Tuesday, February 3, 2009

How the Five-Day-Week Prolonged the Depression!

by the Sandwichman

Hooray for Harold L. Cole and Lee E. Ohanian! They have raised, in an admittedly inept and backward manner, an issue that many Keynesians and New Deal apologists seem to have trouble acknowledging. (See also Brad DeLong and Eric Rauchway).
The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office.
The hours of work decreased during the New Deal! Think of that! People worked fewer hours at the end of the 1930s than they did when Roosevelt took office. Of course, Cole and Ohanian think that was a bad thing, just like they think high wages were a bad thing. They also seem to believe that the Depression would have ended sooner if the market had been left alone to work out its kinks. Yeah, right. I don't want to live through that experiment.

But we do know that one part of what did happen was that the hours of work were reduced. They weren't reduced as much as William Green's AFL wanted them to be or as much as the Black-Connery bill would have mandated -- to 30 hours a week. The reduction in hours was permanent -- a permanent withdrawal of superfluous labor power from the market. Wartime mobilization withdrew labor power from the market in another way, by putting 12 million men in uniform and sending them overseas.

But here's the point: recovery from the Depression was not just about public works and fiscal policy. It was also about enforcing a reduction of working time. Cole and Ohanian are on to something, even if their interpretation of it is ass backwards.

To put Cole and Ohanian's free market mindset into perspective, I've posted, below the jump, the introduction to the October 1926 issue of the Pocket Bulletin, Official Publication of the National Association of Manufacturers, which announced its theme on the cover as "Will the Five-Day-Week Become Universal? IT WILL NOT!"
The Five-Day-Work Week; Can It Become Universal?

Presidents of Numerous Large Establishments Employing Hundreds of Thousands of Men in Various Lines of Manufacture, Declare Tendency to Less Work and More Pay Will Leave Us Wide Open for European Onslaught

Will Henry Ford's five-day week, just put into operation in his plants, and now urged as ideal by labor leaders, be adopted generally by the industries of the country?

It will not!

For the following chief reasons:

1. It would greatly increase the cost of living.

2. It would increase wages generally by more than 15 per cent and decrease production.

3. It would be impracticable for all industries.

4. It would create a craving for additional luxuries to occupy the additional time.

5. It would mean a trend toward the Arena, Rome did that and Rome died.

6. It would be against the best interests of the men who want to work and advance.

7. It would be all right to meet a sales emergency but would not work out as a permanent thing.

8. It would make us more vulnerable to the economic onslaughts of Europe, now working as hard as she can to overcome our lead.

These are some of the conclusions drawn by the presidents of some of the largest industrial concerns in the country, members of the National Association of Manufacturers and employing thousands of workers in various phases of industry.

Mankind does not thrive on holidays. Idle hours breed mischief. The days are too short for the worthwhile men of the world to accomplish the tasks which they set themselves. No man has ever attained success in industry, in science, or in any other worthwhile activity of life by limiting his hours of labor.


peggy said...

Thanks to Sandwichman for the historical perspective on coming out of the last great depression with a reduction of standard hours of labor.

Is there anyone in Congress who will revive the Black-Connery bill to meet the present and growing crisis of unemployment by reducing the standard hours of labor?


Mike Ballard said...

Fine, fine superfine find and analysis, Sandwichman.

Anonymous said...

I think if the WSJ is so set on fighting a reducton of working time, we should just tack on another ten hours per week, and see what that does for the economy...

I am so sure it would make the present crisis run out to its logic conclusion...perhaps not in the way WSJ intends, but finally and completely nonetheless.