figures?

Officially “Unemployed”

A person is unemployed, ac­cording to the Department of La­bor, if during the week of investi­gation he is laid off temporarily because of bad weather, seasonal changes, illness; also, if he is on strike or otherwise chooses not to work. Any boy or girl over four­teen, and not in school, is unem­ployed, if so reported, because at that age one automatically becomes a member of the “labor force,” ac­cording to the Department; for that reason the number of em­ployables increases during the summer vacation and diminishes when school opens.

This is not to find fault with the Department’s way of computing its figures on unemployment; they do the best they can with a problem compounded of many variables, not excluding psychology. Obviously, the Department cannot make a nose-count of the nation’s unem­ployed every week but must rely on a sampling process. The unit of computation is derived from the data brought in by interviewers who visit 35,000 selected house­holds and rooming houses, cover­ing 330 sample areas, distributed among 636 counties and independ­ent cities. Every month the sample areas are changed. The data thus obtained is checked against the last census figures, adjusted for what is termed “standard error” and an estimate of seasonal changes in employment. As sam­pling goes, this can be considered reasonably reliable. It is probably far more reliable than the unem­ployment figures published by the unions, which are always higher than those of the Department.

However, the basic data for the computation is the information furnished by interviewees. The questions they are asked are stand­ardized and cannot take into ac­count their attitudes. A proud man may resent being called unem­ployed, in the firm belief that his superior abilities will shortly be called for. The confirmed malin­gerer, on the other hand, will re­port himself looking for a job while in fact he is thoroughly en­joying his vacation. Another will insist that he is looking for work even though he regularly turns down opportunities which he deems inconsistent with his ability or his station in life, or which pay less than he thinks he is worth; he can wait until the right thing comes along. The interviewers, though they are trained for the job, are unable to prod into such fields, partly because they are confined to the questionnaire and partly be­cause they work on a tight sched­ule.

An unemployed person, as de­fined by the Department, is one who “did not work at all (at least fifteen hours) during the week of survey and who was looking for a job.” This includes those who are temporarily laid off and are wait­ing to be recalled, or who are scheduled to report to a new job in thirty days, or who are ill or be­lieve there are no jobs of the kind they are fitted to fill. The phrase “looking for work” is quite inde­terminate, depending on the judg­ment of the interviewee. The defi­nition is perhaps as exact as can be devised, but the point is that those who qualify as unemployed under it are not necessarily desti­tute or even seriously inconven­ienced by their condition.

“Help Wanted” Ads

That the unemployment figures do not mirror a condition of want is emphasized by the number of “help wanted” advertisements that were run during the time the De­partment was reporting 4.3 million unemployed. On one Sunday dur­ing that month (March 1959) the New York Times carried fourteen pages (nine columns to the page) of classified “help wanted—male” advertisements, five pages of “help wanted—female.” In addition, two full pages were devoted to agency advertisements, and every agency (there were over a hundred of them) was looking for a number of applicants. Almost every kind and degree of skill was in demand: clerks, glass blowers, plumbers, foremen, gardeners, high school graduates, frame makers, life guards, gasket cutters, everything. Eleven additional pages carried display advertisements pleading for applicants who could qualify for scientific and managerial posi­tions.

All this space costs money, a lot of it, and it is obvious that would-be employers would not be spend­ing it if the unemployed were knocking at their doors. And while it is true that most of the jobs of­fered called for some degree of skill, and some knowledge, the fact is that janitors and file clerks are needed where engineers are at work.

In the same issue of the New York Times, as against the 32 pages carrying “help wanted” ad­vertisements, only 2 pages were devoted to “situations wanted” no­tices, and nearly half of these were placed by household workers.

The evidence that unemployment is not the problem it is supposed to be is supported by the newspa­pers of Detroit, a city held up as a horrible example. On the same Sunday, the Detroit News ran 6 pages of “help wanted” as against only 3 columns of “situations wanted” advertisements. The other two Detroit newspapers carried no notices from job-seekers, but did run a full page each of job open­ings. It would seem from this evi­dence that the unemployed num­bers of the U.A.W. are not too dis­contented with their condition.

The experience of the house­holder or small businessman look­ing for temporary help supports the conclusion that unemployment during the last year was not syn­onymous with want. Getting some­one to help with the chores around the house or store—fixing a drain pipe, cleaning out the attic, put­ting in a few panes of glass, painting the barn, removing an accumu­lation of furniture or books, a thousand and one things that have to be done—is next to impossible, even at $2.00 an hour. Evidently the unemployed can afford to be “choosey.”

Bailing Out Union Bosses

So, what is the substance behind all this clamor for “relief for the unemployed”? Among the most vociferous clamorers are the labor union leaders, and in their case the purpose is quite clear: hand­outs to the unemployed both re­duce the competitive pressure on their employed members and help to support strikers at the expense of the taxpayers. Unemployment payments constitute a supplemen­tary “war chest” for the unions. With the politician on the make, “relief” is a potent vote-buying device. The idea that tax-reduc­tion would lead to investments and to job opportunities and thus in­crease purchasing power is a bit too farfetched for his immediate purpose. On the other hand, the socialistic mentality of the union leader cannot embrace the fact that increased wages, without re­gard for the supply and demand conditions of the market, has the effect of pricing labor out of jobs, of creating unemployment.

To be sure, involuntary unem­ployment and consequent hardship cannot be ruled out of the national picture. The coal miners in West Virginia afford a case in point. The situation here (and in other “distressed areas”) is that the consumer refuses to pay the cost of marginal production and has turned to less expensive sources of supply: to cheaper coal, to oil, to natural gas. But “relief” does not solve the situation, and Con­gress certainly cannot put a nice, new, rich vein of ore into these marginal mines. In former times, when job opportunities became scarce for one reason or another, workers loaded themselves into transatlantic ships or covered wagons and went to where job op­portunities were more plentiful; thus, they not only earned for themselves a competence but also built a great nation. Granted that this escape from poverty is diffi­cult, the best that can be done for “depressed areas” is to move the inhabitants, if they are not able to move themselves, to where their skills are in demand. Industrial­ists would do just that if there were no government unemploy­ment compensation or relief and if the unions permitted it.

Handouts Aggravate the Problem

On the other hand, the schemes being advocated—more handouts for longer periods—cannot solve the problem. They aggravate it(1) by removing the sting from unemployment and helping work­ers remove themselves from com­petition, and (2) by increased taxes which add to production costs and diminish job opportunities. Take the case of the expectant mother cited above. Under the present New York state law, when her new-born babe is four or five months old and she is able to ar­range for its rearing, she can go back to work for 20 weeks and thus qualify for 26 more weeks of un­employment pay.

Incidentally, she may enjoy her accouchement in Florida if she wishes. Under a reciprocal ar­rangement, the Florida unemploy­ment office can act as an agent for New Yorkers residing in its terri­tory. The Florida authorities do not bother to offer the New York unemployed job opportunities be­cause Florida employers do not hire them.

One of the bills now before Con­gress proposes to make unemploy­ment “insurance” available for 39 weeks, in all states, the amount of the handouts to be increased to one-half of the average pay earned by the worker during the three months of the preceding year when he earned the most. Were that en­acted, our housewife might be listed as “unemployed” by the De­partment of Labor most of the year.

  • Frank Chodorov was an advocate of the free market, individualism, and peace. He began as a supporter of Henry George and edited the Georgist paper the Freeman before founding his own journal, which became the influential Human Events. He later founded another version of the Freeman for the Foundation for Economic Education and lectured at the Freedom School in Colorado.